The April numbers are in and there’s good news and bad news. Let’s start with the bad news.
- For the first time in a long time, median prices in Belltown dropped. If you remember my last update in March, we saw median prices rise over 13% versus March 2007. In April, we saw median prices drop by 7%. We’ll have to see how the next few months play out to determine if this is the adjustment we’ve all been waiting for so that buyers on the sidelines can come back in or if prices drop further.
The good news:
- April over Apil inventory (April 2008 as a proportion of April 2007 inventory) has come down compared to March over March numbers. In March, Belltown inventory was 51% higher than March of 2007. In April, Belltown inventory was 41% higher than April of 2007. If this trend continues, it would suggest that there while we are certainly seeing more units on the market than last year, there does appear to be a ceiling in terms of how much more supply is entering the market and as a result (all else equal), we will have a floor on how low prices will ultimately go.
So the big question: was April’s price correction enough to motivate more buyers to pull the trigger or will they continue their waiting game in hopes that sellers will capitulate further? My sense is that there’s probably at least 6 months worth of potential buyers who have deferred their purchase month after month and are just waiting for the right time to get in. I wouldn’t be surprised if they started returning in the summer but it may have more to do with concerns about the national economy than any local supply and demand issues.
Wendy,
This chart looks like the same chart you had posted on April 9, 2008.
Thanks for pointing that out. I’ve posted the chart for April.
Isn’t it a big deal that median sale prices in Belltown dropped a whopping 25% from March ’08 to April ’08? Am I missing something??
I think year over year comparisons are the most valid since you don’t want to confound the analysis with seasonal effects.
Also, keep in mind March 2008 was up 13% over the previous year so the 25% decline you refer to is a bit of apples and oranges.
I don’t really get the apples and oranges point. Anyway, I still think a 25% month over month decline was worth a mention. I thought about the seasonal effects angle too, but then saw that no other area had a decrease even close to that and in fact some actually saw a median price increase.
What I mean is that if March 2008 was not up 13% and April 2007 was constant or up slightly, then April 2008 would not have been down 25% compared to March 2008 as you pointed out but closer to down 12%. In other words the “down 25%” you’re pointing out is partly because March 2008 was an unusually strong month.
Still, I agree it’s an interesting observation. I wonder if this reduction will be enough to get buyers to grow a pair.
Reliable statistics need lots and lots of data. These are relatively small data samples. I wonder if $/sf would be a more reliable indicator of price changes. Also, what is the average age of the homes sold. A new building closing a lot of units over a short period of time is going to skew data as well. Anyway, lots of variables. It makes for interesting reading, I’m just not sure what kind of solid conclusions you can make with a couple of data points. Need more data and data points which can be trended over time.
Wow that’s quite an impressive stretch for a little bit of “good news”!
-Kent
MLS data usually does not include new condo sales. Sometimes new developments will put a couple “fishing” units on the MLS to drum up interest, however, MLS data should be catagorized as resale data. I’m not saying a new building closing a lot of units dosen’t impact the market, I’m saying those closings are usually not represented in MLS data sets.
I wonder if the Upcoming Moda release is putting downward pressure on unit pricing?
Can a developer drop unit prices prior to the completion of the building? We purchased a unit at SLU and found out prices have dropped considerably. Is there a way to pull out of the purchase without losing our ernst money or transfer the ernst money to another unit in the same building? If any body reading this has had the same experiance – would they please let us know. Thank you.
If prices were raised, would you be ok if the seller dumped you? I think your options are to take it or let them keep you earnest.
You might try transferring your earnest money to another unit. Some of the condo developers are protecting their early buyers and offering “price matching” if they drop prices. I think Olive 8 is doing this. Anyway, try working something out with them, they want you to close for sure.
Just curious what project you bought at. If it was at Rollin Street Flats I heard that some of the backside, east facing units got reworked and therefore re-priced to fit the market conditions better. Just wondering. We bought there and so far there have been no price changes on our purchased unit-type.