It’s Not all Gloom & Doom in the Local Market
To those readers who were chagrined, appalled, or depressed by my report last month that Madison Park house values may have had a greater fall from the peak than the declines experienced by other Seattle neighborhoods, I now offer some more-encouraging words. Simply put, the sky is not falling, though house prices here obviously have. It’s not the end, and the future may well be bright. That, at least, is the opinion of real estate professionals I’ve spoken with.
Of course realtors are paid optimists, as one of them admitted to me. Even so, it’s a fact that Madison Park has a lot of things going for it, and it’s clear that our community enjoys significant advantages that will continue to make the Park very attractive for home buyers as overall market conditions improve.
Let’s take a minute to remember what makes Madison Park special for those of us who live here. We can start with the neighborhood’s easy access to downtown and (at least until the Arboretum 520 ramps are removed) the Eastside. Proximity to our City center and the UW is always going to be a big plus for the Park, especially as transportation gridlock in the Puget Sound region grows worse.
But the ambiance of the neighborhood is probably at the top of most people’s lists of reasons for living in Madison Park. We’re an end-of-the-road community with many of the aspects of a beachfont town: exciting and crowded in the summer, and quieter and slower-paced in the winter. We enjoy immediate access to nature, with the Lake and the green spaces of the Arboretum virtually surrounding us. We have water and mountain views, eagles soaring, beavers building, ducks quacking, Canadian geese—well, you get the picture. Then there’s the Village, our commercial core, with its “quaint shops” (that quote’s from a marketing piece I picked up), sidewalk cafes and excellent restaurants. Ours is a great walking neighborhood too, with a significant expanse of flat streets and not-too-tough slopes--perfect for runners, joggers, and cyclists as well. It’s a place where, as realtor Leslie Dickinson notes, you really don’t need a car since you can walk to just about everything (among the few things I miss here are a book store and a liquor store). And bus transportation to and from the Park is easy.
For an urban community, Madison Park retains a bit of a small-town feel, with a low crime rate, and friendly neighbors that you’re likely to know. People actually acknowledge each other as they pass on the streets; and like any little berg, news is exchanged at community hangouts (Madison Park Hardware, Bert’s, Starbuck’s, Tully’s and Scoop du Jour). People who grow up here and move away often find themselves coming back, while those who come here from elsewhere often decide to stay. It’s one of those rare neighborhoods where siblings, cousins, parents and even grandparents may live within walking distance of each other. Val Ellis, longtime resident and real estate agent, sums up this family-friendly aspect by saying we’re simply a place “where we all look out for each other.”
Last but not least, let’s acknowledge the advantage to the neighborhood of having an outstanding public school located in our midst. Unlike many Seattle schools, McGilvra Elementary is highly regarded (rated ten out of ten, for example, by greatschools.org), and boasts dedicated, highly involved parents and solid community support.
These are among the major reasons that Madison Park will continue to be an attractive option for many home buyers well into the future. But what about the economics?
Because of its many advantages, Madison Park has historically performed well, relative to other Puget Sound neighborhoods. In the early 2000s, The Seattle Times did a survey of 50 or more communities in the region and found that Madison Park had the highest average annual appreciation over a twenty-or-more-year period of all of them (Federal Way, at that time, had the worst). Madison Park has always been a good place to invest; and even though we are down from the highs of 2007, the economics for our neighborhood don’t indicate that we have suddenly become unattractive. Just a bit pricey. But we can hardly complain, can we, about our house values falling while simultaneously bemoaning the fact that no one can afford to buy a house here? Well, maybe we can.
Here’s what the market has been doing over the past couple of months: people are still buying, sales numbers remain steady, and inventory is on the rise. In May, there were ten home sales, followed by nine sales in June. The level of activity is completely in line with the trend of recent months. There are currently eight homes pending sale.
Here’s the breakdown on the sales for single-family residences during the May/June period:
Median Sold-Home Price: $1.1 million (May)/ $1.6 million (June)
Average Number of Days on the Market for Sold Homes: 126 (May)/149 (June)
Average Discount of List Price to Sales Price for Sold Homes: 5.8% (May)/4.7% (June)
Additionally, there were six condo sales during the two months, with a median price of $337,000. The average sq. ft. of the sold units was actually slightly less than 1,000. The houses that sold, on the other hand, were big as well as expensive, averaging over 4,000 sq. ft.
This is what the market looks like today, based on data supplied by Redfin:
New Listings in Last 60 Days: 30
Median Listing Price: $1,950,000
Average Number of Days on Market: 112
Percentage with Price Reductions: 36%
New Listings in Last 60 Days: 9
Median Listing Price: $475,000
Average Number of Days on Market: 198
Percentage with Price Reductions: 52%
What’s striking about these numbers is the significant increase in inventory from the levels of a few months ago. As recently as February there were only 71 listings in Madison Park, while now there are 103, a 45% increase. Real estate agent Chris Falskow, however, thinks this may have more to do with seasonality than with some unexplained market spike.
And it does seem to be true that winter is slow for new listings, historically, while things generally pick up in the spring and summer. It’s also true, however, that there appears to be a much higher level of inventory now than there was prior to the point when the local market peaked in September 2007. Lincoln Thompson of Windermere Real Estate has provided me with some data on inventory levels in Madison Park since June 2005 which show that current levels are high, though not as high as at this time last year. In the pre-peak years the inventory of houses ranged between 15 and 35 in any given month. In the post-peak years the range has been between 35 and 90, with June 2009 being the absolute high point. During 2009 house listings averaged 67. Today, with 73 house listings, we’re running ahead of that pace.
Interestingly, the newest inventory is skewed towards the lower end of the market, the kind of properties which in Madison Park have to pass for “affordable.” The number of under-$1 million houses now stands at 13, almost a fifth of the total listings. In recent months we had as few as three listings at this price level, so it seems pretty evident that many sellers in the lower market have concluded now is the time to make their move.
At a ten-sales-a-month pace we have about a ten-month supply of inventory in the Park right now, condos included. This is well under the horrendous levels we saw during several months last year. It's just another item to add to the list of real estate blessings we should be counting.
[Photo Above: The home of Joel Diamond (Diamond Parking) and his wife, located at 4205 East Highland, is one of four waterfront houses currently on the market in Madison Park. Priced at $7,880,000, the 6,500 sq. ft. house features curved rooms with floor-to-ceiling windows and sits on an outstanding view site. Photo courtesy of David Dykstra, from his book, “Lake Washington 130 Homes”.
Thanks to Wendy Skerritt of Windermere Real Estate for her help in providing sales data used in this report.]