Real Estate Re-Runs (June Insider Report)

Redfin National Heat IndexSo far this summer the real estate market in Seattle is about as exciting as a Matlock Marathon at the High School Prom.

Very few quality, well-priced new listings are coming on the market, and when one finally does, it’s the same story every time as the few buyers that are out there all descend at once and end up bidding against each other.

In lieu of our usual tables full of data on listings, sales, and price, we decided to mix things up a bit this month with a sneak peek at the Redfin Heat Index (Beta)*.

For starters, we developed the table at right, which includes our heat ranking for every market where Redfin has real-time sales data.

That’s interesting (although more so for Washington DC and Long Island than for Seattle), but knowing that the entire Seattle area (King County) is lukewarm probably isn’t a surprise to anyone, and isn’t particularly insightful for those of us that are interested in what’s going on in our own specific neighborhood.

Fortunately, we didn’t stop there. We crunched the numbers for the entire Seattle area and produced an interactive Redfin Heat Index map broken down by zip code:

Heat Map Color Legend

Prices are still falling across most of the Seattle area, and although buyers are scarce, listings are even more rare, which is why you’re seeing some warmth in the map above.

“We’ve felt the effects of low inventory since last year. Everyone is waiting for the next great property to come up for sale, no matter the neighborhood,” explained Redfin Northeast Seattle and Mercer Island Agent Febe Cude. “Buyers are starting to get used to the multiple offer playing field. They understand that when a reasonably priced, turn-key home that fits their needs hits the market, they need to bring their A game.”

We ran the Redfin Heat Index at the neighborhood level and sure enough, Northeast Seattle—Febe’s area of expertise—topped the list of King County’s Top Five Hottest Neighborhoods in June:

King County’s 5 Hottest Neighborhoods in June

Rank Neighborhood Price Months of Supply Heat
1 Northeast Seattle +4.1% 2.0 101.0
2 Lake Union +0.3% 1.9 94.2
3 Wallingford -0.9% 1.6 93.6
4 Northwest Seattle -1.5% 2.7 90.8
5 Queen Anne +5.6% 4.0 90.2

On the other end of the spectrum, here are King County’s Top Five Coldest Neighborhoods in June:

King County’s 5 Coldest Neighborhoods in June

Rank Neighborhood Price Months of Supply Heat
1 Snoqualmie Ridge -13.0% 6.3 36.9
2 Delridge -18.8% 4.1 40.7
3 West Seattle -19.8% 3.6 42.4
4 Cougar Mountain -18.1% 3.6 47.6
5 Northgate -15.7% 4.0 47.6

Of course, in a market like this, comparing relative heats is almost like watching a race between a sloth and a snail, but I digress…

“New listings are slow to hit the market, and buyers are getting frustrated with the inventory,” said Redfin Redmond/Bothell Agent Kurt Pepin. “Buyers are anxious to buy, but are also being very smart about their purchases. The pure emotional buy is gone, while crunching every number possible has become the new norm.”

Speaking of crunching numbers, if you miss the tables of data, don’t fret! You can still 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.

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:
  • MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
  • $YOY = Year-over-year change in the median price per square foot.
  • Heat Index = ((MOS – 6.0) * -7) + (($YOY – 5%) * 2) + 75
  • Consultant Ninja

    Odd to have the central point of an index at 75, and not 50 or 100.

    • The_Tim

      The purpose of using 75 was to make it somewhat line up with Fahrenheit temperatures.  75 is a relatively comfortable temperature, so 75 was chosen as the “balanced” level, below which is cold and above which is hot.

      • Consultant Ninja

        Hmm.  98.6 is also “balanced”.  :-)

  • TheJohn

    Great analysis!  One question though, your heat map has Queen Anne as Icy or Not Enough Sales, yet the text and 5 Hottest Neighborhoods table shows Queen Anne as 90.2 (Warm).  Mind shedding light on the discrepancy?

    • The_Tim

      Yeah, it's a bit confusing, but here's the explanation.

      The map breaks it down by zip code (and uses SFH or Condo or Townhome, whichever had the most sales in that zip code), but the table shows neighborhood breakdowns (and uses only SFH).  Queen Anne is split into two zip codes, neither of which had enough SFH sales to show up on the map, but the zip code that covers the eastern half of Queen Anne (and also South Lake Union, and Denny Triangle, and parts of Eastlake) had more condo sales than SFH, so the icy index level shown on the map reflects condos, not SFH.

      • TheJohn

        Thanks for the fast reply and the answer makes sense.

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  • Swedish

    How come the heat-map show West Seattle being “Warm”, yet it's considered as being one of the “coldest” neighborhoods for the month of June?

    • The_Tim

      Because the map shows zip codes, and the West Seattle neighborhood encompasses 3+ zip codes, and only one of them was warm, the others are all Cool or Icy.

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