Multiple Offers in a Declining Market? Yep, It’s Possible. (April Insider)

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Greetings Redfinnians,

The nationwide double-dip in the housing market drags on, and Seattle is no exception, with sluggish sales, falling prices, and bidding wars. Wait, what was that last part? Yes, you read that right. As bizarre as it sounds, despite the rut the market is in, competition for some homes is heating up this spring.

So what gives? How is that even possible? Read on for the inside scoop as we comb through our vast market data and pick the brains of our crack commando agents to find out what’s going on in today’s market.

Still a Stale Spring

The first part of this peculiar equation is the still-unusually-flat inventory of homes for sale.

City Compared to Mar. 2011 Compared to April 2010
Seattle +0.8% -23.3%
Bellevue -12.4% -34.7%
Federal Way -4.8% -8.2%
Issaquah +4.8% -21.7%
Kent -3.1% -17.0%
Kirkland -8.7% -27.6%
Renton -4.3% -16.9%
Shoreline +5.3% -5.7%
Redmond -11.9% -17.8%

Change in # of King County Houses for Sale on April 30th 2011, By City

“Buyers are excited to start looking for homes,” says Corey St John, a Redfin Capitol Hill Agent, “…until they see what’s available.” By this time of year, the selection of homes is usually in full bloom, but this year buyers have been faced with a lot of stale inventory. “Buyers are getting frustrated. They were thinking that by now there would be a lot of new homes coming on the market, but there just aren’t.”

Frustrated Buyers Take a Break

That frustration appears to be simply turning many would-be buyers off completely, as sales continue to mark double-digit declines across most of the Seattle area.

City Compared to March 2011 Compared to March 2011 Adjusted for # Weekdays Compared to April 2010 Compared to April 2010 Adjusted for # Weekdays
Seattle -3.7% +5.4% -14.6% -10.6%
Bellevue -30.7% -24.1% -16.8% -12.9%
Federal Way -29.2% -22.5% -35.2% -32.1%
Issaquah -23.4% -16.1% -18.2% -14.3%
Kent -24.6% -17.4% -16.9% -13.0%
Kirkland +17.2% +28.4% +9.7% +14.9%
Renton -9.4% -0.7% -37.9% -34.9%
Shoreline +2.7% +12.5% -35.6% -32.5%
Redmond +17.1% +28.3% -14.6% -10.5%

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

With sales dropping off — not only from last year’s tax-credit-juiced levels, but even just since March in many cities — one would expect the few buyers that are out there shopping to have it pretty easy. Unfortunately, that’s not what our agents are seeing in the field.

“Most of the buyers we’re working with today either have been recently or are right now in a multiple offer situation,” says Corey St John. Cheryl McLaine, Team Lead for the Bothell/Redmond team, is seeing the same thing. “Well over half of our recent deals have been multi-offer,” she explains.

What explains this seeming contradiction? How do we have slow sales and lots of multiple-offer situations? It seems that the few buyers who are out there today are all interested in the same small selection of homes.

“Today’s buyers are detached,” says Cheryl. “They definitely feel that they can be picky.” So the majority of homes for sale today — which are either overpriced or need work — end up sitting on the market for months. Meanwhile, the few nice, well-priced homes that come up tend to go fast.

Prices Keep Sliding on Slim Sales

Despite the competition among buyers for a small selection of attractive homes, prices are still showing considerable softness across the Seattle area.

City Median Price in April 2011 Median $/SqFt Change since March 2011 Median $/SqFt Change since April 2010
Seattle $391,500 +4.0% -8.5%
Bellevue $550,000 +0.7% -1.4%
Federal Way $204,925 -7.4% -23.6%
Issaquah $472,000 +3.4% -11.4%
Kent $240,900 0.0% -14.4%
Kirkland $441,500 -7.1% -10.7%
Renton $259,900 -3.2% -10.2%
Shoreline $266,475 0.0% -5.1%
Redmond $428,000 +6.0% -9.8%

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

Ryan Kingsbury, a Redfin coordinator for the Northeast Seattle team, attributes this to the still-stagnant economy, tight lending guidelines with lower approval values, and the willingness of buyers to simply wait out the market. “Both sides are waiting for the other to flinch,” says Ryan. “Buyers are waiting for lower prices to buy, and sellers are waiting for higher prices to list. It’s still a standoff.”

Cheryl advises truly motivated sellers to make sure their home shows well and is priced low for a quick sale: “Many of today’s serious buyers seem to be interested only in turn-key homes priced right in the sweet spot.”

That’s it for this month’s Insider Report. 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. To learn more about how we calculate these numbers, check out our methodology page. You can also liven up the place by posting a comment below.

Tim Ellis, Redfin Analytics Team