This Might Be As Warm As It Gets (July 2011 Seattle Insider)

Greetings Redfinnians,

We’re back with the lowdown for July on what’s hot and what’s not in the Seattle market. Between upcoming changes in lending practices and few homes for sale, the market is staying sluggish heading into fall. The table below shows Seattle near the bottom of the list in terms of our new Heat Index (Beta)*.

Redfin National Heat Index

To see the heat or chill in the Seattle neighborhoods where you’re looking at homes, just click on the image below to check out our interactive map that breaks down the ranking for every zip code in King County:

King County Heat Map by Zip Code

Heat Map Color Legend

(Note: the map above is broken in Internet Explorer 9 and Google is working on the issue. In the mean time, please use Mozilla Firefox or Google Chrome to view the map.)

King County’s 5 Hottest Neighborhoods in July

Competition is hot in Magnolia and Ballard, where turn-key homes fresh on the market immediately get multiple offers.

Rank Neighborhood YoY Price Change Months of Supply Heat
1 Magnolia +8.4% 4.6 91.9
2 Ballard -3.3% 2.0 86.6
3 Northwest Seattle -3.0% 2.3 85.2
4 Queen Anne +2.7% 4.0 84.6
5 Northeast Seattle -2.6% 2.7 83.1

Redfin Capitol Hill Team Lead agent Allie Howard says: “I give the summer of 2011 an “F” for frustration! Sellers are frustrated as prices of comparable homes remain low and many cannot afford to sell at current price levels. Those sellers who must move on are opting to rent their homes until the market recovers. Buyers are frustrated as well due to the lack of available inventory. When something desirable appears on market, they find themselves competing against other buyers for the better homes. It may still be a ‘buyer’s market,’ but you have to be fast to reel in the winners.”

Redfin West Seattle agent Klaus Gosma echos Allie, noting that “it feels like the traditional summer buying season has been stymied by the lack of strong inventory. We’re still seeing well-priced homes in desirable areas going very fast. If rates stay attractive, I think this trend will continue into fall as quality listings trickle on the market.”

King County’s 5 Coldest Neighborhoods in July

Rank Neighborhood YoY Price Change Months of Supply Heat
1 Lake Union -29.4% 1.9 34.9
2 Rainier Valley -15.0% 5.5 38.7
3 Lake City -20.6% 3.6 40.4
4 Delridge -16.7% 4.3 44.2
5 Snoqualmie Ridge -10.3% 5.6 47.2

That’s it for this month! If you miss our old tables full of data, just 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.

Best,
Lisa Taylor, Redfin Analytics Team

*Methodology
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
  • Pingback: Seattle Bubble • Redfin: Summer Not so Hot for Local Real Estate

  • Mahesh

    how to interpret Heat Index? what does it mean? higher the better for selling? lower the better for buying?

  • Lisa Taylor

    Hey Mahesh,  

    The Heat Index is still a work in progress and attempts to determine how fast homes are selling in a given area.  Higher does mean better for sellers as there's more demand, and lower could be both good and bad for buyers.  Good in that there's little competition for homes on the market, and they've likely experienced price drops.  Bad in that most of the homes on the market could be pretty picked over. We'll do a better job of explaining how to use it next time.  Thanks for the feedback!

  • DanW

    Why set 5% as the default value? Yes, house prices may have risen by that if you include the bubble period, but long term CPI or an equivalent would make more sense…

  • Lisa Taylor

    Hi DanW,

    The 5% is a rough estimate of inflation. It doesn't matter so much, though, since the relative temperatures across markets are more meaningful than the precise number scale — The 75 degree baseline is just a metaphor.

  • Pingback: Redfin: “It’s All About the Inventory” | The SunBreak

  • http://www.myaustinproperty.com/ Ted Simpson

    That looks like music to your ears, I'm sure.  I am hearing that interest in real estate (as identified by pendings and closed sales) is up all over the U.S.  Here in Austin, it's the same story.  Our pendings are up, sales are up, prices are up and inventories are dropping.  Your chart shows Austin at 4.4 months of inventory, which would make it a strong seller's market.  In reality, we are at 6.5 months — a neutral, strong balanced market.  It's good to be in one of the healthier cities, isn't it?!

  • http://twitter.com/dreeves david reeves

    I love the data and the map. I was wondering, though, why the teal green color isn't reflected in the key?