With Fewer Homes Selling Below Asking, the Pacific Northwest Market Is Heating Up
The Northwest is heating up, and we aren’t just talking about the weather. According to ZipRealty’s own data, two major metro areas in this part of the country show strong signs of positive growth: specifically, Portland and Seattle. In both locations, the number of homes sold for below their asking price has markedly declined. Today, we look at why this might be. We’ll be back later this week to look at additional metros enjoying similar turn-arounds.
First, a look at those selling prices. From these data, we see a steady decline in the number of homes sold at prices below the sellers' asking over the past year. These numbers should encourage anyone worried about the metro's home values: certainly, such worry was warranted in January of 2011 when almost 70% of homes sold for less than they listed for. But this May, that number was down to just above 50%.
© ZipRealty, 2012
Portland’s median list this May for single-family homes was $250K, and the sold median list (usually less than the list price in a sluggish market) was $255K. The median list was up over 4% both month-over-month and year-over-year. The median sold price, however, was up 11%.
Portland is one of those rare cities in which median single family home prices aren’t much higher than condo prices, and May data confirm this. Here too, the sold price beat the list price, as the median list for May 2012 was $226K, while the median sold was $228K. The latter figure is up 6% year -over-year.
As to why this could be happening, we have several ideas. First, summer generally heats up not only the weather in the Portland metro, but also the real estate market. Second, unemployment in Portland has been dropping steadily for a few months, and in May, 2012 was down to 7.9%, a full 1.3% less than last year. Next, inventory in this metro, though slightly up from the previous week, was as of June 25, 2012 offering less than 11,500 available homes on the MLS—and we can expect that some of those homes were likely in contract, so the actual number of “available” homes was most likely even less. Finally, we can assume sellers have become more realistic about listing prices, so buyers don’t need—or want—to haggle.
With similar drop in below asking transactions, Seattle shows us another major Northwest metro making a comeback. Here too we see a dramatic year-over-year improvement: around 65% of homes sold at less than list in January of 2011. In May, that figure had dropped to just over 50%.
© ZipRealty, 2012
For single-family homes, Seattle’s median asking price this May was $499K. The sold price was less, at $439K. Still, the sold figure represents a gain overall, up 7.1% from May, 2011. Condos, meanwhile, performed well too. The median list at $275K was higher than the median sold of $264K, but the latter figure is 3.4% more than recorded for condos in May, 2011.
As in Portland, Seattle homes show better under clear skies, so summer generally offers better conditions for home sellers. Also favorable, the metro’s unemployment rate has dropped several months in a row, landing at 7.3% in May, 2012 and down 1.3% year-over-year. And again, like Portland, inventory plays a part in home price gains, since the Seattle metro area posted a 34% drop in May, the 4th largest decline in the nation. Finally, here too, sellers might be getting more market savvy, taking advice from seasoned Realtors® on home pricing.
All these factors and many others we haven’t named converge to help Northwest home sellers get closer to, or even above, their asking prices. Stay tuned for part 2 of this blog series, in which we look at other national markets exhibiting this exciting trend.
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in theSan Francisco Bay AreaandPacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.