With all the madness of the real estate market, I am surprised that all home prices held steady this month.
As we *finally* ease into the seasonal slowdown, we are seeing 6% fewer houses for sale, 12% MORE condos for sale, and prices holding steady. One of the more notable things is that we had a 27% increase in the number of houses that sold compared to last year, and 48% increase in the number of condos sold.
But Christy, you said the condo market was struggling…
It really depends on which part of the condo market we are talking about. The overall median sales price inched up $1,000 over last month, and is $40,000 higher than this time last year. And that is because what used to be the “bread and butter” of condo sales (in-city, studio and small one bedroom condos) has been replaced by the sales of larger condos outside the city core. Larger condos cost more money, and that is why the median sales price is rising. To get a good gauge of exactly how hot and cold our condo market it, let’s look at how long it takes it sell a condo in different parts of Seattle:
If you are trying to sell a condo on Capitol Hill, it will take 46 days, and that is 3X longer than a Beacon Hill condo and more than twice as long as a Northgate condo. Downtown, Belltown, Capitol Hill, Queen Anne and Magnolia are seeing the most over-supply, low buyer demand, and the longest days to get an offer.
Let’s talk more about prices:
Since “flat” prices are hardly newsworthy, let’s take a look at the median sales prices in Seattle over the last 5 years:
Although prices aren’t doing anything dramatic month-over-month, we can see the overall trend is strong price growth. Even for condos. Even in the middle of a seemingly endless pandemic. Who would have thought?!?!?
This month had far more sales than is typical of this time of year. The Seattle real estate market is slowed down just a little, but not nearly as much as we typically do this time of year.
Let’s start with prices:
When looking at houses, we see the median sales price held steady month-to-month, but we see consistent year-over-year price growth. Compare that to condos where we had a jump up in median sales price from the previous month, but are still below the median sales price from 2 years ago.
Let’s look at price growth over the last 5 years:
This graph shows that the median sale price for houses sees seasonal ups and downs, but we typically see price growth year over year.
Condos are not as predictable as houses. Notice that the green top line is NOT 2020, it is 2018. Condo prices fluctuate both month to month and year over year.
Other fun facts:
Houses sold in 17 days, while condos took 31 days
Houses sold for 103% of list price, while condos sold for 99%
The number of people buying homes in Seattle is WAY UP:
We have fewer homes, but more condos for sale than we have in previous years. The buyer demand for houses is more intense than we have seen in years.
We are seeing more condos sell than we have in previous years, but when we consider we have more than double the number of available condos for sale than we have in previous years, we can see that the condo market is not nearly as robust as the house market.
Seattle Prices Came Back Down to Earth A Bit This Month
Looks like August was a bit of a sugar-high for real estate prices, and things are calming down a bit this month.
Again we see the tale of two different cities.
Houses and Townhouses:
Buyer demand was still strong, with 962 homes selling last month! Considering we only had 1,164 home for sale, I am sure that number would have been even higher if there were more homes for sale. The impact on buyers preference as a result of the ongoing extra time at home has caused the spike in demand for houses (and BIG houses) that is above and beyond what we normally see.
More condos sold this month than the previous month and the previous year. We had an increase of 18% more condos sell this month, and at the same time, we also had a 12% increase in the number of condos for sale. We have 48% MORE condos for sale this year than in 2019, and are also seeing 47% more condos sell than this time last year. But condos are still a tough sell. You have a 2.5% chance of finding a buyer, and according to the data, those that do find a buyer take 30 days to get an offer and are selling for 99% of the list price.
For all of 2015, 2016 and 2017, each month I kept saying “it is another record high price for Seattle houses”. And then in 2018, prices took a steep drop, and we have stayed under peak pricing since. Until now. The median sales price for a single family house in the City of Seattle is now $817,000. That breaks the peak price of $802,000 in May 2018.
What is driving this crazy price increase? Three things:
People want BIGGER houses and bigger lots. Until COVID, we had continue to see a buyer preference for smaller homes in more dense and walkable neighborhoods. But with all this extra time at home, buyer demand has shifted to wanting more rooms and more outdoor space.
Low inventory. With new construction being put on a 3 month delay due to COVID and the outrageously expensive cost of goods and lack of skilled labor, new homes are not being completed as expected. And folks don’t really want move in the middle of all this, and they don’t want to have to be buyers in this competitive market, so we have some would-be sellers opting to stay in their home instead of sell.
Crazy low interest rates. Money has never been this cheap in my lifetime, and it is helping prop up buyers spending power so they can afford these rapidly rising prices.
Let’s look at all the data:
Prices are up across the board. Condos are still below their peak price, but this is the highest the condo price has been since October 2018.
Let’s talk about condos:
Condos sold for an average of 103% of list price?!!?!?! Haven’t I been telling you all year how soft the condo market is, and how hard it is to sell a condo? Well, that still rings true if you have a small condo, or a condo close to downtown. What happened this month was REALLY unusual in 2 ways:
One condo sold for $6M, one for $5.25M, one for $2.7M and one for $2.5M. That really skews pricing when we only had 235 condos sell.
And the condos that did sell were HUGE! Over the past 3 years, really consistently, the average size of sold condos is 950 square feet. This month it was 1,536 square feet!!! We also had a disproportionately high number of 3 bedroom condos sell (8% of all condos compared to a typical 5%) and 10% decline in the number of studios and one bedroom condos that sold.
Let’s talk about houses:
Not only did the median sales price jump up $37,000 in one month, we also saw the AVERAGE sales price jump $51,000 compared to last month. That is a prime indicator that not only are houses getting more expensive, but the bigger and more expensive houses are selling at a high rate than normal. Seattle had 47 homes priced over $2M sell in August, and 25 of those were over $3M. We saw a lot more houses sell this year than last year, but that is likely due to the delay COVID caused in the usual Spring rush. Faster faster, homes sold in just 16 days and are still selling for 102% of list price. Although things do seem to be slowing down. The popularity of the offer review date continues to decline week over week. Speaking of decline, this was the first week since mid February that we saw a decline in total number of homes for sale. More signs of us starting to wind down the peak home buying season.
Holy SMOKES! The real estate market was as hot as our summer temperatures this month.
#1 – Houses are HOT
What we care most about is the home prices in Seattle. Let’s take a look at the median sales price for houses in Seattle:
The median sales price for houses (including townhouses) is up 5% from this time last year. That is a very healthy and sustainable rate of price growth. As the offer review date continued to gain popularity, we also saw homes sell just a bit faster and also for a bit more over list price. On average, houses in Seattle sold for 102% of list price in July! We finally got above 1,000 total homes for sale, but held steady at just 1.1 months of supply. All metrics point to a competitive market for houses in Seattle.
#2 – Condos are WARM
Our median sales price is up! It is up more than houses. And condos are finally selling for 100% of the list price, and are selling faster than they have been. We see a lot more total condos for sale, and only a slight increase in the number of condos sold. I would say condos are HOT, but we have a bit more supply when compared to demand than we do with houses, and condos are still taking an average of over 3 weeks before they sell. Last month I claimed the condo market was in BAD shape. This month I will say the condo market is okay.