When talk turns to real estate in the United States, the general trend is one of ongoing despair.
The Case-Shiller index continues to tell a dreary tale and gloom and doom is abounds.
Which is why we raised an eyebrow at this headline from the Seattle Post Intelligencer: "Seattle Real Estate Roaring." (hat tip DM)
The PI reports that real estate sales in Seattle are the most dramatic in at least five years.
In fact home sales have been on the rise for months, but the PI says previous gains in homes prices had been minor.
May’s real estate statistics, however, have solidified the up trend and pushed it into overdrive.
In fact home sales have been on the rise for months, but the PI says previous gains in homes prices had been minor.
May’s real estate statistics, however, have solidified the up trend and pushed it into overdrive.
Prices of houses sold in Seattle increased 10.5 percent year-over-year. The lacking inventory of Seattle homes for sale in the most popular neighborhoods has created bidding wars and sellers are becoming more confident in pricing their homes higher in recent months. Condo prices gained 7.4 percent, with the same dearth of inventory creating a serious shortage as buyers struggle find available condos in South Lake Union, Downtown, and Capitol Hill.
Total sales of houses in Seattle climbed 22.3 percent in May, as compared to the same month in 2011. Sales of condos increased 29.6 percent, a whopping increase of nearly 1/3 more sales, while at the same time inventory of available Seattle real estate was down 37 percent.
The picture is similar on the Eastside with slightly muted numbers, as we’re seeing 1-2 percent gains in home prices, but a 19 percent increase in the number of total Eastside home sales. Based on Seattle’s trend, the Eastside may follow suit shortly and be in for a significant bump.
Overall, King County house prices saw a gain of around 5 percent and condo prices saw a drop of about 2 percent, with Seattle’s large gains offsetting some price drops in outlying areas of the county. Total sales in King County increased 24 percent for houses, and 25 percent for condos.
The PI says Seattle housing inventory numbers very low right now. And while there will certainly be more short sales and foreclosures coming to the market in the future, the PI believes the current market for traditional resale and new construction home is strong and hasn’t looked this good since 2006.
Which the paper notes feels like a lifetime ago.
Is it an anomaly... or is the market turning around for the Emerald City?
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I'm from Seattle and live in Vancouver. The economy and housing is doing better there, and Seattle's GDP has been on the rise since 2007. Seattle is lucky to have large employers like Boeing, Microsoft, Amazon, Google, along with major healthcare. The tech scene is doing awesome. There is also a huge commercial RE surplus that is resulting in lower costs for businesses which equals more jobs.
ReplyDeleteThat said, there is a problem in that most people aren't good with numbers and stats. While Seattle's condo prices might have jumped 10% and inventory has decreased 37%, compared to what? Condo prices in Seattle fell 50%. So a condo that was $150k a year ago is now only $165k, when it used to be $300k at the "peak". These are actual numbers; this is what happened to a friend of mine when he bought and sold. The "lack" of inventory is also a reflection of properties being rented and shadow inventory. So the reality is there is still ton's of inventory there, just not brought online. When you see rental prices increase, then you'll know you've reached an inflection point.
I put peak in quotes above because peak numbers, like they were in Seattle, and how they are in the Lower Mainland, are artificial. They are created by lax lending standards, greed, etc. They don't represent reality. So while condos might have tanked 50% in Seattle, they were probably overpriced.... well about 50% give or take. Ecosystems normally overcorrect and then reach a stasis. You even see this number issue with leading economists. They compare numbers to the peak. Compare employment to the peak. The peak wasn't real. Mitt Romney can say that he will get unemployment down to 4%. It will never be 4% again in the US.
So the lesson here is you have to be careful when you look at numbers. A 10% increase year over year in prices is better then a decrease, but cancel the parade. A 25% increase in sales in King Country from nothing is still close to nothing.
Very well said JR. In Greater Seattle there is also a lot of distressed inventory as a proportion on the market - either short sales or foreclosures. My personal opinion is somewhere 25-40% of inventory is this category, further complicating sales. Years into the downturn, sellers do seem to have more realistic sense of what they can get for the property but it is a fraction of what it was. Personally, I am going through the process of buying now in the east side and everything is heavily discounted from a years back point of view. Occasionally one runs into someone who can't or won't drop the price and I've personally seen places that have on market for 2 years +. All because of an owner pricing sometimes ever so slightly about market - slowly dropping price in little bits but always trailing the true market price.
ReplyDeleteCanAmerican
HAM surge in the USA:
ReplyDeletehttp://www.ft.com/cms/s/0/0f1fab44-b49a-11e1-bb68-00144feabdc0.html#axzz1xhA8Nxv2
Seattle, with a comparable setting to Vancouver and yet boasting an actual economy, seems like a much better bargain for foreign money.