The Seattle real estate market remained steady throughout 2010 posting its first, albeit slight, year over year price gains since 2007. Residential cost per square foot, days on market and list price to sales price ratios all indicated a return to market stability and balance after two years of freefall. Current prices land somewhere between those of 2005 and 2006 levels—bringing affordability to its highest levels in recent history. Sales of homes priced above $1 million increased 27% as high-end buyers with available money entered the market to take advantage of rock bottom prices and favorable interest rates. Bank-owned properties and short sale transactions made up just over 13% of all homes closed, 773 sales, throughout the year.
The condo market was very diverse in 2010 with some buildings posting strong sales and others faltering amid developer and financial issues. Stability in this segment of the market will only come when demand meets up with the overstock of available inventory for sale. With no new permits expected to be issued for new construction condos for some time to come, we could see a shift by 2012 as buyers snap up the available supply of units for sale.
Mercer Island and the greater Seattle region continued to tread water through much of 2010. At first glance, it would appear that sales prices increased slightly during the year. However, the average square footage of homes sold increased to 3275 from 2827 the year prior. The net result is that buyers got far more home—about 450 sq ft more—for their money in 2010. With markedly lower prices and more favorable jumbo financing terms, buyers found bargains on private waterfront homes and took advantage of the opportunity to buy this limited commodity at a substantial discount. Waterfront home sales more than tripled to a count of 27 from only 7 in 2009.
The condo market continued to struggle in 2010, likely in part due to the number of troubled projects on the Island and also in the downtown core markets of Seattle and Bellevue. Lower condo sales prices prompted more sales and resulted in a reduction of the number of available condos for sale to a more manageable number—a first step toward stability.
Short sales and bank-owned properties, which have only been tracked since 2009, made up only 10% of all homes closed (23 of 220)—the lowest level in the Seattle-Eastside region. On the other hand, they accounted for a remarkable 40% of all condos sold on the Island in 2010 (16 of 40)—the highest level in the region.
The Eastside real estate market—comprised of Bellevue, Kirkland, Redmond, Issaquah, Mercer Island, Woodinville, Bothell, Carnation and Duvall—showed the greatest strength of any area in the Puget Sound region in 2010. Gains were seen across nearly every indicator measured with a year over year increase in sales of more than 12%. Sales of homes priced above $1 million increased 29% as high-end buyers with available money entered the market to take advantage of rock bottom prices and favorable interest rates. Bank-owned properties and short sale transactions made up just over 17% of all homes closed, 911 sales, throughout the year.
The overall condo market, plagued by developer financial instability, continued its decline with sales prices and cost per square foot now closest to 2005 levels. 2011 will be a year to watch as potential buyers, banks, developers and receivers set the tone for demand, prices and stability throughout the Eastside region.
While the days of falling prices appear to be behind us and double-digit appreciation only a faint memory, 2011 and the years ahead should see slow and steady appreciation of 1-4% per year. Interest rates will likely begin to volley in an upward direction spending much of the year in the 5-5 1/2 % range.