THE REAL ESTATE CHASE | Local market for buyers or sellers?
Not surprisingly, some readers disputed the notion that this is not a seller’s market, and they seem to have a point.
According to Merriam-Webster, a buyer’s market is “a market in which goods are plentiful, buyers have a wide range of choice and prices tend to be low.” That seems to be pretty much the opposite of the situation here, where, at the end of the first quarter, there were only 22 residential listings — hardly a “goods are plentiful” situation for a market that saw more than 100 listings during the downturn, with prices significantly lower than the current median sales price.
Here’s a capsule summary of the market at the end of the first quarter:
Houses
Listings: 22
Median list price: $2.595 million
Median square footage: 4,105
Median price per square foot: $625
Average days on market: 78
Percentage with price reductions: 9%
New listings: 22
Pending sales: 10
Condos/Townhouses
Listings: 5
Median list price: $475,000
Median square footage: 1,025
Median price per square foot: $463
Average days on market: 132
Percentage with price reductions: 60%
New listings: 2
Pending sales: 0
This market snapshot seems to prove we’re experiencing a seller’s market, which the dictionary defines as “a market in which goods are scarce, buyers have limited range of choice and prices are high.”
We went back to Zillow to get a clarification of its reasoning, and here’s how the website defines its approach: “Based on three metrics — sale-to-list price ratio, the prevalence of price cuts on home listings and time on market — the market temperature provides information on the current balance of bargaining power between buyers and sellers in this neighborhood relative to other neighborhoods in the same metropolitan area.”
So the “hot/cold market” issue for Zillow has do with other variables than simply inventory levels. In the case of Madison Park, Zillow showed 21.3 percent of Madison Park properties as selling below the list price earlier this year, with 26.7 percent of properties on the market having undergone a price cut from the point of the original listing.
The days-on-market metric, however, was not high at the end of the first quarter.
Here’s an overview of the first quarter’s sales activity:
Houses
Sales: 11
Median sale price: $1.499 million
Average square footage: 3,457
Average price per square foot: $434
Average days on market: 80
Average discount from list price: 5.8%
Condos
Sales: 6
Median sale price: $597,500
Average square footage: 1,500
Average price per square foot.: $542
Average days on Market: 81
Average discount from list price: 6.8%
An average rate of six sales per month is certainly not barn-burning performance, but for the market as a whole, it’s clear that discounts are still being required of many sellers and price cuts are common. So Zillow has a reasonable point to make about a “cold” buyer’s market in Madison Park, using its definition of what that means.
Different sales patterns
As we discussed last month, however, the market here can really be divided into two segments, each of which is exhibiting a different sales pattern.
Houses priced under $1.5 million or so are selling quickly, may garner multiple offers and are sometimes being sold at a premium from the original list price.
At the upper end of the market, however, price cuts and discounts are the norm and the waiting time is longer — hotter (a seller’s market) at the bottom, but colder (a buyer’s market) at the top.
Interestingly, Zillow has now removed the “Hot/Cold” thermometer from the Madison Park home-value page (www.zillow.com/madison-park-seattle-wa/home-values/#). Perhaps the company’s methodology was just not in keeping with the generally accepted definition.
We noticed some other changes, as well. When we first reported on Zillow’s analysis of our market, we were looking at the website’s Madison Park page in mid-March. At that time, Zillow showed a 7.1-percent year-over-year increase in Madison Park home values and was projecting a 4.8-percent increase for the upcoming year.
The Zillow Home Value Index for Madison Park (Broadmoor excluded) then stood at $925,200 (the estimated median value of homes in the neighborhood). Now, just two months later, Zillow shows a Madison Park Home Value Index of $964,300, an 11-percent increase in neighborhood values over the last year and a one-year forecast of a 7.9-percent rise.
Things are looking up, at least in Zillow’s significantly revised opinion.
BRYAN TAGAS writes the Madison Park blog (www.madisonparkblogger.com), from which this column was excerpted with permission. Laura Halliday of Windermere Real Estate compiled the sales data. Listing data is courtesy of Redfin, using information from the Northwest Multiple Listing Service.
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