Monday, September 26, 2011
Musings on the real estate scene
Madison Park: not hot, not cold
Though we’re still a month away from our third-quarter report on Madison Park real estate activity, it’s already clear that the summer is ending on a pretty solid note. There have been many more sales per month than in earlier quarters, and there’s a large number of properties pending sale. This bodes well for a potentially strong close to the year, at least in terms of sales. It may also be the case that the average price-per-square-foot achieved by sellers is now trending up rather than down. So while it’s too early to be breaking out the champagne, these markers, combined with a decline in market inventory, do give sellers reason for hope.
Nevertheless, Seattle, like most U.S. metropolitan areas, remains a “buyer’s market” in the opinion of national real estate research consultants such as Altos Research. SeattleBubble.com. meanwhile, recently looked at Northwest Multiple Listing Service (MLS) data, comparing the 2011 numbers to the historic “high” and “low” points for the last decade in King County. That analysis showed that sales in the County this year are at about 60% of the decade’s best year, while pending sales are at about 70% of the best year. In terms of closed sales, pending sales and inventory levels, the King County market is still below the averages for the Century’s first decade. The conclusion of SeattleBubble.com: “Sure, we’ve moved out of the gutter, but we’ve got a long way to go before we get back to anything resembling a ‘normal’ market.”
Madison Park is probably no exception. Real estate website Redfin did some interesting statistical research on Seattle neighborhoods earlier this summer and found that Magnolia, Ballard, Northeast Seattle, Queen Anne, and Northwest Seattle were the hottest neighborhoods, at least in July. The relative “hotness” of each neighborhood was rated, among other things, on the year-over-year price change for sold properties (up 8.4% for Magnolia and 2.7% for Queen Anne), and the number of months of inventory (2.0 months for Ballard, 2.3 for Northwest Seattle). How did Madison Park compare? The neighborhood showed a year-over-year change in the average sales price per-square-foot of 2.5%. At that point we had an 8.2 month supply of inventory (total listings divided by total sales for the month). While we may not be hot, neither are we cold. Redfin gave that designation to the Lake Union, Rainier Valley, and Lake City neighborhoods.
A final bit of encouraging news was provided by Zillow, which at the end of July reported that its Home Value Index for our neighborhood (excluding Broadmoor) was up 5.5% year over year.
‘A buyer for every house’
I sometimes attend “brokers’ opens”, which are held in this area on Thursdays. These open houses are designed to showcase new listings to real estate professionals so they’ll know what’s available in the market. The listing agent (or a surrogate) usually sits in the house for a couple of hours around lunchtime and answers questions put by the other agents and the occasional passerby who might show up. Part of the listing agent’s job is to shill for the seller: talking up all the pluses of the property while downplaying (or completely overlooking) any minuses. A good agent will be able to make a potential negative into a positive (for example, talking about super-tight spaces as “warm and cozy” or positioning a house’s lack of yard as a great situation for those tired of landscape maintenance).
I was visiting with an agent during an open house recently, while she did her thing. As various agents wandered through the place, she would occasionally call out to them: “Did you notice the lovely inlaid wood floors in the master bedroom? It’s all original!” Having walked through the house earlier, I asked her about the weird floor plan. She admitted it was pretty bad. And that was hardly the only problem with the house (lack of street appeal and a musty interior smell were among the other downsides). So, I wondered, how are you going to unload this thing? She had a ready answer: “There’s a buyer for every house, Bryan!”
That piece of insight certainly seems to hold true, even if the seller may have to wait a long time for that buyer to finally come along. Right now, according the MLS, there are 17 homes in Madison Park that have been on the market for 200 days or more. And seven of these have been on the market for more than a year (one for over 500 days). These properties range in price from $265,000 (for a Canterbury Shores condo) to $5,400,000 (for a Broadmoor mansion at an “undisclosed” address), so it’s not all about the “price point.” While a lot of the problem may be that theses homes are priced above their actual market value, it may instead be that the “right buyer” has simply not come along to claim them. That’s what the sellers certainly hope.
Every once in a while a house will sell after a long spell on the market, even without a steep lowering of the initial offering price. When that happens, it’s a wonderful vindication for the seller (and perhaps for the agent as well, unless the agent had been arguing unsuccessfully for price reductions as the home sat unsold). There was a “right buyer” in those unusual cases, just as there was a “right buyer” in the more typical long-term situations where the buyers struck deals only after the sellers made significant price concessions. But in the end, most homes one way or another do end up with the “right buyer.”
There are many examples in Madison Park of houses that ultimately found a buyer when it seemed that a sale was unlikely, or at least a sale at the initial offering price. One such house in my neck of the woods is a 7,000 sq. ft. speculative house built in 2005. At the time it was put on the market it was the subject of a laudatory article in the Madison Park Times in which the builders stated that they were trying to recreate a little bit of their native Russia right here in the heart of Madison Park. Much to the consternation of the neighbors, however, they had torn down a classic house in order to build a gigantic home that featured a pastiche of different window, column, and railing styles. When the builders said that the house was reminiscent of St. Petersburg, one neighborhood wag suggested its style was more like “St. Petersburg as interpreted by Las Vagas.” At a neighborhood party about the time the house came onto the market, the host invited guests to compete for who could come up with the best word to describe this new neighborhood structure (I’ve forgotten what the winning word was, but my vote in absentia—since I was not invited—was “egregious”). There was just no way this house was going to sell to anyone. So we thought.
Just a few months later, however, the house sold at close to the asking price of $4,400,000. The buyer was an insurance executive from California. At that time and in that place, at least, the “buyer for every house” adage certainly proved true. But maybe not today. That same house was just withdrawn from the market after having been first listed for re-sale in May 2009, at $4,700,000. The asking price was reduced to $4,250,000 in early 2010 and to $3,600,000 in 2011. Still no buyer. But someday...
The ‘art’ of selling houses
One of the chief jobs of the listing agent is to entice prospective buyers and their agents to take a look at their listed property. One method of drumming up interest is through the artful wording used in the description of the home. That’s the paragraph used that’s in ads, on the agent’s and other real estate websites, and given to the MLS. I often get a chuckle out of these little essays. My favorite real-estate-agent adjective is the word charmer, a very much over-hyped term that’s sometimes appropriate but is often used to mean, at best, “fixer-upper.”
Of all the real estate property descriptions I’ve read over the years, however, this recent entry for a probable teardown in Madison Park certainly is the most incomprehensibly overwrought:
“A Lake Washington treasure ~ tucked away on a lakefront peninsula of history in the heart of Seattle. The diary of this quiet, no-through avenue in Madison Park/Washington Park community is a journal of significant citizens and signature properties, drawn together by attitudes: superb positions, civic pride, world interests. 60’ of gentle shores; 15,500 sf street to beach. The lore of an Elizabeth Ayer legacy before retiring. Eclectic fire of sunsets against towers of glass; jagged Mtn. peaks.”
Must have worked. The property is rumored to be going pending.