November Real Estate Report

Madison Park goes posh

At mid-December there were exactly two houses for sale in Madison Park listed at under $1 million. And with the median price of condos having risen to $600,000, affordable is definitely not a good characterization of the current real estate scene here in the Park.

It isn’t that there aren’t still a lot of Madison Park houses that are worth less than $1 million. It’s just that the market has absorbed almost all homes that had been for sale in that price range. Meanwhile, many of the higher-priced residences are still awaiting buyers. “Maybe we’re just out of the relatively inexpensive houses,” says Dave Hale, Managing Broker for Windermere Real Estate in Madison Park. “I think our office’s average listing price is now somewhere in the $2 million range.”

What we had in the early part of 2008 was a market with very little movement. Now what we apparently have is a market where houses at the lower end are being snapped up fairly quickly, but the upper market has yet to fully recover. The average number of days on the market for under $1 million houses during the last three months was 79, while the average for the over $1 million houses was 145, based on listing information from the Northwest Multiple Listing Service (MLS).

Nevertheless, sales were surprisingly brisk last month in the upper market. Of seven houses sold during November in Madison Park (Broadmoor and Washington Park included), five changed hands at over $1 million. Here are the statistics (which include two houses not listed by MLS but recorded as sold by the King County Assessor’s Office):

Houses

Average Sales Price: $1,433,000
Median Sales Price: $1,295,000
Average Sq. Ft.: 2,952
Average Cost per Sq. Ft: $485
Average Days on Market for Listed Homes: 267
Average Discount from Original List Price: 16%

(Note that the discount average is skewed by the famous example, which I discussed in an earlier posting, of the Washington Park home which sold for a 52% discount from its initial asking price. Without that outlier, the average discount accepted by house sellers in November was just 7%.)

[Pictured above is the least expensive house on the market as of December 15, a three-bedroom 1927 stucco home located at 2324 41st Avenue E. Priced at $649,000, it is a listing of Michael Roland of Skyline Properties.]

There were also three condo sales in Madison Park during November:

Condos

Average Sales Price: $593,667
Median Sales Price: $585,000
Average Sq. Ft.: 1,410
Average Cost per Sq. Ft.: $440
Average Days on Market: 223
Average Discount from Original list Price: 6.5%

With ten total residential real estate sales during the month, November continued the trend of increasing market activity that began earlier in the fall. December, though mid-month, also showed surprising strength, with six sales recorded in the first two weeks. In addition, there were nine houses listed as pending sale or contingent. There were, however, only three new house listings and one new condo listing during the holiday season.

The impact of all these sales and the relative lack of new listings means that we enter 2010 with a pretty low level of inventory. Currently, there are only 70 active listings in Madison Park, which is a 10% decline from the October level and a 40% decline from the 116 listings that agents were working with at the beginning of the summer. We end the year with a seven-month absorption rate (10 sales to 70 listings).

So it’s both a rather limited market and an expensive one:

As Windermere’s Dave Hale notes, however, this is all just part of a long-term trend. “For the average person, it’s getting very tough to find a home here,” he says. So-called ‘starter’ homes which once may have cost $800,000 in the Park have declined to something like $650,000, he notes, but there aren’t very many of them available. And with declining inventory and renewed buyer interest, we may even be returning to price appreciation in 2010. “It’s been a tough year,” Hale admits, “but we start fresh in January. So we’ll just have to see what the New Year brings.”

Thanks to Wendy Skerritt of Windermere Realty for her help in providing some of the market data utilized in this report. Additional listing information was obtained from Redfin.

October Real Estate Report

Sellers ‘capitulate’ to the market

During my ramblings around Madison Park last month I happened to cross paths with a well-known local real estate agent who was standing in front of a house—one of his listings—where a “sold” sign had recently been posted. He was watching the movers cart out the last vestiges of the “staged” furniture that had been on display in the home during its many months on the market. My congratulations on the sale were met with a weary sigh. “Well,” the agent said, “the seller lost a bundle and I lost a bundle, but at least we got the thing sold!” Then he added wryly, “It sure was a heck of a deal for the buyer, though.”

The seller had been “testing” the market over a long period by holding out for a higher price. But he ultimately succumbed to market realities, accepting a much reduced sale price. In a phrase borrowed from the stock market, he finally reached his personal capitulation point. And he was not alone. With only one notable exception, every Madison Park seller in October accepted a discount from their originally-hoped-for selling price, 12.5% on average. Even so, it appears that the market is achieving equilibrium and maybe even a bit of momentum.

Eight home sales were recorded in the Park during October, which was down from September’s volume of 11 sales but is level with the average eight-sales-per month pace of the market during the third quarter. There were also a large number of new pendings added during October and the first two weeks of November, bringing the total pendings at mid-month to 23, including three homes sold on a “contingent” basis. This is a huge increase from the 12 pendings outstanding a month earlier.

All but one of the six houses sold during October were in the $1 million or more price range, with a median sale price of $1,272,500 for all the houses. Their median square footage was 3,497, reflecting a median price per square foot of $454. The two condos (each boasting less than 600 sq. ft.) changed hands at about $300,000 each, for a median price per square foot of $524. While the houses sold in only 90 days on average, the condos took over twice as long to sell: 188 days each.

This combination of sales activity and the fact that there were only ten new homes listed for sale during the last month has caused inventory levels to continue their steady decline. The total number of homes on the market in Madison Park is now only 78, which compares favorably to the 116 active listings we had at the beginning of the summer (for those who are number oriented, that’s a 33% decline). Where there was a 17-month absorption rate (total listings divided by the month’s sales) in May, now there’s only 9.75 months of inventory, a pretty substantial improvement.

In addition to the two condos sold in October, there are nine additional condos that are now listed as pending, including two of the three units in this 2007 building at 1611 43rd Avenue E. These condos have been on the market for almost 700 days, according to Redfin; and it's expected that the developer will be taking a bath on the sale of the units, so to speak:

Here are the numbers for the Madison Park market (Broadmoor and Washington Park included) as of mid-November (courtesy of Redfin):

Houses

Listings: 53
Median List Price: $1,995,000
Median Sq. Ft.: 4,372
Median Price per Sq. Ft.: $456
Average Days on Market: 129
Proportion with Price Reductions: 45%

Condos & Townhouses

Listings: 25
Median List Price: $599,950
Median Sq. Ft.: 1,125
Median Price per Sq. Ft.: $533
Average Days on Market: 185
Proportion with Price Reductions: 56%

Interestingly, the proportion of for-sale properties that have been reduced in price is trending upwards, perhaps another sign of the capitulation process at work. As any viewer of cable TV’s Million Dollar Listing (Bravo channel, Mondays at 10:00) will tell you, sellers in even pricier neighborhoods than ours can be pretty unsophisticated about the market and resistant to facing the reality of declining real estate values. Many of them, of course, don’t have to sell and simply withdraw their properties or stick to their over-market price while awaiting a recovery that may or may not occur.

If you don’t have to sell, of course, there are more options available than for those who cannot afford to hold. But clearly it is possible with the right property to properly gauge the market and price accordingly. One Madison Park home, for example, was sold in October after only 9 days on the market—and at a 3% premium to the list price. It could be a fluke, or it might just be a good example of “pricing to the market.”

On the other hand, there is the example of that Washington Park house I mentioned in an earlier posting, the one whose owners had been “chasing the market down.” After almost 500 days on the market, the nicely located Hillside Drive home was finally sold early this month. Though the sale price of $1,350,000 was a 52% reduction from the initial offering price of $2,795,000, this was still a 35% increase in value from what the owners reportedly paid for the property in 1999. Not quite a hard-luck story, but a come down and a capitulation to the market nonetheless.

[Upper photo: a 2007 contemporary home at 1840 41st Avenue E., listed by Kathryn Hinds of Windermere at $1,795,000 (my favorite for-sale property in Madison Park). Thanks to Wendy Skerritt of Windermere Realty for her help in providing some of the market data utilized in this report.]

Defining Madison Park: an essay (part three)

In its more than 100 years as an upscale Madison Park neighborhood, Washington Park has gradually but inexorably grown from a relatively small enclave at the top of the hill to its present-day expansive form, covering most (or, depending on your view, all) of Madison Park south of E. Madison Street. The residential community of Washington Park, as noted earlier in our series, was so-named because of its proximity to the City park of the same name and, presumably, as a way to distinguish the area from the rest of Madison Park, which was considered much less exclusive.

From its inception, Washington Park was known for its large and stately homes. A good example of early homebuilding in the neighborhood is the Walker-Ames Mansion (808 36th Avenue E.), built in 1906, which has served as the home of University of Washington presidents since it was bequeathed to the UW in the early part of the last century. That’s the house pictured above, and here’s how it looks today:

Historically, Washington Park was confined to just a few blocks east of E. Lake Washington Boulevard and directly south of E. Madison Street. Even by mid-century, the area considered to be Washington Park was much less extensive than it is today. Longtime Madison Park resident Lola McKee (Madison Park Hardware) reports that back then everybody knew that Washington Park extended to 39th Avenue E. and went no further. All of the blocks to the east were just plain old Madison Park, she says.

This distinction made a lot of sense geographically, since Madison Park (the City park, that is) was to the east and Washington Park (the City park) was to the west. So how does it happen that today the neighborhood of Washington Park extends all the way to the shores of Lake Washington and perhaps (depending on where you draw the line) even touches Madison Park, the City park that gives our community its name? Isn’t that just a bit perverse?

As it happens, the redefinition of Washington Park is almost certainly an extreme case of neighborhood creep, which over the years was encouraged and abetted by home builders, homeowners, and real estate agents anxious to capture the cachet of a Washington Park address when selling residences located further and further from that neighborhood’s original starting point.

Let me explain neighborhood creep by pointing to what may well be a present-day example of the phenomenon: a successful attempt to market a new residential project, Madison Lofts, as being in Madison Park when the properties in question clearly sit outside of what has traditionally been considered our community. The Madison Lofts is that new brick condo building in Madison Valley located in the 2900 block on the north side of E. Madison Street. Even the City of Seattle (which, as we’ve noted, is somewhat confused about our southern border) recognizes that on the west side Madison Park begins at E. Lake Washington Boulevard. That, at least, is where they erected the “Madison Park/Washington Park Welcome You” sign.

Undoubtedly because Madison Park is considered to be a more exclusive neighborhood than Madison Valley, the developer and its real estate agent decided to market the condos as though they are located in Madison Park, which after all is only two blocks away. The Northwest Multiple Listing Service accepted this designation and listed the property as a Madison Park address. Perhaps this wouldn’t have happened if Madison Lofts had been built on a site with a previously existing Madison Valley residence on it, but the site was undeveloped. So for this new residential address, realtors bought into the developer’s concept that Madison Lofts is in Madison Park. And as a result, anyone buying a condo there presumably believes he or she lives in Madison Park. If other new residential buildings were to be built in the area between 29th and E. Lake Washington Boulevard, presumably they could and would be marketed in the same manner. And if that happened, there would be an additional block or two of people who believe they live in Madison Park, effectively extending Madison Park into Madison Valley.

Neighborhood creep is clearly a gradual process, and it probably only works successfully when there’s an affinity between the type of construction in the new area and that of the original neighborhood. In other words, as the area to the east of Washington Park became gentrified, it was perhaps logical and appropriate to consider it part of Washington Park. But the extension of Washington Park eastward probably wouldn’t have been successful if the area had continued to be dominated by bungalows, cottages, and beach houses, as the area “down the hill” from 39th Avenue E. was during much of the 20th Century.

While it’s pretty evident that most people in the community accept the idea that Washington Park now extends all the way to the Lake, a question still remains: Does Washington Park encompass all of Madison Park south of E. Madison Street?

When I moved to Madison Park I accepted the view of a friend who already lived here that to be south of Madison is to be in Washington Park. But I gradually became aware of the fact that not everyone subscribes to this notion. In researching this story I asked local realtors what they thought. Here’s the answer from one well-informed professional: “Washington Park begins at the Reed Estate. I can’t remember what street that is, but I can tell you one thing for sure—Washington Park Tower is not located in Washington Park.”

He’s right, assuming you accept the current view of real estate officialdom, which appears to be consistent with historical usage. The Northwest Multiple Listing Service (MLS) puts the area north of E. Garfield Street (the northern border of the Reed Estate) solidly in Madison Park. The Washington Park neighborhood begins south of Garfield. Just to confirm this position, I checked on the four residences currently listed for sale in the five blocks south of Madison that are supposedly not considered Washington Park. In each case (one of which is a condo unit in the Washington Park Tower) the MLS shows the neighborhood as “Madison Park” and not “Washington Park.” I also talked to a couple of longtime residents of these blocks who agreed that Washington Park starts somewhere to the south, one telling me ‘I grew up right here and didn’t think I lived in Washington Park then--and I certainly don’t think I live in it now.’

So there you have it: the Washington Park Tower (shown in the photo above) does not sit in the Washington Park neighborhood. Here’s how the dividing line looks on an aerial view, courtesy of Bing (click to enlarge):

Now that we’ve disposed of that issue, what’s left define about Madison Park? Well, several things. For one, what do we call that group of houses that sit to the east of E. Lake Washington Boulevard and to the north of E. Madison Street (behind the Shell Station and Arboretum Court)? They are the closest to Washington Park Arboretum of any houses located in Madison Park, so by all rights they ought to be part of the Washington Park neighborhood, shouldn’t they? Not so. By historic convention (and the supreme authority of the MLS), the four-block area squeezed between Broadmoor and the Arboretum is actually a stub section of “Madison Park.” Here’s the aerial view, again courtesy of Bing (click to enlarge):

Interestingly, this area is disputed by the Greater Madison Valley Community Council (GMVCC), which believes it is part of the Valley. In fact, the Council’s expansive view of their community also takes in a section of Washington Park running from 33rd to 36th Avenue E., south of Madison (this is perhaps a bit of a surprise to residents in that area). This map shows the border between the Valley and the Park, according to the “Greater” view:

So Madison Park residents on the four blocks to the north of Madison--as well as those on another six blocks to the south--are in the happy position of being represented by two community councils at the same time; which, according to City planner Steve Sheppard, shouldn’t necessarily be considered a bad thing. Madison Valley or Madison Park? Let the residents decide!

At this point we’re almost done with our overview, but there are still two additional items left to claim our attention: 1) What about Canterbury? And 2) Where, if at all, does Denny-Blaine fit into the picture?

Canterbury, for those not in the know, is an area of Madison Park located next to Broadmoor‘s east side, in the area north of E. Newton Street. It was built as a developed community in the late 1950s and consists of about 100 mostly ranch-style homes popular during that era:

Like the rest of Madison Park, Canterbury has been undergoing a lot of redevelopment in recent years; but even before that, it was considered the tonier area of Madison Park north of Madison Street. The MLS does not consider Canterbury to be a separate neighborhood on a par with Broadmoor or Washington Park, so homes in the area are listed for sale simply as in the “Madison Park” neighborhood. Instead, “Canterbury” is listed as the plat area (or “project”), in the same manner as a house in Washington Park might have “John J. McGilvra Second Addition” as a plat designation on its MLS listing.

Nevertheless, Canterbury is clearly recognized by the Madison Park Community Council (MPCC) in its bylaws as a separate enclave on a par with Washington Park and Broadmoor, so why should we be any less generous in our evaluation? Canterbury is obviously a defined Madison Park neighborhood, another enclave.

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And Denny-Blaine?:

Like Canterbury, the MPCC recognizes the neighborhood as being within the Council’s area of representation. But there’s a difference. Yes, it’s true that the Denny-Blaine has no community council; and as we saw in part two of this series, it has been disowned by the Madrona community. Additionally, the City’s Department of Economic Development includes Denny-Blaine in the coverage area for the Madison Park Business District. So Denny-Blaine is part of Madison Park, right?

Not really. The residents there apparently don’t think of themselves as being in either Madison Park or Madrona. And according to current MPCC President Ken Myrabo, the reason Denny-Blaine was added to the MPCC coverage area is not because it is considered part of Madison Park but simply to give its residents representation by a community council. From that perspective, Denny-Blaine might at most be considered part of “Greater Madison Park,” but someone really ought to poll the residents there to see if they agree. The final verdict: Denny-Blaine is not Madison Park.

So that about does it. We’ve now explored the entire geography of Madison Park, and we’ve put to rest the misapprehensions anyone could possibly have on the subject of where Madison Park begins and ends. We now know what enclaves exist within the Park and what the boundaries are of each of these subunits. We’ve completed our definitive review and have emerged from our investigation--5,718 words later--weary but informed. Who could possibly now question our logical and reasoned conclusions?

Well lots of people, probably. Definitions, as we have seen, have been surprisingly dynamic throughout the course of Madison Park history. And, in fact, there’s no real authority on these matters. The City--as we’ve seen--is befuddled, the community councils disagree, and the Park’s residents have their own conflicting opinions. In my months of probing the definition of Madison Park I’ve talked to a lot of people, many of whom had strong opinions. But one well-known realtor was dismissive of the idea that there is any reason for confusion about neighborhood definitions. As she told me (and here I am paraphrasing), ‘It doesn’t make any difference what the City says, the community council says, or even what the homeowner says about what neighborhood their house is in. It’s the real estate professionals who decide these things!”

Well, that settles that!

[Historic photo of the Walker-Ames house courtesy of the University of Washington Libraries.]

Parks department gets serious

Late this morning several Seattle Parks and Recreation Department trucks pulled up to Park and their crews unloaded new, higher, stronger, chain-link fence panels to replace the trampled wire-mesh fencing that has done little to protect the Park's plantings down the slope along 43rd Avenue E. The ineffectiveness of the previous fencing, not to mention the hazard to pedestrians it presented in its mangled form, finally got the City's attention.

This new fencing, according to the parks department workers, is still a temporary expedient. It is expected to be in place only until the plantings (primarily ferns in that location) can get established. The condition of the old fence was the subject of one of our Pet Peeves postings last month. It seems that there were more than a few park visitors who could just not bring themselves to walk a half a block and use the stairs.

Though it will be a bit difficult either to jump or climb over the new fencing, the ingeniousness of the lazy should never be underestimated. As he linked the fence panels together, one of the installers admitted to me that it wouldn't surprise him to find after the weekend that the whole line of fencing had been pushed over. "It happens."

Revolutionary Battle scene in Madison Park?

It was a grand idea, and if carried to fruition would have created quite a spectacle in the Park this Saturday: a large-scale battle re-enactment as part of American History Day. The will was there; but, alas, the money was not. So instead of watching a staged battle scene in the Park this weekend, event goers will be treated to a “living history encampment.” Not quite the same as soldiers skirmishing, but fun for history buffs nonetheless.

Organizers, including the United Daughters of the Confederacy’s local chapter, promise there will be knowledgeable re-enactors in period uniforms from both the Civil and Revolutionary Wars, colorful displays, and lively demonstrations. It’s all timed to coincide with the Alaska Yukon Exposition Centennial celebrations currently underway in Seattle. American History Day participants will include the 2nd Connecticut Colonial Reenactors, the Daughters of the American Revolution, the Philippine Scouts of 1899, the Washington State Sons of the American Revolution, and the Snoqualmie Nation.

While some of the re-enactments will occur in the Park, much of the day’s activity will be across the street at Pioneer Hall (1644 43rd Avenue E.). The Hall will be open from 9am until 6pm, and the public is definitely invited (a “small donation” is requested).
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[Photo: 5th Connecticut Regiment reenactors shown in 2006 Battle of Yorktown reenactment by Jeanette Dussell.]

August Real Estate Report

A tale of two real estate markets

You’ve probably noticed the recent spate of reports that the Seattle real estate market is finally heating up. A recent front page story in the Seattle Times, for example, was headlined “Home sales hot, especially in upscale areas.” Following up on a recent report by the Northwest Multiple Listing Service (MLS), the Times concluded that there was a “summer surge” in August not only in the overall Puget Sound residential market, but in such tonier neighborhoods as West Bellevue/Medina, where the August single-family home sales increase year over year was 169%, and Queen Anne/Magnolia, for which the MLS reported a 74% increase.

Nevertheless, it’s a fact that MLS numbers for both King County and Seattle only showed only a 5% increase in sales for August 2009 over August 2008. Even worse, our general area (Capitol Hill/Madison Park/Central District) showed an actual 8% decline in year-over-year sales. So taken on the whole, August house sales certainly don’t justify all the hype about a newly sizzling real estate environment in the region.

What’s getting everyone’s hopes up, however, is the fact that pending sales (listed houses that are still somewhere in the process of closing) were up sharply in August: 24% in Seattle, and 45% for the Capitol Hill/Madison Park/Central District area. Sounds good, but what about Madison Park?

First, let’s look at what actually happened here in August. Our five August home sales represented a 50% decline from the 10 sales recorded in the same month last year, according to the MLS; and this rate of sales is significantly below the level of prior years:
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The year-to-date numbers for residential sales in Madison Park also show a clear cut downward trend:

Nevertheless, August sales were pretty much in line with what monthly sales have been since the spring and, at worst, probably represent a continuing slow acceleration of the market from the levels of the past winter. Here’s a quick overview, based on data from Redfin, of what the Madison Park real estate market looks like as summer ends (as always, I include Broadmoor and Washington Park in the Madison Park statistics):


Single Family Homes

Listings: 68
Median List Price: $1,950,000
Median Price of Houses Sold in August (4): $510,000
Average Sales Price Discount from List Price: 9%
Months of Inventory (Listings/Sales): 17

Condos and Townhouses

Listings: 29
Median List Price: $500,000
Price of Condos and Townhouses Sold in August (1): $585,000
Sales Price Discount from List Price: 10%
Months of Inventory (Listings/Sales): 29

The MLS reports that there were 15 pendings in Madison Park as of mid-September. If translated into actual sales in future months, these pendings might signal an upswing. But will they close? In past years it was assumed that if a home was pending it would almost certainly close, probably within 30 days. Real estate agents tell me that now, however, pendings are far from certain to close quickly; and some deals ultimately may fall through. Among the obstacles to closing are continuing problems with financing (especially at the jumbo-mortgage level) and new rules concerning appraisals.

But before we discuss the ways a sale might fall through, let’s look at what differentiates our real estate market here in Madison Park from what’s going on in the Puget Sound region as a whole. Why is the market still relatively stagnant here while it’s supposedly “hot” elsewhere? And are all of those other “upscale” neighborhoods really taking off while Madison Park is being left by the wayside?

Don’t believe it, says Dave Hale, Windermere Real Estate’s Managing Broker in Madison Park. Market conditions here in the Park are mirrored in every upper-end market in the Seattle area, he notes. Houses selling above $1 million dollars are always more difficult to move, since their “audience” consists of a pretty select group of buyers. What he sees happening right now is something of a disconnect between the “hot” market for low-to-moderately priced houses and the more rarified market for million-dollar-plus homes. The lower-priced market is benefiting from a lot of factors, including government aid for first-time home buyers, increased availability of conventional-mortgage financing, and plenty of interest on the part of many sellers to do deals (including banks that have taken back houses through foreclosure). At the high end of the market, conditions are still not as favorable, though Hale says he sees definite signs of improvement.

Looking at Madison Park, the division between the two kinds of real estate markets is pretty clear. Of 68 houses listed for sale here, only eight houses (12% of the total) are priced under $1 million. Yet it was houses in the under $1 million category that sold last month, according to the MLS. Four houses were closed with a median price of about $500,000, and one condo closed at $585,000. Only one property changed hands at over $1 million, and that was a $2.6 million house located in the Reed Estate on Lake Washington.

This is precisely the kind of market bifurcation that’s happening in other upper-end markets. In Medina/West Bellevue, for example, the median price of a house sold last month was a relatively high $915,000. But this actually represents a 45% decline in value from the $1,600,000 median price of homes sold in August 2008. Does this mean that home owners in Media/West Bellevue have lost almost half the value of their homes in just one year? Hardly. The numbers simply show that a disproportionate number of relatively lower-priced homes are selling in that market while the more expensive houses still sit awaiting buyers. The median price of a Medina listing this month is $2,495,000, according to Redfin. Just as in Madison Park, the MLS reports only five home sales in Medina during August. The median sales price of these homes was $1,375,000, just 55% of the median price of the houses still on the market in Medina.

So what are the positive signs for our market? Hale sees several. He reports that his office, with its 45 agents, has been averaging five sales a month in the over $1 million category for the last five months. In just the first half of September, however, Windermere Madison Park already had six pendings at that price level. Indeed, looking just at Madison Park, all of the pendings are in the over $1 million category. The median price (again, that’s the price halfway between the highest and the lowest listing) for the currently pending single-family residences in the Park is $1,595,000, while the median price for the two pending condos is $1,420,000.

Another hopeful sign that Hale points to is an apparent easing of the jumbo-loan market, both in terms of pricing and availability. Trevor Bennett, a mortgage loan officer with Bank of America, agrees with this assessment. “We’re starting to see a lot more activity in the upper market,” he says, noting that the confidence level of upper-income buyers seems to be a lot higher than it has been. Helping the situation, he reports, is the fact that underwriting guidelines for non-conforming loans are a lot better today than they have been. Another positive factor he cites is that the rate differential between the jumbo (non-conforming) loan market and the conventional market has converged in recent months. Historically, the rates for jumbo loans had been only 0.2% higher than the rates for conventional loans, according to MortgageMag.com. But for well over a year the difference between the two rates had been as much as 3%. Last week that differential declined to about 1.1%, on average, nationally. Jumbo rates currently range from 5.75% to 7% for jumbo loans versus 4.85% for conventional mortgages in the Seattle area.

Generally, conventional mortgages have been limited to loan amounts of $417,000 or less. Recently, however, there has also been a “high-balance” conforming loan category for mortgages of up to $567,500 in the Puget Sound area. But financing above these levels had been difficult since the real estate market collapse in the summer of 2007. That’s not quite as true today. Bennett says that B of A now has a jumbo loan program that will finance 80% of a house’s value up to a loan amount of $1.5 million. Above that level loans are still available, but the amount of equity required might be increased to 25 or 30 percent, he says.

Priscilla Crutcher, Vice President and Manager at Golf Savings Bank, says “home buyers are being scared into thinking that there are no jumbo loans available, but there actually are some really aggressive deals out there for people with liquid assets.” She notes that there are mortgage providers in the market now who are willing to take a home buyer’s portfolio into consideration as part of the underwriting process. She says her goal is to not require a buyer to liquidate his investment portfolio in a down market just to increase the equity portion of a home purchase. Crutcher, who works prmarily with jumbo mortgage loans, reports she is currently very busy dong creative loan structuring of this kind.

Julia Eaton, a senior loan originator at Landover Mortgage’s Lake Union office, agrees that lending in the upper market is now easier than it has been. She notes that while credit standards are still “pretty tight,” she can lend up to $5 million to people with high credit scores (750 or better) and a significant level of liquid assets. “This is encouraging,” she notes, since up until recently there just hasn’t been a mortgage product in the market at that loan level. She, too, has noticed a recent change in the upper market. “I feel like the borrower with a portfolio that took a hit is now coming back into the housing market,” she says. “I really believe we’ve already hit the bottom.”

Subtle changes in the market are also being noticed by real estate agents who cater to upper-end buyers. Windermere agent Jeff Stanley says he thinks “potential buyers are becoming convinced that the bottom is either behind us or we’re in it.” Either way, he believes, many people are now thinking it’s time to make the move: “Previously there was a lot of low-balling going on out there. People were reading the papers with stories about a buyers’ market.” It’s not that way now, he says. But even though he believes “the market has definitely gotten a lot hotter,” he acknowledges that it’s got a long way to go to equal what’s now happening down market, where he recently witnessed multiple-offer situations on several houses priced under $700,000.

While there are still plenty of danger signs on the road, most real estate people I talked to have the palpable sense that the worst is behind us. “Historically,” says Windermere’s Hale, “our market has been very stable and has shown decent appreciation. Then we got into a situation where we were seeing 10 or even 15 percent appreciation each year.” The market simply couldn’t be sustained at that level, he adds. While he acknowledges that we’re still in a buyers’ market, he believes that simply means there’s still an opportunity to get in before a turnaround is obvious to everyone. “The market is going to come back,” he says “it always does.”

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Thanks to Wendy Skerritt of Windermere and to the NWMLS for their assistance in providing data utilized in this report.

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[Photo: This $1,575,000 Craftsman-style house located at 1624 39th Avenue E. is a listing of Windermere agent Darcy Breene. The 3,560 sq. ft. house is one of the less expensive listings in Madison Park.]

Waterborne rodent invasion coming soon to a beach near you

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They’re ugly; they’re voracious; they’re prolific—and they’re here. Large buck-toothed semi-aquatic rodents foraging in the waters of Lake Washington and sometimes venturing onto the shores of Madison Park. They’re a non-native species that could threaten the entire Lake Washington ecosystem if not controlled. And right now, well, let’s just say that they’re certainly not under control.

Unless you live on the Lake or spend a lot of time at the beach or road-end parks you may be unaware of these big rat-like interlopers. They’re called Nutria (species name: Myocastor coypus), and they are much bigger than so-called Norway rats, though smaller than beavers. They already infest Portage Bay, and they are becoming an increasing problem on Lake Washington as well. There are regular sightings of Nutria in Laurelhurst, for example, where eradication efforts earlier this year netted several animals.

Nutria are natives of South America, so what are they doing here? Well, eating up the habitat used by other species; burrowing into and eroding embankments along waterways; and reproducing like crazy. As to why they are here, the answer lies in a failed experiment in raising the critters for their fur. Although Nutria were first brought to the United States in the 1890’s, they were not introduced into the Pacific Northwest until the 1930’s. During and right after the Second World War, when it became evident that raising Nutria for their pelts was no longer economically viable, some animals were probably released into the wild rather than destroyed. Other animals may have escaped captivity even earlier. Nutria were seen in Washington until the 1970’s or early 1980’s and then apparently died out. For some unknown reason (possibly emigration from Oregon), they reappeared in Lake Union and Lake Washington in 2005. And their populations have been growing ever since.

In some parts of the country, Nutria have devastated their adopted homes. On Chesapeake Bay, for example, the rodents’ habit of digging out and feeding on the roots of marsh grasses has caused substantial wetland losses. Millions of dollars are being spent annually on eradication efforts there. As for the Northwest, it’s the Portland area, Skagit County and Portage Bay that seem to have the most clearly documented cases of significant Nutria incursions.

At first sight a Nutria may not seem to be particularly menacing or obnoxious. Its front end is much less rat-like than its back end. Here’s a detailed description so you’ll know one when you see one: an adult Nutria has yellow or reddish brown fur; a dense grey undercoat highlighted with long coarse hairs; yellow or orange teeth; short legs with webbed back feet; and a long rat tail that constitutes about one third of its total length. Nutria weigh between 12 and 15 pounds and are about two feet long. If you do see one on land (as I did a few months ago at a neighborhood road end) don’t mess with it. Those big teeth can be dangerous.

Although the animals are generally nocturnal, there have been recent daytime sightings of Nutria in the waters off Madison Park, on road-end beaches in the area, and along the shoreline of the Seattle Tennis Club. According to Diana Forman of the Portage Bay Floating Homes Association (FHA), Nutria have also been reported along the UofW shoreline from Conibear Shellhouse to the fish hatchery and in many Lake Washington locations, including Magnuson Park, Seward Park, Juanita Bay, Yarrow Point, and Bothell.

So what’s to be done? The most effective and most environmentally correct method is trapping. Earlier this year 165 Nutria were trapped in our area under a program funded by the National Oceanic and Atmospheric Administration (NOAA). Of these, 78% were taken from UW property, and the rest were removed from Portage Bay, Montlake-area wetlands, and Laurelhurst, according to the FHA. Houseboat owners on Portage Bay, along with the Seattle Yacht Club, the Queen City Yacht Club and shoreline property owners, have funded a contract with the USDA Wildlife Services to continue with an eradication program in Portage Bay, an effort which may extend into 2010. As of the end of July, the total number of trapped Nutria had risen to 209, as reported in the Portage Bay FHA’s newsletter.

I spoke with Ken Gruver, Assistant State Director of Wildlife Services, about the Nutria menace in our region. He said “there are already enough Nutria in Lake Washington that they are changing the habitat.” If uncontrolled, they will outcompete other species such as beavers and muskrats, damage or destroy the wetland environments of birds and fish, and undermine property along the lakeshore. Not a good prospect for the Lake.

In addition to trapping, he said, there are also toxicants that can be used on the animals without killing other species. He noted that while Lake Washington is experiencing a marked increase in the number of animals, there is still time to correct the problem before the Nutria invasion gets totally out of hand. He noted that Portland has experienced serious damage to its waterways through the rapid growth of the Nutria population there, which has not yet been controlled. On the other hand, the Nutria problem appears to have been resolved in Skagit County, he said, as the result of eradication efforts there. With regard to our Lake, Gruver said that while the problem may be solvable now, in five years it may be too late.

When will we know that we have a real problem in Madison Park? “When property owners along the shoreline first start to see erosion of their property,” said Gruver. That’s what happened in Laurelhust, he noted. “As soon as people saw the habitat change they began asking what can be done.” There’s nothing like seeing your property drop into the Lake to get your attention.

Yes, it could happen here.

There’s a lot of useful information available on the FHA website about Nutria and their impact on Lake Washington, including resources and details on how to report Nutria sightings. KING-TV has a 2007 news story on Lake Washington Nutria (available on video here), as well as a 2008 update on the Nutria invasion of Laurelhurst and the UW (available here). Finally, there are some great professional Nutria photos available here.

Top photo courtesy of Naturecrusaders. Bottom photo by Milos Andera.

Pet peeves redux

I’ve made the argument before on this blog that we’ve got it pretty darn good down here in our little end-of-the-road community. And as evidence for this contention, I’ve cited the kinds of stories that my neighbors and other blog readers think I ought to write about. While we may be plenty upset about the big issues (war in Iraq, the state of our investment portfolios, and the Taylor Swift/Kanye West contretemps, for example), what really seems to rile us the most is discourtesy and rule breaking—especially when perpetrated by outsiders.

Here’s a second edition of the petty irritants Madison Parkers seem to be dealing with this summer (in other words, more of our pet peeves):

People who come to the Park but are too lazy or too imbecilic to walk a few feet to get to the stairs. The target here is those bums who decide they just can’t walk that far and therefore head up or down the embankment, trampling both the vegetation and the protective fencing in the process. One of my neighbors was witness to an accident a few weeks ago where an elderly woman walking along 43rd tripped on the wire fencing and was nearly impaled on one of the metal fence posts. He himself had earlier tripped in the same area while making a morning run. The Parks Department has repeatedly repaired the fences, but they still seem to end up at least partially on the sidewalk after every heavily-attended weekend at the Park.

People who have the misguided belief that everyone in the Park gets up at 6:30 in the morning (or, more likely, have never given it a moment’s thought). It’s those early-morning runners, walkers and bikers who travel in tandem and talk loudly to others in their pod that I’m referring to here. This is especially an issue in the summer when windows may be open and street noises are even more intrusive. To these miscreants we ask “Does the whole neighborhood really need to hear about what your podiatrist told you during your last visit?” Also at fault: walking cell-phone users who apparently believe that the person on the other end won’t hear them unless they shout the entire conversation.

People who put their dog poop in other people’s trashcans. Yes, I know this is much better behavior than the other thing. But believe it or not, some Madison Park residents (especially those who don’t own dogs) object to dog poop in their receptacles when the cans are located close to open windows or decks --and it’s 100 degrees outside. I know, this attitude does seem strange.

People who come down to use the Park from other neighborhoods (or, heaven forbid, even from outside of Seattle) and then actually park their cars on our streets. Some of us can’t even park in front of our own homes as a result! In some cases we can’t even get out of our own driveways because of illegally parked cars. And where are the City’s parking enforcement people at 6:30 on a Sunday afternoon? (P.S. Can’t these Park users go to the beach somewhere else, such as Alki?)

People who allow their dogs to come out and bark at every person, animal and delivery truck that goes by their house. Okay, to be honest, no one suggested this was a story I should cover. But they were just being polite, since my dogs are notorious barkers. In my defense, I limit the barking to between the hours between 8:00 am and 10:00 pm (11:00 pm on weekends). I’ll try to do better.

[Photo of the Park fencing on 43rd Avenue E. near E. Howe Street by David Hutchins.]

July Real Estate Report

What happened to the trend?

Madison Park home sellers looking for a sign that the tide has turned in the local real estate market may have to wait a little longer for their good news. The upward trend in sales volume that characterized the last quarter does not seem to have kept its momentum into the summer.

During the second quarter of the year six homes were sold on average each month, a significant increase in volume from the two sales a month recorded at the bottom of the market last winter. In July, however, only four houses were reported sold in Madison Park, according to the King County Assessor’s Office, and no houses were recorded as sold during the first half of August. These initial results for summer home sales break the trend line, making it harder to argue that a recovery is underway:

Just to put these numbers into perspective, there were 14 homes sold in Madison Park (including Broadmoor and Washington Park) during July and the first half of August last year, and there were 16 sales in 2007. There’s a hopeful sign in the fact that through mid-August there were seven houses listed as “pending” sale by the Northwest Multiple Listing Service (MLS). But the four closings to date this summer certainly define a market that’s still drifting in the doldrums.

Even though recent sales figures are not positive, in other respects things are at least not getting worse. For example, the level of for-sale inventory has been holding steady at about 100 homes for several months. Based on current pendings, that represents about a 14-month absorption rate. Not robust, but much better than the 30-month rate or higher recorded in the first quarter.

Values, meanwhile, also seem to be holding up. Zillow.com estimates that the median home in Madison Park has declined in value by only 4.7% in the past year. Of the 99 Seattle neighborhoods the website surveys, only four have a better record than Madison Park of retaining their home values in this down market. Some, such as East Queen Anne, have seen declines of 20% or more, in Zillow’s estimation.

Our real estate market continues to be characterized by relatively big and expensive homes, with the bigger and more expensive of these dominating the list of properties for sale:

The median home currently on the market in Madison Park (condos and townhouses included) has a list price that is 74% higher than Zillow’s estimate of the median value of all area homes. Of the 76 houses for sale, over 40% of them boast at least 4,000 sq. ft. Many of these properties have been on the market for a year or more (one Broadmoor house has the record at 460+ days).

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Here’s a snapshot of the current listings in Madison Park (Washington Park and Broadmoor included), based on data from Redfin.com:

Houses

Listings: 76
Median Asking Price: $1,995,000
Median Square Footage: 3,870
Median Price per Square Foot: $516
Average Days on Market: 83
Percentage with Price Reductions: 45%
Average List-Price Reduction: 8.2%

Condos & Townhouses

Listings: 28
Median Asking Price: $525,000
Median Square Footage: 1,152
Median Price per Square Foot: $456
Average Days on Market: 95
Percentage with Price Reductions: 45%
Average List-Price Reduction: 7.2%

The most expensive home currently on the market is a $12.8 million waterfront mansion located in the Reed Estate (1500 42nd Ave. E.). The least expensive is a 680 sq. ft. condo, listed at $279,000.

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The four-bedroom, 3,300 sq. ft. home pictured above is located across the street from McGilvra School at 1620 38th Ave. E. and is a listing of Coldwell Banker Bain agent Laurie Way. At $1,300,000, the house is actually one of the more modestly priced properties currently on the market here in the Park.

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Chasing the Market Down

A continuing phenomenon of the current real estate market is the disconnect between the expectations of sellers and perceptions of buyers over home values. Almost half of those with homes on the market have had to reduce their list price at least once to try to catch the market as it has headed downward. And while the average price reduction so far in this cycle has only been 7-8%, many sellers with unrealistic expectations have taken a beating while trying to “chase the market down.” The most extreme example of this is a five-bedroom Washington Park view home (610 Hillside Drive E.) which went on the market over a year ago at $2,795,000 and, after numerous price reductions, is currently listed at $1,549,000--a 45% come down. But have the owners finally caught the market? Until someone makes an offer, it’s hard to tell.

Windermere Associate Broker Lincoln Thompson believes that one of the biggest problems with the market right now is that with so few sales occurring, especially in the upper market, there just isn’t enough data available to properly determine values. Owners, agents, buyers and appraisers are all without information, and this is causing a lot of discomfort for everyone. Agent Jonathan Himschoot of Windermere agrees, saying “the hard thing is finding the right price. How do you pull comps when there’s so little to compare to?”

One agent told me that she thinks many sellers who want to put their houses on the market perceive that they are taking an actual loss if they list their houses at a price consistent with the current market. But for most people in Madison Park who’ve owned their homes for any appreciable period, the only thing they will be giving up is part of an unrealized gain, a different thing entirely. But try telling that to someone who set the value of his own house on the basis of what his neighbor got when selling his house two years ago.

Several other agents that I spoke with told me that many buyers are just as unrealistic as the sellers, expecting big discounts from the list prices. The fact is, however, that on average Madison Park home sellers are currently getting 97% of their list price at sale. Small comfort, perhaps, to those who have had their houses on the market for months without any offers.

Next month we’ll take a look at two other factors having a significant impact on house sales in Madison Park: the difficulty in finding mortgage financing, and the downside of the new rules governing appraisals.

[Thanks to Windermere agent Wendy Skerritt for her help in providing market data utilized in this report. Please note that the Average Monthly Homes Sales chart above, which shows different historical data from the numbers used in the June real estate report, has been adjusted to exclude sales that are not the result of properties being placed on the public market (such as changes of ownership within a family as part of an estate settlement, etc.).]

Mystery of the missing pavers solved

Anyone who purchased a granite paver in support of the Friends of Madison Park but has yet to see the engraved paver placed in the Park will be happy to learn that installation should happen within the next week to ten days. That’s the word, at least, from FMP volunteer Matt Bridge.

In my role as investigative journalist (“Ask Bryan”) I was called last week by someone who wondered if there might be something questionable going on with the non-profit Friends of the Park. She said that she and others had paid their money months ago but had yet to see any results. Where are their pavers?

For those of you who haven’t been paying attention, the Park recently underwent a significant upgrade as a result of the efforts of FMP, which raised about $1 million for park improvements. This was matched by around $115,000 from the City. The upgrade included reconfiguration of the play areas, creation of a sitting area, the addition of playground equipment and benches, and new landscaping.

Bridge told me that he hopes everyone will be patient as the finishing touches on the Park are completed. These include installation of several engraved pavers, repair of some of the playground equipment, and placement of some additional park benches. He said that what began as an FMP group of 12 parents has now dwindled to just three parent volunteers, “and we’re working hard.”

The engraved pavers became a fund-raising method for FMP rather late in the game, according to Bridge. Donors willing to contribute $500 were entitled to placement of a 6” by 8” paver engraved with their name or the name of their business. Those donating $800 would get an 8” by 12” paver. Bridge told me that as he remembered it, the initial deadline for donors to get in on the opportunity was probably sometime around June 1.

At any rate, some donors didn’t submit their forms until much later, he said. (In their defense, the form does not list a deadline). These later donors are the ones who have yet to see their names displayed in the Park. To save on costs, installation was delayed until all of the pavers of this later group were engraved. According to Bridge engraving is now complete and the pavers are sitting securely in the warehouse of the Seattle Parks & Recreation Department awaiting placement. Bridge says he understands the frustration of those who are still waiting to see the results of their contribution, but their wait is almost over. “We realize we’re late, and we do apologize.”

Friends of Madison Park (which is a section 501.c.3 nonprofit) will continue to operate as long as there are funds in the FMP account, Bridge says. Right now there’s between $25,000 and $30,000 available, he estimates, which will be used principally for maintenance of the playground equipment.

When the Friends of Madison Park announced plans to make improvements to the Park, some longtime residents were wary if not downright hostile. They liked the Park the way it was. But I’ve been by the Park a lot since it was dramatically transformed, and my sense is that the users are plenty happy with what FMP has accomplished there.

Madison Park makes top-20 ranking

I’m not sure that this can be considered a particularly noteworthy honor, but Madison Park is ranked Number 20 on Seattle Magazine’s recent list of Seattle’s 60 best neighborhoods. “Madison Park enclave Broadmoor,” however, makes the list at Number 8, just behind Madison Valley, at Number 7. The list is highly subjective, and there appears to be no obvious method to the magazine’s madness in creating its rankings. There are multiple paragraphs detailing the source of information for the various categories used in creating the list, but there is no explanation of how these categories were weighted.

Given the magazine’s stated criteria concerning housing affordability as the “key to continued dynamic growth in our area,” it is interesting that Broadmoor (with its supposed $2,009,000 median house price) ranked so high, while Madison Park as a whole (with its stated $792,500 median house price) was so far down the list. I guess it’s just that Broadmoor is eminently affordable for the wealthy, while the rest of the Park is considered pricey for the less wealthy.

Or maybe the magazine places high value in its belief that the commutes to downtown Seattle and to Redmond (two of the ranking criteria) are significantly shorter for people in Broadmoor than for the rest of Madison Park. (Are are we really five minutes further away from Redmond; and if so, do very many of us care?) These are the only two categories in which Broadmoor ranked higher, unless you want to count the fact that $2+ million gets you more bedrooms and bathrooms per median house than $792,500 does. Crimes per resident, park acreage, and percentage of fourth graders passing the WASL were the other criteria for the rankings. Oh, and for some reason, the appreciation (or not) of median house values from 2007-2008 was an important element. (Madison Valley was down 1%, Broadmoor was up 1% and Madison Park was up 4%).

Personally, I suspect that Seattle Magazine’s staff voted on their favorite neighborhoods in order to create the list. The magazine certainly does not seem to be particularly aware of Madison Park. In the “Neighborhoods” section of the magazine’s website, for example, the “Madison Park/Madrona” webpage devotes 200 words to describing the pleasures of Madrona, but there’s not a single word about Madison Park. This didn’t help Madrona in the listings, however, as it was ranked Number 33. Leschi, on the other hand, barely made the list at Number 60, just below Judkins Park! Really?

Frankly, I think the list is screwy. However, for those who are interested but unwilling to actually buy the August issue of the magazine, here’s the top ten list: Queen Anne, View Ridge, Alki/Admiral, Phinney Ridge, Magnolia, Delridge, Madison Valley, Broadmoor, Capitol Hill, and Roosevelt. The Seattle and suburban Seattle neighborhood rankings are not available on the seattlemag.com website.

[Sour-Grapes Disclosure: My impression of Seattle Magazine’s neighborhood rankings is in no way influenced by the fact that a story on best neighborhood blogs in the same issue of the magazine did not list Madison Park Blogger as among “the cream of the crop.” Actually, this blog was not mentioned in any context, but neither was the Central District News, which certainly deserved comment.]

Who are we and what are we doing here?

In advance of the 2010 U.S. Census, now only a few months away, I thought it might be kind of fun to take a look at what the last census said about us. (If you don’t think it would be kind of fun, stop reading now and see the note below). I’m guessing that where we were at the time of the last census is pretty much where we are today, since Madison Park is not a particularly dynamic community. But I could be wrong; so it will be interesting to make a comparison of these statistics to the new numbers when they come out next year.

Madison Park (including Broadmoor and Washington Park) comprises King County’s Census Tract 63, which in 2000 was populated by 5,006 residents living in 2,822 separate housing units (houses, condos or apartments). We were and clearly still are a pretty homogenous group of people: 2% Asian, 1% Hispanic, 1% African-American, 1% multi-race, and the rest (94%) Caucasian.

And we’re a pretty old bunch, as well, given that the median age for the community is 45. The distribution around the median would make for a pretty nice bell curve if I hadn’t decided to present it as a horizontal bar chart:

Consistent with an older population is the fact that women significantly outnumber men in Madison Park:

This difference becomes more pronounced at the upper end of the age range (the ratio of 65-and-older women to men, for example, is 1.75 to 1.00).

A much higher percentage of us live in rental units than I would have supposed:

Meanwhile, very few Madison Park households include children 18 years of age or younger, unless things have changed dramatically since the last census:

This is consistent with the fact that most of us either live alone or have only one other person in our household:

Although the City has generated some updated census estimates for Seattle as a whole, I have been unable to discover any new estimates for our neighborhood in particular. So until some better information comes along, I think we have to conclude that Madison Park is still the same aging, white beach community that we’ve been for some time. The details may have changed somewhat around the edges, but basically, that’s who we are.

Oh, and with regard to the “What are we doing here?” in the headline above, that’s what this blog is about.

[Note below: For those of you who get bored with statistics, here’s a story from The Seattle Weekly about the nude beach in Madrona (actually Denny Blaine), which you might find more interesting: No Swimsuit Required.]

Music in the Park returns this week

The 2009 version of the popular Music in the Park program gets underway this Thursday and continues on each successive Thursday through the end of August. Sponsored by the Madison Park Business Association, this year's series presents quite a range of musical styles, beginning with early American popular music and ending with a bit of everything.

On deck for this Thursday is the 24-piece Cornucopia Concert Band (shown above), which performs American music of the 1890-1930 period, including ragtime, roaring 20's, and early jazz. Based in Seattle, The Cornucopians, are celebrating their 20th anniversary this year. Their program is likely to include a bandstand march and some dance music, possibly even a polka or a waltz.

On August 13, the the sounds of traditional Cuban son music will fill the Park, as the SuperSones play the acoustic dance music that was a Cuban countryside precursor to the better-known Salsa. "Son is a unique blend of Spanish guitars and harmony, Afro-Cuban percussion and swing, call-and-response singing, and trumpet improvisation," and SuperSones has been playing this vibrant, happy music since the group was formed in 2001.

A piano-sax duo, Two Scoops, performs a program of blues and boogie in the Park the following week, August 20. The combo features Seattle pianist/singer/composer Eric "Two Scoops" Moore, who has performed with legendary blues musicians and with his own combo at blues festivals all over the United States and overseas. A critic calls his singing "soulful," his keyboard playing "ferocious," and his performances "roof raising."

Rounding out the concert series, on August 27, is country/folk/pop/jazz singer and songwriter, Jonathan Kingham, who apparently does it all. With four albums to his credit, Kingham's music has been used in the soundtracks to films and TV shows. He places himself within the same musical sphere as Norah Jones.

The Music in the Park concerts, which are held in the grassy area near the tennis courts of Madison Park, begin at 6:30 pm. For those interested in checking out these acts in advance, click on the hyperlinks for the music samples available on each of the groups' websites.

June Real Estate Report

Home sales up, pending sales strong

There appears to be solid ground for optimism that the worst may be over for the real estate market in Madison Park. Home sales accelerated significantly in June, with the King County Assessor reporting ten homes sold in Madison Park during the month, an increase of 67% over the rather dismal six sales recorded in May. For the first five months of 2009 there was an average of only seven sales per month, so June’s sales figure represents a dramatic improvement.

But is this an aberration or do June’s results appear to be part of a new positive trend? Looking at average monthly home sales by quarter for the past 15 months certainly makes it appear that the market has bottomed out and may be on the rebound (click graph to enlarge):

Fueling an optimistic outlook is the fact that as of last week there were already nine Madison Park homes listed by the Northwest Multiple Listing Service as somewhere in the closing process (known in the industry as “pended” or “pending”). And the outlook appears even better if you are super inclusive and count the Madison Lofts (2914 E. Madison Street) as being within Madison Park and not over the line in Madison Valley. Six Madison Lofts condo units are pending sale, which if counted would raise the total pendings to 15. I am told that historically, 90% of pendings normally close.

Most of the real estate agents I talked to are cautiously optimistic, but few of them are willing to be quoted on the record that they believe the tide has turned. One of the big issues facing buyers is obtaining financing. This is especially true at the $1 million sales price and above, according to Ron Sparks, Marketing Vice President at Coldwell Banker Bain. He notes that banks appear to be reluctant to lend, and when they do lend the standards for approval are substantially higher than they were at the height of the market. He says he has personally seen at lot of arbitrary decision making by banks, and some buyers have been forced to find their financing from non-traditional lenders or even to go out of state to find a willing bank. “People who are highly qualified and should be allowed to buy are being kept from doing so,” he says. “It’s stalling the recovery, frankly.”

Nevertheless, deals are evidently getting done. Based on June’s sales, Madison Park’s absorption rate (the number of months it will take to sell the available inventory of houses on the market) has declined from 17 months in May to 12 months now. There are currently 119 properties on the market in Madison Park (including Broadmoor and Washington Park). And as was true last month, the homes for sale are substantially larger and more expensive, in general, than the typical Madison Park home.

Here’s a graphic showing the progression of home values, starting with Zillow’s estimate $1,010,000 for the median value of all homes in Madison Park (single family and otherwise) and concluding with the $1,606,000 median listing price for the homes currently on the market (click graph to enlarge):

Zillow estimates that the median Madison Park home has 2,049 sq. ft. (this figure includes condos and townhouses). Believe it or not, seventy percent of the houses listed for sale in the Park boast 3,000 sq. ft. or more, and almost all of them are located in Broadmoor or Washington Park.

Here’s a snapshot of the current listings in the Park (based on data from Redfin):

Houses

Listings: 88
Median Asking Price: $1,990,000
Median Square Footage: 3,680
Median Price per Square Foot: $541
Average Days on Market: 102
Percentage with Price Reductions: 39%

Condos

Listings: 26
Median Asking Price: $525,000
Median Square Footage: 1,131
Median Price per Square Foot: $464
Average Days on Market: 122
Percentage with Price Reductions: 50%

Townhouses

Listings: 5
Median Asking Price: $449,950
Median Square Footage: 1,200
Median Price per Square Foot: $375
Average Days on Market: 50
Percentage with Price Reductions: 40%

(As we cautioned last month, take with a grain of salt the figures for days on market and the percentage with price reductions. Many of these units have been on the market in the past, were withdrawn and later put back on the market. They thus get treated as new listings.)

Shown below is a 1939 five-bedroom view house in Washington Park (610 Hillside Drive E.) which represents a prototypical house currently on the market in the Madison Park area. Its $1,695,000 asking price is just slightly higher than the $1,606,000 median price of all homes currently listed for sale, including condos and townhouses. This listing of Kathryn Hinds, Windermere Real Estate, was recently reduced by $200,000. Its original list price, over a year ago, was $2,795,000.

The most expensive home sale last month was of a 4,020 sq. ft. 1939 four-bedroom house in Broadmoor (2110 Waverly Way. E.) which sold for $2,675,000. As a side note, the $3 million rambler located in the Reed Estate, which I mentioned on this blog last month as the “gracious and elegant” other home for sale there (“A glimpse beyond the gates”) is one of the nine homes on the list of currently pending sales.

It appears there have been no foreclosures in our market, although I have learned anecdotally that there may be one short sale in the works. Short sales are situations where a home owner sells at a price less than the amount owing on the mortgage. This kind of transaction obviously involves approval by the lender and takes much more time to close. I understand that a speculative developer with an unsold condo in our market may now be having that kind of discussion with his lender.

To put the Madison Park market into perspective, Coldwell Banker Bain did some absorption-rate comparisons for me based on pending sales. The numbers seem to show that the overall Seattle market is definitely heating up at a faster rate than ours:

Seattle Listings: 1,902
Seattle Pendings: 801
Absorption Rate: 2.37 (Months of For-Sale Inventory)

Madison Park Listings: 119
Madison Park Pendings: 9
Absorption Rate: 13.22 (Months of For-Sale Inventory)

If the pending Madison Lofts sales are included, Madison Park’s absorption rate is 7.93. It’s also worth noting that within Madison Park there is a huge disparity between Broadmoor’s 31 months of inventory and the inventory level for the rest of the market. The case of Broadmoor provides an easy way to understand the concept of absorption rate: there are 31 houses for sale, with only one sale pending. At that rate it will take 31 months to clear existing inventory, an absorption rate of 31.

Putting the Seattle and Madison Park numbers into context, CBBain’s Sparks notes that at the height of the market the Seattle absorption rate was on the order of 2.0. For 2008, he estimates the rate had risen to 5.0. So while Madison Park has certainly not fully recovered, at a current rate of 2.37 the Seattle market has actually made a remarkable comeback. The Eastside’s current 3.54 absorption rate is also a pretty good indicator of a market turn, he believes.

Kathryn Lister, also of CBBain, believes that for the market to return to normal at the upper end, some things still have to change. “There is definitely a disconnect between people’s desire to make a purchase and their ability to get it done,” she said. There is also buyer nervousness based on market perceptions, she says, and some pretty serious problems in getting appraisals done and accepted by lenders. In the past she notes, most upper-market sales involved bridge loans, which are just not available in the market today. Speculative buying, which once drove a part of the market, is certainly no longer accepted. Many sophisticated buyers are taking a wait-and-see approach, still sitting on the sidelines, she believes.

Sparks sums the situation up this way: “The sellers had been driving the market up artificially, and now the buyers are driving it down artificially.” Ann Henderson, a realtor with Windermere, adds that there’s another factor also at work: seller misperception of where the market is. “I think that about 50% of sellers just don’t get it,” she says. “They think their house is still worth what is was, or is even appreciating!” So it’s not only a problem with buyers, it’s a problem with sellers—and, of course, mortgage bankers.

The bottom line of this report is that Madison Park’s level of housing inventory remains high; and while the situation does seem to be improving, it will probably take a few more months for us to be able to say whether what now appears to be an upward trajectory is not just a momentary summer blip.

[The photo at the top of the page shows a new listing this week of 1443 McGilvra Boulevard E., an extensively remodeled three-bedroom 1927 cottage, a listing of Windermere’s Mary Snyder. Priced at $1,250,000, it is one of the more inexpensive houses currently on the market in Madison Park.]

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A note on methodology:

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The real estate market analyzed in this report covers Sub Areas 6 (Broadmoor) and 7 (Madison Park and Washington Park) of Area 14, as designated by the Office of the King County Assessor. This is essentially the geographic territory defined in the description at right of the “Madison Park Blogger Coverage Area.” Differences between the median figures used above and those of Zillow, as shown on its site, result from the combining of the two Sub Areas, which are separately analyzed by Zillow but are not broken out for purposes of this report. Broadmoor represents 18% of the total residential units within Madison Park and is weighted accordingly. Also note that the term “homes” generally refers to single-family houses, condos and townhouses, whereas “houses” refers only to single-family houses.