Clients and friends keep ask­ing me: what do you think of the Seat­tle hous­ing market?

From per­sonal obser­va­tions and expe­ri­ence I know that Seat­tle area homes are sell­ing if they are:

• com­pet­i­tively priced,
• well pre­pared for sale
• offered by a moti­vated seller, and
• mar­keted aggressively

I’ve listed and sold two Seat­tle prop­er­ties in March which met these four cri­te­ria. Dur­ing the same time I’ve also helped two buy­ers pur­chase homes.

Buy­ers have plenty of choice and will buy when the above cri­te­ria are met. Obvi­ously, buy­ers are up against tougher lend­ing stan­dards. Still, first-time buy­ers with good credit, steady income and sav­ings for a siz­able down pay­ment have the pick of the lit­ter — if they can afford it.

The prob­lem with Seat­tle res­i­den­tial real estate is afford­abil­ity.

Cur­rently, the aver­age Seat­tle area home price is $414,518, just about dou­ble the national aver­age of $207,272.

Why’s that?

• More peo­ple are mov­ing to Seat­tle than are leaving.
• Seat­tle com­pa­nies are still hir­ing and open­ing offices here, such as Google.
• The local gov­ern­ment cur­tails land use.
• The local geog­ra­phy fos­ters exclusivity.

Take a look at a Seat­tle area map and what you see are bod­ies of water dis­sect­ing the land. What you get is an abun­dance of highly desir­able water­front prop­er­ties. Add the undu­lat­ing hills that rise from these waters and you get desir­able view prop­er­ties. Water­front and views sell for a premium.

The solu­tion for many first-time buy­ers is to “go condo” or to buy fur­ther out and set­tle for a longer com­mute. In the mean­time, prices on some Seat­tle area homes are com­ing down. One exam­ple is Kirk­land con­dos, espe­cially those at the higher end. The high­est fore­clo­sure rates are south and north in cities like Burien and Mon­roe. These fore­clo­sures came about through the com­bi­na­tion of easy credit, lofty expec­ta­tions of appre­ci­a­tion, and per­haps opti­mistic assess­ment of increased per­sonal income.

What the Experts say about the Seat­tle hous­ing market.

PMI Cor­po­ra­tion, the com­pany that pro­vides pri­vate mort­gage insur­ance, looked at the risk of home prices declin­ing over the next two years (pdf file). Seat­tle ranks in the least risky group. Speak­ing to the sta­tus quo, The Wall Street Jour­nal shows the Seat­tle area in 197th place out of 200 when it comes to mort­gage pay­ment delin­quen­cies (by value) of 30 days or more.

Another mea­sure of the same table is the cur­rent price level when com­pared to the peak of the US hous­ing mar­ket which the WSJ deter­mined to be the fourth quar­ter of 2005. Com­pared to that peak (being 100%) the national aver­age price level is now at 91.9 per­cent — a drop of 8.1 per­cent. Seat­tle home prices, how­ever, have still risen fur­ther since then to 117 percent.

This would sug­gest that it’s about time for Seat­tle home prices to cool down fur­ther. Fore­clo­sures excluded, what I see is a stand-off between sell­ers and buy­ers. Seat­tle home sell­ers can’t believe prices are com­ing down, buy­ers are won­der­ing by how much.

Tags: Kirkland condos, Seattle home prices, seattle housing market, Seattle View property, Seattle Waterfront

This entry was posted on Wednesday, April 23rd, 2008 at 1:19 pm and is filed under Buyers Corner, Sellers Corner. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.