Market Report: The North Sound Market

Posted 05/17/2010 by Rob Schmaus

North King and Snohomish counties hold a wide range of price points, and in today’s market, price points are the best way to determine what’s selling and what’s not.

We’ll start in Snohomish County, on the high-end. Homes over a million dollars in Edmonds and Mukilteo have stalled… more like hit a wall. In 2009, Edmonds saw 6 homes sell for over one million dollars. 3 of those sales were 3rd party properties; indicating foreclosures or 'short sales'. We have seen a large number of older 1970s-90’s homes with views, that at one time would’ve been valued over a million dollars, drop well below that mark.

New construction has been hit hardest; where we have seen fewer than 30 new homes sold in all of 2009 and 27 homes in 2008 (low point in the market). Compare those numbers to 65 new homes sold in 2007 and 96 new homes sold in 2006 for Snohomish County. The middle market (400k-700k) has recovered slightly from a serious low point in early 2009. This section of the market is usually the strongest, typically holding move-up buyers rather than first-time buyers. However, in the past year, we have observed a rash of move-DOWN buyers taking buyers away from this segment. Adding to the move away from mid-market, the government has set its sights on helping first-time buyers (until recently when they provided incentives for move-up buyers therough the first-time home buyer credit program).

Loans for the mid-market segment are currently harder to get, although rates remain low if you can qualify. The Lynnwood, Bothell, Brier and especially Mill Creek real estate markets were strongly hit here as the bulk of their inventory falls into this segment.

Mill Creek is a special case where a vast number of new unsold condominiums/townhomes remain on the market in 2010. This is stagnant inventory that has been on the market for an average 0f 200+ days. It will be a big bonus to all homeowners and sellers when that inventory is cleared from the market and competition returns to normal.

Moving further south into King County, areas like Richmond Beach, Shoreline, Northgate, Greenwood, and even those as far south as Ballard and Green Lake have been seeing similar issues in their markets. However, the low end price point in this area (200-400k) does seem to be significantly stronger than higher price points. Homes in this range are tending to sell faster, though still for 3-5% less than last year at the same time. These southern areas have also struggled in the high price points. In Ballard, new construction has been a bear for builders over the past 2 years. Confidence is without a doubt the biggest barrier for buyers.

"What if I lose my job?" "What if the price continues to go down?" "Why not just wait to buy?" These are the questions that have hamstringed the high end buyer for over a year now. It doesn’t help that banks are asking similar questions, and have dried up their high-end loan money accordingly.