The Redfin blog provided an update last week on home prices in the Seattle area, noting that county-wide sales prices are down 3.5% for August vs. the same period in 2009. But we dug through Redfin’s detailed neighborhood-by-neighborhood breakout and found that neighborhoods in the Central District are bucking that trend, with some rising significantly at the end of the summer selling period.
Here’s some examples:
- Central District- up 13.3%
- Leschi – up 19.3%
- Madrona – up 46.1%
Statistics provided by the Northwest Multiple Listing Service appear to confirm this trend, showing a year over year increase of 21% for the area between 520 and I-90.
Last week the Seattle Time’s reported that Garfield High School’s popularity was driving some families to move into the neighborhood just to be in its attendance area. Perhaps that’s one of the factors behind the rise in our real estate values?
Our new property tax evaluations arrived a few weeks ago, and now shows a fairly dramatic increase in assessed tax value. Since we live on a block with multiple rentals, and homes that took well over a year to finally sell, we could not understand this increase. If this increase is based upon Garfield’s well earned educational opportunities, great, but I am still not convinced that our CD property values are actually stabal nor increasing.
This is a perfect example of why averages and only two data points (year over year) are a bad mix. I work in the business of selling homes and believe me, no-one wants pricing to return to a positive trend more than me!
Here is a quick breakdown of what is really going on – not just in the CD, but elsewhere in areas like Ballard, Fremont, and Wallingford. The Story is even more severe for condos vs single family houses, although the story below (and the Redfin blog ‘numbers’) are a mix of both Single Family (SF) and Condos.
Between August 09 and August 2010 we have had a huge shift in the type of inventory available, listed, and sold around town. A year ago the story was crammed full of standing new construction townhomes (small single family) and condos. In August 2010 that inventory was largely gone from the scene and the numbers – although at first very encouraging, are actually showing us a mixed bag. The numbers by themselves do not make sense until you look at what was being sold. To get truly accurate numbers for any particular property you must compare apples to apples in your neighborhood, however we can see the difference in inventory from just the large aggregate numbers the Redfin is using.
Here we go! -All numbers are for both single family and condo combined, in the MLS area called 390, which is between I-5 and Lake Washington, and between I-90 and 520 –
– Sales volume is actually down 20% from Aug 2009. There were 98 sales in 2009, and 81 sales in 2010
+ Days on market has improved 26%! In Aug 2009 it took an average of 119 days vs 25 fewer days @ 94 days to close a sale in Aug 2010
+ ORIGINAL List Prices were UP 13% $536,106 vs $621,133
+ FINAL Sales Prices were UP 13% as well at $489,788 vs $574,423
+ Percent Sellers had to come down to make a sell actually improved by 1.1%, with an average drop of 8.6% ($46,316) needed in 2009 – and just a drop of 7.5% ($46,710) needed in 2010. Much of both of these drops would be avoided and time would be saved if Sellers took the advise of their Realtors up front… but that is another story.
So why am I arguing that prices have actually not increased but have decreased? It has to do with what was actually being sold a year ago vs today. In Aug 2009 the Avg property was 1561 sq ft (read lots and lots of new townhomes and condos) In 2009 the price per sq ft was an average of $313. In 2010 the Avg property available for sale was much bigger, 16% bigger actually, at 1808 sq ft.
So there you have it. The whole story is that in 2009 we were still working through much of the left over new construction inventory which was smaller and cheaper than what was available for sale in 2010. Many would-be-sellers in 2009 waited until prices stabilized somewhat and put their larger, more expensive homes on the market in 2010.
The picture actually looks very different when you take your particular housing type, style, age, location, and condition (your ‘apple’) and compare it with other ‘apples’ nearby. I can guarantee you will not be seeing a 13% increase year over year, you will see a decrease.
Real Estate is a long term investment that has more to do with connecting to your community, becoming a greater stakeholder in your neighborhood, and contributing to the history and sense of place an area develops over time than it has to do with making money year over year with price appreciation. We need to change the way we think about what role Real Estate plays in our lives, the ‘good ole days’ are gone for a reason – we don’t want them back.
The stats over at Seattlebubble.com look a little different. They list a drop in $/SqFt of 5.8% year over year for the the CD based on 15 sales in the month of August. Also worth considering the sample size (number of homes sold). That said- the story in the Seattle Times on hundreds of extra incoming freshman at Garfield does make me wonder?
Don’t forget that property tax assessments are 2-3 years behind actual events.
Yeah gentrification!
…and good news for my neighbor who bought at the height of the market and is now putting his five year old CD home on the market at $427k, taking a huge loss as it is.
That said, 3 bedrooms, 2+ baths, anyone??? You’d have great neighbors! :)