“Home Forecast Calls for Pain” was the headline from a Wall Street Journal article posted on September 21, 2011 which opened with the following: “Economists, builders, and mortgage analysts are predicting the weakened U.S. economy will depress housing prices for years…Home prices are expected to drop 2.5% this year, and rise just 1.1% annually through 2015 according to a recent survey of more than 100 economists.”
But did we wait for 2015? Not a chance! By the spring of 2012 our Eastside inventory had sold down to only a couple of months of supply before starting a slight rebuild going into the summer months of 2012. It was at this point that most of us felt that we had found the bottom of our local market, but it was to be several months before we could look back to quantify and confirm that we had indeed.
From that point forward, our local market continued to recover. Slowly at first, but as inventory was consumed, the race began building momentum. And it continues…
The first three accompanying charts capture the vivid progression of the market from a “doom and gloom” buyer’s market in 2010 – 2011 to the very strong seller’s market that is now in play as we enter the spring of 2015. By mid-year 2012, our market had effectively reached the bottom and began the recovery. By now, that recovery has morphed into a crescendo for sellers who are ecstatic about their sales potential, and into a fair amount of pain for buyers who find themselves competing with others on nearly every home they seek to purchase.
Where the pain was solidly in the seller’s quarter just a few short years ago, it has now shifted to the buyers who struggle to find a home to purchase, then face increasing competition to win the successful bid for it.
But while it feels like prices have been driven through the roof in the current market, it is not necessarily so.
A close look at median prices over the past ten years for the Eastside market tells a story that substantiates the recovery, but it also puts it in perspective. Please refer to the Median Price – Eastside chart that also accompanies this newsletter to see that the median priced home in the Eastside market for February 2015 is still below the median priced home of the same month in 2007, a full eight years ago:
Median closed sales price in Eastside market:
February 2007: $624,498
February 2015: $617,645
In wrapping up this quick review of our market over the past few years, it must also be pointed out that the statistics for the Eastside do not always reflect what is going on in individual neighborhoods of this same market area. Both the east Bellevue and Kirkland markets are experiencing tighter inventories and more buyer competition than the rest of the Eastside in general, and this has been driving home prices upward at a faster pace than the overall Eastside market reflects – subject for a future newsletter, so stay tuned.