Shrinking Selection Stymies Selective Shoppers (Feb. Insider Report)

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Welcome to Real Estate Bizarro World, where falling supply means falling prices and scarce demand still leads to multiple offer situations. 2011 continues to shape up as an unusual year for the Seattle-area real estate market, with the number of homes for sale in February falling when it should be rising, the number of buyers still near all-time lows, and prices showing persistent signs of weakness.

So what does it all mean for home buyers and sellers around Seattle? Read on for an analysis of February’s data and on-the-ground intelligence from our agents in the field.

Inventory Still Slipping

Decreasing inventory continued to plague the Seattle-area housing market across the board in February, slimming the selection of homes for 2011′s potential buyers at an even faster pace than last month.

City Compared to Jan. 2011 Compared to Feb. 2010
Seattle -5.5% -11.8%
Bellevue -11.7% -22.9%
Federal Way -8.5% -11.6%
Issaquah -13.0% -27.3%
Kent -14.2% -11.5%
Kirkland -8.1% -21.3%
Renton -9.6% -14.3%
Shoreline -2.6% +6.4%
Redmond -17.1% -18.6%

Change in # of King County Houses for Sale on February 28th 2011, By City

“I wish there was more inventory on the market, I really, really do,” pines Michelle Swierz, a Redfin Agent in Sammamish. Northeast Seattle Redfin coordinator Ruby Manuel agrees: “Inventory definitely seemed unusually low in February.”

Things may pick up in March though, as Ruby reports “a lot of listing clients in the last couple of weeks, some of whom are ready to put their house on the market as soon as next week.” Here’s hoping.

Scarce Sales, Bargain Buyers

Sales are gaining steam as we head into the usually busy spring season, but still came in below last year’s levels in most neighborhoods. The buyers that are out there hoping to buy in the coming months are serious about their search.

City Compared to January 2011 Compared to January 2011 Adjusted for # Weekdays Compared to February 2010 Compared to February 2010 Adjusted for # Weekdays
Seattle 0.0% +5.0% -20.8% -20.8%
Bellevue +8.3% +13.8% -4.9% -4.9%
Federal Way -15.9% -11.7% -15.9% -15.9%
Issaquah +50.0% +57.5% +12.5% +12.5%
Kent -22.5% -18.6% -35.4% -35.4%
Kirkland +7.3% +12.7% -13.7% -13.7%
Renton +9.8% +15.3% -1.5% -1.5%
Shoreline -25.9% -22.2% -28.6% -28.6%
Redmond -8.0% -3.4% -34.3% -34.3%

Change in # of King County Houses That Sold in February 2011, By City

Although it may take a while with the shrinking selection, buyers are willing to pounce when they find the right home. “I have a client searching for a home around $400,000 who has looked at 130 homes,” explained West Seattle Redfin Agent Kevin Broveleit. “If something new comes on for them, we have to see it within 48 hours, or we will not get to see it.”

According to Kevin, most of the demand that is out there is focused on a fairly narrow price range, leading to an often frustrating situation where despite the low level of competition, the good homes can go fast.

It’s the same story on the Eastside. “There are a lot of people looking,” said Michelle, “and when a well-maintained, updated, well-priced home comes on the market, it goes quickly.”

Choosy Buyers Drive Down Prices

Despite the dearth of homes on the market, prices continued to slip across most of the region:

City Median Price in February 2011 Median $/SqFt Change since January 2011 Median $/SqFt Change since February 2010
Seattle $379,650 -8.0% -15.9%
Bellevue $507,323 -4.2% -2.2%
Federal Way $200,000 0.0% -7.0%
Issaquah $495,250 -1.4% -6.4%
Kent $234,950 +0.8% -9.7%
Kirkland $437,000 +15.4% +12.0%
Renton $267,500 +0.7% -9.0%
Shoreline $373,250 +8.3% -13.3%
Redmond $417,500 -3.5% -7.9%

Change in Median Price of King County Houses That Sold in February 2011, By City

With prices still dropping, buyers are exercising their muscle. “Buyers have a price in their head of what they’re willing to pay for a house, and they’re not willing to budge,” said Michelle. “They want to battle. They go into it looking for a deal and ready to beat people up.”

“Buyers are not acquiescing to sellers,” agreed Kevin. “It may be a seller’s market by the numbers, but you need to be careful because buyers are very cautious and risk-averse.”

Want to know what’s happening in your neighborhood? Download our comprehensive spreadsheet and dig into the data for yourself! Inside you’ll find county, city, and neighborhood information galore. You can also liven up the place by posting a comment below.

  • pricestoohigh

    Prices still too high and selection too skant. In addition, geo political turmoil with rising oil has me skitish anyhow. So, I've taken myself off the market…

  • Dynasty

    Ahh, more of the fallout following the mass hysteria of that overtook most of the nation of buying a house for far far more than it was worth.

    It is this simple: All those who paid too high of an price, yet make enough income to maintain their mortgage can't sale because they cannot sell for what their house would bring in. Nothing earth shattering in that statement by any means.

    So, as they continue to whittle away month by month, bit by bit on the principle remaining on the balance sheet and once prices stabilize and begin to appreciate enough to finally intersect at the point of selling value and value owed on the mortgage, there will be plenty of quality real estate on the market.

    I predict sometime in 2015 everybody will be able to laugh about the real estate meltdown. And we'll all be back to buying overpriced 2007 value homes. In my opinion, housing is still 30% overvalued…………..

    One last thing, hopefully, everyone who bought an overpriced fixer upper is able to get the house updated, and all the deferred maintenance squared away. It will help your cause to unload the property.

  • Dynasty

    I meant those with high enough income to keep paying the mortgage, but not wanting to wreck their credit score by defaulting.

  • Dford101

    The big problem is the banks don't want to write off these properties and loans. I've heard of builders who would turn back spec houses to the bank but the banks don't want them, on the books or whatever. There are soooo many things in the system keeping even these seemingly low prices artificially high. Also I heard that buyers can still get 90% or plus financing. Doesn't anyone ever learn anything???

  • nick

    Still seems like a weak market because of the paucity of buyers. Inventory must decline even more for things to get back in balance. In more normal times, buyers would bite at even poorly kept places or those not in the best locations.

    • The_Tim

      “…buyers would bite at even poorly kept places or those not in the best locations.”

      That sounds like the market in 2005 and 2006, but I definitely wouldn't call it “normal.”

      • nick

        I was comparing to the 2001 recession since that is the worst market I knew. Sales in the condo complex I own a rental unit in were quicker in the months after 911 than now. Even the bank owned unit that was put on the market at 2001 prices sat for a while before finding a buyer.

  • GlennKelman

    Tim, what is the price range where there's the most demand: $400K – $500K?

    • The_Tim

      Yeah, from what Kevin said, the $400k-$450k range is super-tight right now.

      • paydirt68

        Precisely our comfortable price point. Fifteen months and nothing but failed inspections and rescinded offers. It would take too much of our cash to repair and recover much of the 'used up' inventory we've seen. Happily, we finally decided to rent for a while.

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