Seattle Mortgage Demand Slips Again, But City Still a Seller’s Market

For the sixth consecutive month, the city of Seattle had more homes on the market, fewer sales and higher prices than the previous year, according to the Seattle Post-Intelligencer.

But the median home price of $420,000 was down from the previous month for the third time in the past five months, bringing it back to July’s level, according to the Northwest Multiple Listing Service.

Fitting a typical seasonal trend, the number of properties for sale declined nearly 30 percent from November to December.

“It’s more of the same,” said Glenn Crellin, who is the director of the Washington Center for Real Estate Research at Washington State University. “My expectation is that we’re moving into a period where sales are going to remain strong, but certainly not as strong as they had been, and where prices are going to be moderating and stabilizing.”

Prices on comparable homes, particularly in higher ranges, are going down, but people are taking advantage of that to buy more with their Washington mortgage than they could have otherwise.

Michael Simonsen, chief executive of Altos Research, in Palo Alto, Calif., has noticed cooling in the Seattle housing market.

“Any comparison with last year is down in terms of demand and numbers of home sales. Not great but certainly not falling through the floor,” he said.

Prices have not dropped with the changes in inventory and sales because only good houses are selling.

“The lousier properties, they’re going off the market or just sitting around for a long time,” Simonsen said.

Bob Melvey, assistant manager at Windermere Real Estate’s Ballard office, said he is always “a little suspect” of the median price because it does not really show whether the value of any given house has gone up or down.

But he noted one Olympic Manor home that sold in December 2005 for $541,900 and again in November 2006 for $600,000 - a hefty increase for a Washington home loan seeker. Subtracting $5,000 in value that Melvey estimated renovations added to the house, that’s an increase of 9.8 percent in 11 months.

Melvey’s own analysis of the number of sales versus the number of homes listed shows that Seattle is still a seller’s market.

“Definitely inventory dropped a lot during the holidays, but the activity level didn’t drop off as much as I expected it to. It certainly seems to me that the market is still really healthy,” he said.

Altos Research numbers show the average house is now spending 69 days on the market.

“Ten weeks is pretty long, compared to the levels of the last few years,” Simonsen said. He said 36 percent of properties currently on the market have had their prices reduced - relatively high, but lower than reductions of more than 40 percent seen in many San Francisco Bay Area markets.

Simonsen predicted that if mortgage rates rise, Seattle would start seeing slight year-over-year price declines this spring or summer, although due to a strong economy, its market would fare better than outlying areas.

“While we see some positive things to keep the bottom falling out, we don’t see any big catalyst that will let prices jump upwards,” he said, adding that price cuts might not do enough to reassure skittish buyers, who in many cases are already pushing it to qualify for home mortgages.

“I kind of think that people are attuned enough to the bubble headlines that if we see year-to-year price declines that might even scare people,” he said.

Lucia Riva, who bought a townhouse in Ballard last month, said she wasn’t worried about price declines.

“You don’t want to buy at the height of the market. Properties are taking longer to sell, but they’re not on the market for months and months and months and months if they’re appropriately priced,” she said.

Below is a graphic illustrating the change in the Seattle housing market. This graphic and article are property of the Seattle Post-Intelligencer: