“I want HALF, Eddie” – West Seattle Property Forecast
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…or so goes the quote from the buck nekid chick with a bone in her hair riding on the back of a zebra.
For those of you too young or cultured to get that reference, don’t worry. It’s not germane to what we’re going to discuss here…Seattle real estate.
This holiday season I was talking about my view of where Seattle real estate prices were headed. Specifically, I was discussing West Seattle real estate, but my views can be used interchangeably for pretty much any moderately desirable Seattle neighborhood.
In a nutshell, even though the prices had come down a bit, I think Seattle real estate still needs to be HALVED to be considered a ‘good deal’ (by my standards).
To be perfectly clear, I actually meant that as of Christmas 2010, the prices needed to be chopped in half still. And, to be perfectly honest, I just said, “HALF” cuz it was a nice round number, a little bit shocking, and easy to keep track of. I might be interested at a 35 or 40 percent reduction as well…depending entirely on the property and the situation of course.
Rather than get into the ‘why’ (that will be several LONG posts) I just want to start looking at prices.
Before we get started, we can agree that prices PAID are the only prices that define the real market. Unfortunately, with my tools, even paid prices are soiled, in that, prices paid by banks taking homes back through foreclosure sales are recorded as a sale and a price.
So, for now, I’m just going to start my investigation of prices by looking at the WISHING PRICES (asking prices) of different properties that haven’t moved yet….with the assumption that the market that clears these properties is either at or below these levels (for now — until we start seeing multiple bids over ask on properties again).
In West Seattle, there are 101 single family houses that have had their prices reduced in the last 30 days. Generally speaking, the further south (and east), the more aggressive the price cutting so far. This follows the general pattern elsewhere that as the bubble has played out, prime areas go last.
Let’s look at a few:
West Seattle Property Price Reduction #1 (follow the link to see the complete Redfin listing)
Price History:
| Date | Event | Price | ||||
|---|---|---|---|---|---|---|
Apr 01, 2011 |
Price Changed |
$284,900 |
||||
Mar 14, 2011 |
Price Changed |
$294,900 |
||||
Feb 22, 2011 |
Price Changed |
$309,900 |
||||
Feb 04, 2011 |
Listed (Active) |
$324,900 |
||||
Dec 21, 2010 |
FORECLOSURE |
$328,500 |
||||
Jun 06, 2006 |
Sold (Public Records) |
$386,000 |
||||
Jun 27, 1997 |
Sold (Public Records) |
$166,000 |
||||
Mar 23, 1989 |
Sold (Public Records) |
$45,000 |
||||
I’ll grant you this property looks anything but “PRIME” but lets do a little digging and cypherin’ here. It sold in 89, for $45k, then again, 8 years later for more than 3x that price. It’s unknown if it was updated or rebuilt between those two transactions, but for our purposes (it just so happens) that 1997 prices are about what I consider FAIR these days (in most cases). With that in mind, let’s continue…
In the span of 9 years between my “fair” price of 166k, it goes to 386k when it is sold in June of 2006.
4.5 years later the bank forecloses on the property for 328,500 (presumably the unpaid portion of the 1st mortgage on the property).
The bank takes Christmas and another month to ensure that they’ve evicted any former home-loaners (and varmits hopefully) and put it on the market a month later for 324,900 — kind of them to whack a whopping 3,600 off their price. Wow. 1.09% reduction. Only 48.91% more to go to get me interested! 
After 18 days of no takers, the bank wises up and reduces the price to $309,900
That’s a 15k reduction. $833.33 for each day you don’t buy and put up with the indignity of not being able to paint the walls in your rental.
20 days later, another $15k.
Another 18 days, another $10k.
At this point, the asking price is a full 43,600 below the price from Christmastime 2010.
That’s a 13.27% reduction, and what I would call, “A START”
I imagine that even with continued disinterest in this property the price reductions will slow since the quarterly reduction of 13.27% is a 43.5% reduction when annualized (1-13.27% to the fourth power).
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