The story of the local real estate market, in line with what’s happening nationally, is primarily about how low inventory levels and apparently increasing demand may be forcing prices upward. The Seattle Times, for example, recently touted the fact that home prices in King County are continuing to rise. Quoting May information from the Northwest Multiple Listing Service (MLS), the paper reported on its front page earlier this month that the median price of a single-family home in King County was up almost 5% year over year while Seattle’s median price had increased by over 10%.
West Seattle, Leschi, Mount Baker, Queen Anne and Magnolia were among the Seattle neighborhoods singled out as having had the biggest increases in median prices, but Madison Park was not mentioned. The MLS, however, does not break out sales information for this neighborhood, lumping Madison Park together with Capitol Hill, Madrona, Leschi and Montlake. So it’s not clear how the MLS information might have been mined by the Times to indicate that Leschi is hot right now. For the wider MLS region that includes both Madison Park and Leschi, the May data are actually a bit mixed. While the median price of homes rose from $394,500 to $447,500, a 13.4% increase, those numbers include condo sales. Just looking at single-family homes, as the Times did, the median price for our part of town actually fell from $635,000 in May 2011 to $562,500 in May 2012. That was the third-largest decline of any King County area tracked by the MLS.
Statistics have their limitations, of course. We’ve often noted that small changes in the composition of Madison Park sales can have a big month-over-month impact on the numbers. This is true, but to a lesser extent, for the MLS real estate region we are part of and for the year-over-year numbers as well. For the Capitol Hill/Madison Park/Montlake/Madrona/Leschi neighborhoods as a whole, listings were down almost 33% year over year, while sales were up 30%. This data may represent a good sign for the future, since increasing demand should impact median prices in the long run, assuming inventory does not ramp up even faster.
Hot on the heels of the Times’ coverage, the Wall Street Journal weighed in with a front-page story of its own last week. In it, Seattle’s real estate market was specifically called out. The article, “Housing Comeback Remains Uneven,” noted that a recent analysis of national real estate trends by Zillow concluded, “Homes in sought-after neighborhoods, including those near transportation corridors and with top-notch public schools, are finding buyers.” Other neighborhoods not so blessed, however, are “languishing.” A map of Seattle zip codes shows the 98112 area as being in the very top tier of Puget Sound communities, with a 5% January-through-April increase in home values.
According to Zillow’s chief economist, Stan Humphries, as quoted by the Journal, more than a third of Seattle’s zip codes showed increases during the period, a sharp increase from last year, when only 3% had rising values. Redfin’s chief executive Glenn Kelman, meanwhile, is quoted by the paper as saying that Seattle’s market is characterized by a “flight to quality.” While home prices are up in neighborhoods such as Capitol Hill, median prices are still on the decline in “Seattle’s far-flung exurbs and emerging urban communities,” says the paper. The article’s accompanying colored map shows a lot of red and pink throughout the Puget Sound region (marking areas of continuing decline) while bits of green (spotlighting areas with home-price increases) are centered primarily in the core of Seattle. Madison Park and our immediately surrounding neighborhoods are all some shade of green, with the exception only of the Laurelhust and University District area just north of the ship canal.
Whether there really is a flight to quality in Seattle should become more evident as the year progresses. Madison Park has apparently always bounced back very well from downturns in the past, and if good schools and close-in location are now the most important variables, this neighborhood and the surrounding communities should continue to stand in good stead. Anecdotally, local real estate agents report that there have recently been multiple-offer situations for several Madison Park properties, including for a couple of houses in the over-$1 million price range. It’s been a long time since we’ve heard of that kind of action.
Even so, it may be premature to accept at face value the subject line of a recent email we received from Redfin: “The Bottom? That Was So Last Year.”
Brian, you of all people should know that median price statistics are meaningless except as an indicator of sales mix. They tell you nothing about house price changes.
ReplyDeleteThat being said, I think there is little doubt that some of Seattle's finest neighborhoods, notably Madison Park, will be the first to rebound in a flight to quality, and in fact are rebounding, for all the reasons you mention.