Redfin’s monthly Seattle real estate insider report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now.
These days the Seattle real estate market is starting to feel like a high-class 1960′s Vegas casino. High Rollers are upping the stakes, Low-Ballers are trying to bluff their way into the game, and everyone is wearing a poker face. Lucky for you, Redfin is here to do a little card counting and give you a peek behind the scenes.
When you average out the score, King County is down, down, down. The number of homes for sale on the last day of the month dropped 2.7%, the number of homes sold for the month dropped 7.7%, and the average price of a home in our fair county did no better. Price per square foot was down by 3.5% and the median price took a turn for the worse at a tune of 2.5%.
High Rollers Still in the Game
Last month we put our bets on a 2 – 4% drop in the median price of a home and we were right. This month we let Tim Ellis, Redfin’s statistics and trends product manager, place a bet on where we will end up in October. “I think the market needs to drop to another 10% over the next 12 – 16 months to get us back to the equilibrium we experienced before the bubble. With that in mind I predict another 2-4% drop in the size-adjusted median as we head into October.”
If prices in King County keep heading down, why are so many of the cities on the table looking up month to month? Once again, it looks like a few high priced homes are skewing the data to the high side.
“I’ve shown several places recently to families looking in the one to three million range,” said Dan Mullins, a Redfin agent specializing in West Seattle. “Buyers know that now is the time to get the big home with a view at a price that is hundreds of thousands less than just a couple of years ago, and at an incredibly low interest rate.”
Low-Ballers Fold Fast, But Sellers Take Notice
The number of homes that actually sold in August took another dive this month. Offers seemed to be rolling in, but sellers simply are not accepting what is offered to them.
Our agents are reporting a steady stream of low-ball offers hitting sellers across the board. “Low-ball offers are rolling off the tongue of touring clients,” says Kenny Whiteside, a Redfin field agent, “When a home is priced less than $300,000 in areas like Renton or Kent, that’s when the joker card springs up, and buyers want to write up an offer $30,000-$50,000 off the list price.” He says, “In addition to the usual set of reasons that motivate low-balling –’It’s a buyer’s market & school is in so homes won’t move as fast’—there’s a brand new one: ‘I missed the tax break, and even though my offer is low, I would like to see that $8,000 somehow’.” Kenny is quick to point out that these offers were rarely if ever accepted by the seller.
By now, we’ve all heard (over & over & over) how insulting a low-ball offer is to a seller, but one thing we haven’t heard is how these low-ball offers are actually helping the seller. Lori Bakken, a Redfin Real Estate Agent in Tukwila, Kent and Auburn says, “Sellers aren’t desperate enough to accept these low-ball offers, but it is helping agents set realistic expectations in regards to pricing. It shows the seller that perhaps they priced their home too high straight out of the gate.” The trends of list prices falling faster than sale prices and sale-to-list ratios increasing slightly would seem to validate this observation. Check out the spreadsheet to see for yourself.
In a recent round of analyses we took a look at the importance of setting the correct price on a home the first time around. We found that pricing the home right for the debut was more impactful than lowering the price later since new listings see the most traffic in the first few days on the market. Check out the blog post for the details: You Only Get One Chance to Make a First Impression.
Eastsiders Know When to Hold ‘Em
Inventory, like all of the other numbers we’ve been looking at, also took a dive. The number of new homes coming on the market has definitely slowed down, but the real dearth of inventory is coming from sellers pulling their homes off the market. Here is an accurate, albeit tricky, explanation: The number of homes pulled off the market in August was twice the number of homes that sold. This means that around half of the inventory that came off the market last month did not sell. Half of the sellers are simply giving up.
The rare exception to this rule is over on the Eastside where a few listings have earned “Belle of the Ball” status by charming everyone with their debut.
“Things can be pretty crazy over here on the Eastside,” said Michelle Swierz, an agent specializing in Bellevue, Issaquah and Sammamish. “If a house is priced competitively it gets all sorts of attention. I have worked on six multiple offer situations over the past week. Three of these offers got beat out with escalation clauses, one beat out another buyer with an escalation clause just under asking, one went pending as we were writing the offer, and the last client pulled a low-ball offer when there was no chance of being accepted.”
Did these tidbits of data make you hungry for more? Sit down to an all-you-can-eat buffet of data in this neighborhood-rich spreadsheet and peruse our methodology as a digestive. If you have a bet you’d like to place, a question you’d like answered, or a bluff you’d like called, be sure to post in the comment section below.
Michelle Broderick, Redfin’s Analytics Department