Seattle May 2010 Market Report: Prices Increase, But Demand Weakens

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Howdy Redfinnians!

We just released our monthly report on Seattle-area home prices, based on the industry’s most comprehensive database of broker- and owner-listed homes, as well as public records and our own brokerage activity. Here’s the scoop: the median price of a single-family home increased 2.5% from April to May, and 2.5% year over year as well, which we mostly attribute to the expiring federal tax credit.

Other metrics were weak: sales volume for King County was mixed from April to May and competition among home-buyers declined, even though the number of houses for sale dropped 5.4%. As a result, we think the market will soften over the course of the year, especially in fall and winter as interest rates rise.

Inventory Declines 5.4% Across King County

From April to May, the number of houses for sale declined significantly across all the major cities in King County, particularly in more affordable markets to the north and south of Seattle:

City Compared to April 2010 Compared to May 2009
Seattle -7.3% -2.7%
Bellevue -0.9% -15.9%
Renton -11.8% -7.0%
Kent -11.0% -2.7%
Federal Way -9.5% -12.0%
Kirkland -2.2% -21.4%
Issaquah -2.8% -14.5%
Sammamish -1.2% -13.9%
Auburn -13.4% -6.4%
Shoreline -6.6% +3.8%

# of King County Houses for Sale in May 2010, By City

“We’ve seen a lull in tour activity and offers since the tax credit expired, with buyers telling us the current inventory has become stale,” said Allie Howard, who runs Redfin’s business in Capitol Hill and along Lake Washington. “But when high-quality new listings come on the market we still see a frenzy over them. A charming turn-key home in the heart of Mt. Baker is likely going to have multiple offers the first week it’s on the market.”

Within Seattle, the biggest drops in inventory were in Ravenna and Capitol Hill:

Neighborhood Compared to April 2010 Compared to May 2009
Ballard -11.8% -5.4%
Beacon Hill -7.6% +19.8%
Capitol Hill -18.7% -19.7%
Greenwood -6.9% +9.5%
Lake City -10.5% 7.2%
Magnolia -2.4% +2.5%
Maple Leaf -18.6% -2.0%
Northgate -3.1% -16.2%
Queen Anne -12.2% -29.9%
Rainier Valley -5.4% +4.2%
Ravenna -26.3% -31.7%
West Seattle -8.0% -2.8%

# of Seattle Houses for Sale in May 2010, By Neighborhood

Based on our own listing activity in the past two weeks, Redfin expects inventory to increase in June.

King County Sales Volume Data Mixed

Compared to other markets across the country that Redfin monitors, Seattle’s sales growth was weak; in absolute terms, sales for the county declined 1.3% from April to May. But since virtually all closings occur on a weekday, Redfin adjusts for the fact that May had fewer weekdays than April; by this math, the number of sales occurring per weekday in King County was 3.4% higher in April than May. Year over year, sales were 33.4% higher.

The biggest monthly gains occurred in more-expensive cities like Seattle, Bellevue and Issaquah:

City Compared to April 2010 Compared to April 2010
Adjusted for # Weekdays
Compared to May 2009
Seattle +10.9% +16.2% +35.4%
Bellevue +30.1% +36.3% +45.8%
Renton -9.8% -5.5% +60.9%
Kent 0.0% +4.8% +19.3%
Federal Way -6.1% -1.6% +10.7%
Kirkland +3.3% +8.3% +47.6%
Issaquah +38.6% +45.2% +84.8%
Sammamish -25.6% -22.1% +56.8%
Auburn +11.9% +17.2% +56.7%
Shoreline -24.1% -20.5% +2.3%

# of King County Houses That Sold in May 2010, By City

Within Seattle, the month-over-month increase was consistent across 10 of 12 neighborhoods:

Neighborhood Compared to April 2010 Compared to April 2010 Adjusted for # Weekdays Compared to May 2009
Ballard -5.0% -0.5% +26.7%
Beacon Hill -32.1% -28.9% -29.6%
Capitol Hill 0.0% +4.8% +40.0%
Greenwood +140.0% +151.4% +20.0%
Lake City -16.0% -12.0% +5.0%
Magnolia +27.8% +33.9% +64.3%
Maple Leaf +111.1% +121.2% +18.8%
Northgate +13.0% +18.4% +13.0%
Queen Anne +80.0% +88.6% +68.8%
Rainier Valley +12.8% +18.1% +43.2%
Ravenna +33.3% +39.7% +53.8%
West Seattle +15.2% +20.6% +52.0%

# of Seattle Houses That Sold in May 2010, By Neighborhood

Sales actually declined year over year in Beacon Hill, which is still recovering from a 2008 – 2009 boom.

King County Median Prices Up 2.5%

Driven at least in part by the federal tax credit, prices of houses closed in May increased from the previous month by 2.5% in King County; the annual increase was also 2.5%. The big monthly gains were all on the Eastside:

City Change in Median Price Since April 2010 Change in Median Price Since May 2009 Median $/Square Foot
Seattle +4.3% +3.9% $289
Bellevue +11.0% +16.8% $241
Renton -14.0% -11.3% $157
Kent -5.7% -3.2% $141
Federal Way -3.3% -0.1% $138
Kirkland +28.6% -6.5% $241
Issaquah +18.0% +8.9% $212
Sammamish -5.2% -2.3% $221
Auburn +3.8% -8.4% $139
Shoreline +2.1% +0.9% $213

Change in Median Price of King County Houses That Sold in May, By City

Within Seattle, the data were mixed:

Neighborhood Change in Median Price Since April 2010 Change in Median Price Since May 2009 Median $/Square Foot
Ballard +3.0% -6.9% $291
Beacon Hill +3.3% 0.0% $238
Capitol Hill -26.6% +12.9% $369
Greenwood -14.5% -12.0% $341
Lake City -13.1% -9.9% $238
Magnolia +10.7% +22.1% $331
Maple Leaf +3.6% -9.4% $291
Northgate +4.1% -2.6% $257
Queen Anne -3.8% +0.2% $326
Rainier Valley +1.9% +1.7% $221
Ravenna -1.4% +24.9% $285
West Seattle +5.0% +4.0% $269

Change in Median Price of Seattle Houses That Sold in May, By Neighborhood

Sellers are responding to the softening of demand more quickly than they have in the past. “The listing clients I’m working with seem to be more realistic about market prices and a little more willing to cut their losses than they were six months ago,” said Febe Cude, Redfin agent for Laurelhurst, Wedgwood and Ravenna. In a few markets over the past few months, activity has been too light and fluky to prepare a comparative market analysis, so pricing has been tricky – particularly for condos.

Redfin agent Trevor Smith, who leads a team covering Ballard, Green Lake and Wallingford, is still seeing plenty of competitive offers in his area, even though our brokerage data for all of King County show that bidding wars have become slightly less common. “Eight of my past ten offers have been competitive; the competition has been most intense in the $300,000 to $450,000 price-range. We’re offering $40,000 over list price and still losing.”

What does it mean that sellers are cutting their losses while buyers are out-bidding one another? Basically, we see two types of listings on the market. The stuff that has been out there a while without any bidders drifts down in price until it finally gets an offer. Then when a new listing does hit, it is usually well priced, and often gets three or four offers. There isn’t much in between.

And that’s all the new data we have for this month. To dive into more detail, just look at the raw numbers in this spreadsheet. Or check out the methodology for our reports. In a couple of weeks, we’ll email you again with a digest of all the reports issued by others on the state of the market. Until then, email me with questions or comments, and have a good June!

Best, Glenn
CEO, Redfin