New listings barely keep pace with sales
“Multiple offers are ‘the new normal’ for the housing market around Puget Sound,” proclaims a recent press release from the Northwest Multiple Listing Service. And as if to underscore that point, a recent listing in the Wedgewood neighborhood garnered a virtually unbelievable 33 offers, according to the manager of Windermere Real Estate’s Madison Park Office, Dave Hale, who also notes that a recent sale in another Seattle neighborhood was at a price 27% higher than what the seller had listed the house for.
While the Madison Park market is certainly not that frothy, multiple offers are becoming much more common here, and buyers in Madison Park are now paying “above list” on a select basis for homes in the neighborhood. One of the reasons for this happy situation is the extremely low level of inventory: there were just 36 houses and condos on the market as of May 20. This compared to 33 currently pended properties (those where offers have been accepted but the deal was yet to close). It’s certainly unprecedented in recent memory for the number of pendings to be almost equal to the total homes available in the neighborhood.
“There are just a lot of qualified buyers chasing very few houses,” says Hale. And the quick turn, especially at the lower end of the market, is putting big pressure on inventory. “There are just enough new sellers putting their houses on the market to keep things going,” he tells us, “but the sales side is so hot it’s tough to keep a balanced board (the ratio of new listings to new sales).” In fact in the last 30 days, according to real estate website Redfin, there have been only 13 new listings in Madison Park. During April, meanwhile, there were 16 home sales in the neighborhood, and monthly sales so far this year have averaged 11. With 36 active listings, this rate of home sales equates to an “absorption rate” of just 3.3 months.
The implication of low supply and high demand in the market means upward pressure on prices. The psychology of rising home values affects the decision making of buyers and sellers alike. For some potential sellers who have been waiting in the wings, perhaps now is the time to list. For prospective buyers, perhaps it’s time to take the plunge before interest rates start to rise and prices really begin escalating. Spring and summer are the heavy selling periods, so in the next few months it will become more obvious whether the market is hotting up.
Here’s where things stand today:
Median List Price: $2,775,000
Median Sq. Ft.: 4,490
Median Price per Sq. Ft.: $618
Average Days on Market: 56
Percentage with Price Reductions: 23%
New Listings: 12
Pending Sales: 27
Median List Price: $1,000,000
Median Sq. Ft.: 1,650
Median Price per Sq. Ft.: $641
Average Days on Market: 60
Percentage with Price Reductions: 29%
New Listings: 4
Pending Sales: 6
Just to put these statistics into perspective, note that at this point two years ago there were 80 homes on the market, more than twice as many as today. Meanwhile, pendings stood at 13, less than half as many as today. Average days on market for single family residences during the first quarter of 2011 was 136, almost three times as long as is the case for the current listings. Something’s happening.
Veteran Madison Park real estate agent Val Ellis of Coldwell Banker Bain explains the situation this way: “What was once a buyer’s market is changing, especially on the lower end.” She notes that in the multiple-offer world that some sellers now inhabit, a “correctly priced house” is going to sell quickly and the winning buyer may have had an advantage more powerful than a higher bid. Ellis notes that “cash is king,” meaning that a lower offer where there is no financing involved may induce a seller to take that offer because it will be quicker than waiting for a higher bidder to close a loan. Also, “pre-approved” buyers may have an advantage over bidders who haven’t lined up a financing source at the time of the bid, she says.
Both Hale and Ellis agree that the upper end of the market, those houses listed at well over $1 million, are less likely to have multiple offers than is true of “affordable houses” in Madison Park. Of course the idea of affordability here may mean an $800,000 home. Based on current listings, there are only seven houses or condos listed at $1 million or less. At the same time there are 16 homes listed for $2 million or more. But even in this upper tier, multiple bids are occurring. Moreover, some houses that have languished on the market for many months are now finding buyers.
This is how the market shaped up in the first quarter:
First Quarter Sales 2013
Median Sale Price: $1,342,000
Average Sq. Ft.: 3,685
Average Price per Sq. Ft.: $348
Average Days on Market: 178
Average Discount from List Price: 10.24%%
Median Sale Price: $375,000
Average Sq. Ft.: 1,076
Average Price per Sq. Ft.: $406
Average Days on Market: 133
Average Discount from List Price: 5.4%
Here’s a quick take on what the numbers show: 1) the median sale price for houses in Madison Park ($1,342,000) is now more than three times the median sale price for houses in the Puget Sound region overall ($400,000), 2) there has been a significant decline in days on the market for sold properties (303 days at this point in 2011 versus 178 days now), 3) the median list price for Madison Park houses ($2,755,000) is more than double the median sale price for houses sold in the first quarter ($1,342,000), 4) the number of days on market for homes priced below $1 million was 49 days during the first quarter versus 237 days for homes priced at $1 million or more, and 5) the average discount from original list price for homes listed under $1 million was 1.2% during the first quarter versus 15.7% for homes listed at $1 million or more. Yes, it’s a bifurcated market (it always is).
[Thanks to Laura Halliday of Windermere Real Estate for her help in compiling the sales data. Listing data courtesy of Redfin, using information from the Northwest Multiple Listing Service.]
[Top photo (courtesy of Redfin): 711 McGilvra, one of many Madison Park properties now listed as "pending."; middle photo (courtesy of Redfin): 1425 McGilvra, at $2,200,000, the most expensive house sale in Madison Park during the first quarter; lower photo (courtesy of Redfin): 1515 Parkside Drive E., at $4,600,000, the most expensive new home on the market.]