Let’s take a look at the big picture of supply (residential listings on the market at month-end) and demand (closed home sales). Having an idea of what is going on with supply and demand can be an excellent way to measure the general “strength” or “hotness” of a real estate market, and often will provide a hint of the future direction of home price changes.
Here’s a brief market summary for single-family sales, based on the lates data I have available:
Active Listings: up 2.2% YOY
Closed Sales: down 43.0% YOY
Median Price: $395,000 – down 9.2% YOY
Our first chart displays the raw supply and demand data back through 2005:
You can see that this year and last had extremely high levels of inventory compared to Seattle’s boom years of 2005 and 2006. November inventory is just barely over last year’s levels. The big hurt in Seattle is in closed sales, which were absolutely anemic throughout 2008, and dropped big in November.
Here’s a look at the year-over-year (YOY) change in the previous chart. YOY is the best way to interpret the direction of the market, due to the highly cyclical nature of real estate.
Inventory has basically flattened out on a year-over-year basis, while closed sales seem to be continually testing new lows.
Other markets around the country have seen a strong uptick in sales after prices start to drop considerably, and I expect the same thing will happen here in Seattle. However, the most recent data shows prices only slightly (~10%) off the peak, which is clearly not yet low enough to start moving buyers into the market.