December Real Estate Report

The year ends with a big bang

The Madison Park real estate market was sizzling in December, with 16 sales recorded during the month. That’s double the sales activity of the previous month and bigger volume than existed at the height of the spring selling season last year, when 11 homes were sold each month on average. December’s sales were 80% higher than for December 2009.

Did the year ended on a fluke, or should we regard it as the precursor of good things to come? Unfortunately, at this point there are only seven home sales pending, which may make it tough for January to measure up to the December standard. Even so, sellers can still take heart from the fact that 2010 as a whole was a significantly better year for sales than any of the three previous years. And it’s now clear that at least in terms of sales activity the market is making a comeback. There were 104 sales of single family residences and condos in Madison Park during 2010, a 39% increase over the previous year’s total. House sales were up a whopping 48% year over year, while condo sales increased by a more modest 18%.

Here’s how December played out in Madison Park (Washington Park and Broadmoor included), based on sales data from the Northwest Multiple Listing Service (MLS):

Houses

Sales: 11
Median Sale Price: $1,227,000
Average Sq. Ft.: 3,273
Average Price per Sq. Ft.: $413
Average Days on Market: 118
Average Discount from List Price: 13.8%

Condos

Sales: 5
Median Sale Price: $615,000
Average Sq. Ft.: 1,321
Average Price per Sq. Ft.: $408
Average Days on Market: 62
Average Discount from List Price: 4.3%

The median sales price of houses sold in December, at $1,227,000 million, was directly in line with the median price of all of the houses sold in 2010: $1,225,000. This is a 17% decline in the median price since the height of the market in 2007. The median price of condos, however, has held up much better, declining just 8% over the past four years. In terms of year-over-year decline, the median value of houses sold in Madison Park was down a modest 4% between 2009 and 2010:

As we always caution, Madison Park is a pretty small market, so these median prices may not reflect the actual decline in value of any particular house or even represent an average decline in values for the neighborhood as a whole. It’s more a question of which houses are selling in any given period; and as we know, the bottom end of the market has been much more robust than the upper market has been since the downturn. Windermere Real Estate’s Kathryn Hinds, one of the top agents in the market, says she thinks that house values have declined only 10-15% in Madison Park since the peak. “I feel we have seen a stabilization of home values and that we will continue to see a steady stream of sales in our neighborhood,” she tells us. She cites the Park’s proximity to downtown, the attractiveness of lakeside living, and the charm of The Village as chief selling points for the neighborhood.

Windermere’s Laura Halliday agrees that the market seems to have bottomed out. She notes that during 2010 buyers seemed to feel more confident that the market was not going to continue sliding, or at least came to believe that the rate of decline had leveled off. That, coupled with sellers being more pragmatic about pricing and buyers being able to finance at historically low interest rates, she says, resulted in a lot more sales.

Shockingly, the average discount from list price during December was a very high 13.8%, but this was the result of an anomaly. One house that changed hands during the month had originally been listed for sale at $1,900,000, but it sold for only $880,000, a 46.3% discount. With this outlier removed, the discount was only 5% for the other houses which were sold. And that’s based on initial list prices, not the list prices that existed after successive price reductions may have been incurred. The MLS numbers compare final list prices to sold prices, and by this measure the trend was is positive for sellers. There was an average discount of a hefty 11% suffered by house sellers in 2009, but this declined to 7.1% in 2010. Condo sellers also saw improvement, from a discount of 7.5% in 2009 to 5.6% last year. Nevertheless, that’s still well in excess of the low discounts experienced at the height of the market.

Another trend favorable to sellers is the average days on market for sold properties. From a low of only 78 days in 2007 to a high of 182 days last year, things definitely moved in the right direction for condo sellers during 2010. The time on market for sold houses also improved.

Madison Park’s real estate market seems to be out of sync with the City’s market overall. December sales were down almost five percent in Seattle, year over year, and listings rose by only 2.3%. Listings in Madison Park, meanwhile, are actually up 17% compared to the same point last year.

Here’s a look at the current market, using data from Redfin:

Houses

Listings: 53
Median List Price: $1,740,000
Median Sq. Ft.: 3,800
Median Price per Sq. Ft.: $458
Average Days on Market: 182
Percentage with Price Reductions: 33%
New Listings: 6
Pending Sales: 3

Condos

Listings: 22
Median List Price: $599,000
Median Sq. Ft.: 1,262
Median Price per Sq. Ft.: $475
Average Days on Market: 200
Percentage with Price Reductions: 41%
New Listings: 3
Pending Sales: 4

Based 2010 sales levels, the 75 current listings provide the market with only a nine-month supply of inventory. That’s dramatically down from the high point of 116 listings during the summer or 2009, when only five or six houses were being sold each month. The brutal 19-month absorption rate of those down months is something that sellers and realtors can apparently now call ancient history.

[Photo above: This house at 1820 41st Ave E., a listing of Windermere Real Estate broker Cathy Millan, was priced at $449,000 and sold (pending inspection) just five days after going on the market. It provides evidence that a well-priced house that is well presented can move fast in the current environment, says Millan.]

Thanks to Wendy Skerritt and Laura Halliday of Windermere Real Estate for providing statistical information on Madison Park sales.