A recent sale in North Seattle. Photo courtesy of Evan Parker, Digital Homeshow

The March Real Estate update shows that Seattle’s market currently has three tiers.

First tier homes are those that are being sold short (the Seller owes more to the bank than what they can sell the  property for) or are bank owned. These homes are selling for 14-17% less than market rate.

Properties with deferred maintenance and priced close to market make up 2^nd tier properties. These  homes usually sell for less than the most preferred  but get more than homes sold short.

Third tier homes are the most desirable. These are well priced; well maintained and often have been updated. Starting in December we began to see these home sell quickly (offers within 3-7 days) and often with multiple offers.

A few properties would receive offers for more than list but most would receive offers at list or below. Buyers would sweeten their offer NOT with cash but with better terms (for e.g., a quick close date or Seller rent back with no fee charged). This trend has continued as we move into the spring market!

NWMLS data released this week show that prices in King County have dipped some but that the median price for an in city, Seattle home was actually up 3% from February, 2011. This means that most 2^nd and 3^rd  tier homes are selling somewhere between 2004 and 2006 prices.

Expect lower prices to continue as the back log of bank owned properties aka “the shadow inventory”  is released into the market. This will  happen because the sheer volume of bank owned properties will hold prices down.

John Gardner, a local economist estimates the shadow inventory in the Puget Sound region to be equal to the Northwest Multiple’s entire inventory.

The good news for Sellers is that low interest rates are pushing more Buyers into the market place. Recent statistics released by NAR (National Association of Realtors) show that nationally pending sales in January were up over 8% from a year ago.

Locally, the NWMLS  reports pending sales in February were up 27% from February, 2011. The moral of the story, homes priced correctly are selling!

Lower prices combined with lower interest rates means Buyers can buy a home today for the same price as a home which sold six to eight years ago. Yet their monthly costs will be less!! And the amount of money Buyers will save over the life of the loan is considerable.

Consider this example.

Buyer Smith buys a home in 2005 Sales for $235,000

Buyer Jones can buy that same home today for $235,000

Both Buyers get 30 year, fixed rate conventional mortgages.

Buyer Smith’s interest rate was 6.27%; his principal & interest are $1499.99

Buyer Jones’ interest  rate is 3.875%; his principal & interest are $1105.06

Buyer Jones saves $344.93 per month and $124,174.80 over the life of the loan. If you are thinking of buying now is defenitely the time to do it!

Post a comment or call me directly at  206.915.1076 if you have a question about today’s post.

All the best,

Mary

**Interest rate information courtesy  of Eileen Burke, Cobalt Mortgage. You can contact Eileen at www. Eileenburke.com or via email Eileen.burke@cobaltmortgage.com