January Real Estate Report

New evidence of a real estate market turnaround?

The big news in the local real estate market last month was the report by the Northwest Multiple Listing Service (MLS) that the median price of Seattle homes sold in January was actually higher than in the same month a year earlier. For the city as a whole, this represented a 2.63% increase over the past year (houses and combos combined). It is the first time in almost two years that there has been a year-over-year increase in Seattle’s residential property values. The rest of King County did not fare as well, however, with home values continuing their downward trend.

But how did prices hold up in our neighborhood? Madison Park itself is a market that’s a bit too small for year-to-year median price comparisons to be meaningful (seven total home sales in January 2009 and only five this year). But for our general area of the City (MLS Area 390, which also includes Capitol Hill, Montlake, Madison Valley, Madrona, and Leschi), the news was pretty good. There was a modest 2.1% increase in value between January last year and this. This improvement, however, perhaps has more to do with a year over year change in the mix of sales (houses versus condos) than a real move up in home values.

Nevertheless, it’s a good start to 2010. Whether this welcome news means we’re on an upward trajectory will only become evident when we’ve got a few more months of sales data in hand. It’s just possible, however, that for our area of Seattle—like for the rest of the City—the downward slope of real estate values has been arrested. At minimum, the rate of decline seems to have abated.

In Madison Park January was actually a pretty slow month. Only three houses and two condos changed hands, a level of sales activity which was well below the nine-sales-per-month average of the last quarter of 2009. The median price of houses sold was a relatively high $1,275,000, and all of these properties were priced in excess of $1 million. The average sale price for the condos was $973,000. On average, sellers in January accepted a 9.4% discount from their original listing prices.

The big news in January was not the number of sales but rather the 15 homes (13 houses and two condos) that were listed as pending sale. Since 11 of the pending houses are priced at over $1 million, this may add to the sense that there is movement in the upper market. Broadmoor has more than a third of the pending houses, which was certainly not typical of the sales pattern in that area of the Park in 2009. There were 18 new listings in Madison Park during the month, which was great news for the real estate professionals. Inventory rose from 64 listings to 70.

While the agents I’ve spoken to are hardly ready to declare victory (even in private), the apparent increase in upper-market activity is cause for some cheer. Longtime and well-known Madison Park agent Val Ellis of Coldwell Banker Bain, for one, says she’s “thrilled” at the uptick of buyer interest in the over $1 million market. “It’s been a dry spell for a couple years,” she commented.

Dave Hale, Managing Broker for Windermere Real Estate’s Madison Park office, is cautious but notes that “we’re feeling fortunate.” He says “it’s still too early to tell if the market has turned,” but he reports that his agents are seeing an increase in demand. He wonders if this might cause some homeowners to re-list homes that they had taken off the market. “Open-house traffic has been excellent,” he says. “Hopefully this will result in some written contracts.”

Here’s an overview of the Madison Park market (including Washington Park and Broadmoor) as of mid-February (market data supplied by Redfin):

Houses

Listings: 50
Median List Price: $1,950,000
Median Sq. Ft.: 4,430
Median Price per Sq. Ft.: $440
Average Days on Market: 129
Percentage with Price Reductions: 28%

Condos

Listings: 19
Median List Price: $495,000
Median Sq. Ft.: 1,045
Median Price per Sq. Ft.: $474
Average Days on Market: 210
Percentage with Price Reductions: 42%

There is also one multi-family property on the market, a two-unit building listed at $849,000. Although there are many relatively new properties listed, there are three houses and three condos currently for sale that have been on the market for more than a year. Several other properties are approaching that milestone. The most expensive house currently available is this impressive Washington Park mansion originally built in 1923 but extensively reworked by architect Stuart Silk, with remodeling completed in 2005. Listed at $6,850,000, the house had been marketed last year at a higher price but was withdrawn and recently relisted.

In line with current market trends, only 5 houses, 10% of the total available, are listed at under $1 million. Twenty-two houses, meanwhile, are listed at over $2 million, representing 44% of the total inventory.

A retrospective on 2009

With the rather lackluster decade-ending year now behind us, I thought it might be interesting to take a look back at how the market fared in 2009 relative to previous years. While sellers, buyers, and real estate agents bemoaned the market last year, statistics show that 2009 was actually not that different from 2008. Though annual house sales still have not returned to their 2007 levels, condo sales seem to have rebounded.

Interestingly, while the median price of Madison Park houses sold in 2009 was down 14% from 2007 levels, the median price of Madison Park condos was actually up 8% from 2007.

The price per square foot for condos, however, was down substantially from 2007 levels ($492 in 2009 versus $562 in 2007). House prices per square foot, on average, fell a dramatic 17% from their 2008 levels (from $535 top $444).

As noted, Madison Park is a very small real estate market and its metrics are therefore significantly impacted by the mix of property sales that occur in a given year. Some of our market statistics, however, are absolutely meaningful. One of the most noteworthy trend lines (and one of the most baneful from the point of view of property sellers) is the lengthening of the sales process that has taken place in Madison Park over the past three years:

Perhaps even more noteworthy (and baneful) is the trend line for discounts that sellers have had to accept from their list prices:

All in all, 2008 and 2009 were a couple of years that many sellers and agents would just as soon forget.

[Thanks to Wendy Skerritt of Windermere Real Estate for her help in providing some of the market data utilized in this report. Top photo: This 3,600 sq. ft. 1924 home located at 1527 39th Avenue E. was renovated in 2005. It is a new listing this month by Janet Schanno and Reilly Schanno of Windermere Real Estate, priced at $1,300,000. Lower photo courtesy of Bob Bennion, Winderemere Real Estate. Map of MLS Area 390 is from SeattleBubble.com.]