Remember when we reviewed the Feb numbers in early March and there was pretty much zero good news. I have to admit, even the optimistic side of me was pretty unsettled that month.
Well, compared to Feb, April was a fantastic month 😉 Year-over-year prices and closings were down but pending sales were up year over year and way up versus the previous month! It's hard not to get excited about these glimmers of hope but we'll have to see if next month shows similar trends. If it does, I think it might be a big step towards a non-falling and hopefully normal market.
In April, there were a total of 1,572 active condos in Seattle, that's 13.36% fewer units on the market than the same time last year. Looking at year-over-year comparisons, this is the 4th consecutive month we've seen fewer sellers competing against each other.
Pending sales in Seattle went up by a modest 0.91% over same time last year from 219 to 221 but leaped ~54.4% higher than the previous month! April also had the highest number of pending sales in a single month since September 2008 (224 condos).
As for closed sales, they were about half (-48.47%) of the level from a year ago with 101 condos closed in April. Assuming if all of the pending sales in April closed in May, we might start to see a positive number for next month's closed sales.
Median prices for closed condos are down by 14.24% from a year ago at $268,000 and off slightly by ~2.5% from the previous month.
Months of Inventory
Months of inventory for April based on closed sale is at 13.4 months but based on pending sales (contract accepted but not closed yet) is at 6.1 month. If the same level of pending sales in April continue over the next few months and closed, we will be seeing the market shifting from a strong buyers' market to a more balanced market.
Based on the stats and the pick up in my own client activity, the uptick is much more pronounced at the sub-$400K level. That's consistent with a bottoms-up recovery since the owners of lower value property won't be able to move up to larger property till they sell their current, entry-level units.
Are pending sales really up or is this the result of new construction units being added to the MLS database as pending?
Rumors are circulating on the real estate blogs that the MLS is now requiring these sales to be added to the database and it appears that Olive 8 added all their pending sales. If other condo projects also added their pending sales, it could easily skew these numbers to the positive.
How do you define “bottom.” sales activity has probably already bottomed. Price drops are bringing some modicum of affordability back into the market, so sales should go up. Prices ideally will drop until they are in-line with historical norms with respect to price-rent and price-income ratios. Still much too high. We’ll need about another year of price corrections at the current pace to approach a historical norm, IMHO.