The graphs below are the result of a study I did on the condominium market in the greater Seattle / Bellevue urban area, including all of Seattle and the Eastside from Renton Highlands to Bothell and out to Sammamish. There is good news for both Buyers and Sellers in here, but not in the same places.
The good news for Buyers is that if you are interested in the urban lifestyle and one of the chic new high-rise condos, you should be able to cut a pretty good deal over the coming year. This is clearly a Buyers Market situation, and you have both the leverage of Sellers competing for your business, and historically low interest rates to finance it with. Even jumbo rates are coming down finally.
The good news for Sellers is that if you have a modestly priced condominium that you want to sell now, there are plenty of Buyers (it looks like we are on the edge of a Sellers Market) and the amount of competition is a lot less than it was. If you have a clean move-in-ready under-$500k condo that you want to sell, you can probably find a buyer pretty quickly these days. And the extended home-buyer tax credit should continue to help.
The first chart is a fairly traditional graph of the overall condominium Months Supply in this area, laddered by price range. Months Supply is calculated as Current Inventory of condos for sale, divided by the average monthly rate of Sales, in this case through the summer months - July, August, September. It shows pretty much what you would expect in our current market - the selected area is a little more tightly defined than in the King County condo charts I usually do in Reiling's Real Estate Market Reports, but the shape is the same as in the full King County Months Supply by Price Range analysis I did in September. Overall the lower price ranges show about 8 months supply, rising to over 36 months (3 years - ouch!) supply in the high price range.
However, if we dig deeper, the picture changes quite a bit. It is somewhat common knowledge that many of the the newer high-rise urban condos are in trouble because they are expensive relative to prior low-rise developments, and because they have been overbuilt relative to demand.
What is less common knowledge is that the lower priced re-sale condos are selling very well - condominium homes under $500,000 that are in good condition and priced at market are selling fairly quickly.
So how do we see that in the data? This first chart shows the overall Months Supply situation for condominiums by price range, and clearly shows the sharply rising Months Supply (read oversupply) at the high end of the price range. Condominium Months Supply - Overall
The second chart shows the same situation broken down into a grid by price and age to show how some major segments of the condo market are performing differently. Condominium Supply - By Segment
The newer condos, those built in 2007 and later, represent almost 25% of the current market inventory, and even that is understated because the developers don't list every unit for sale - they often list only a sampling of the types of units, particularly those that are complete and ready for sale. By contrast, the older resale condos built before 2007, i.e 2006 and older, are almost 75% of the market, and generally sell for under $500,000. So in this chart, reading left to right, the first box set, Sales Rate, is the number of units sold per month through the summer in each age/price segment, the second box set is the remaining Inventory of unsold condo units in each segment, and the last box set is the current Months Supply in each segment. No surprise that the newer higher priced condos are way out in Buyer's-Market-land with over 15 months supply. But look at the lower-priced resale market at only 4 months supply! That is starting to be Seller's Market country, and is the source of some of the multiple-offer stories we've been hearing lately.
Updated from the original post on Greater Seattle Homes Blog
