July 2018 Real Estate Market Update

August 13, 2018 | by Erin Sirianni

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We’ve been reading the latest real estate news reports with great interest, especially industry insiders’ interpretations of the regional market shift. With a 44% year-over-year increase in inventory across King County, the question raised in a recent Seattle Times article was this: “Is the market simply taking a breather before surging back up again, or is this the beginning of a new normal?”

We’re cautiously optimistic about this “new normal,” as a more balanced market would also point toward a healthier, more sustainable market for the long run. Just a week ago, a fantastic mid-century view property on Mercer Island garnered 7 offers and, undoubtedly, a great price and terms for the sellers.

Competition for truly special properties shouldn’t be unusual, but similar scenarios have, until more recently, become commonplace for affordably priced homes in Seattle, Mercer Island, and the Eastside.

This competition is making the greater Seattle area an increasingly expensive place to live. The recent Forbes article, “Are US Home Prices Peaking?,” is also a particularly worthwhile read for its discussion of “upward price momentum.” That momentum has been breathtaking in Seattle where prices have “roughly doubled” in the past six years. That’s true for Mercer Island too – in 2012, the median sale price for a single-family home was $855,500; in 2018, we’ve reached a median home price of $1,650,000, based on total sales so far.

More inventory is providing relief and a more sane experience for home buyers and price stabilization, as well. But the question remains, will this last? Or is this just a seasonal trend, as inventory typically builds up in the summer? Will we watch inventory decrease throughout the fall and winter months, and will the spring bring the frenzy back again? Time will tell. For now, here’s a look back at what happened last month in Mercer Island real estate.

An Overview of Mercer Island’s Single-Family Residential Market

In July, there were 37 new listings, down from the 55 new listings we saw in June. Though the drop was significant, it’s a typical seasonal transition that we see on Mercer Island from spring to summer. Buyers saw more listings last month than the buyers who were house-hunting in July 2017, a month which only brought 27 new listings to Mercer Island. In the midst of the summer slowdown, the shift to a more balanced market continues, as inventory climbs.

The number of sales was consistent month-over-month and year-over-year. We saw 30 sales in July, slightly increased from the 29 homes sold in June 2018, and slightly decreased from 33 homes sold in July 2017. Consistency in the number of homes sold month-over-month and year-over-year is a sign of a healthy, stable market. Over the past two years, the number of homes sold for any given month has ranged from 13 (January 2017) to 54 (June 2017), with an average of 29 homes sold/month.

Mercer Island Price Trends
As shown in the table below, the Mercer Island median and average sale prices increased month-over-month and year-over-year. The median price is significantly increased compared to the previous month as well as the same month last year. An increase in the number of luxury home sales contributed to this shift. In July, there were 13 sales over $2 million, including the sale of a $4.65 million waterfront home; by comparison, there were 10 sales over $2 million in June, with the highest sale being $3.75 million.

A quick note about our new “Trends at a Glance” table in regard to median and average sale price:  The Mercer Island monthly sales data set is small, and we provide the median and average sale prices from one month ago and one year ago as an interesting comparison. However, waterfront or luxury sales can skew the average and median monthly sale prices to the high side. To get a more accurate sense of appreciation on Mercer Island, we suggest that you look at quarterly and annual Mercer Island market reports.

A Snapshot of the Current Inventory

Mercer Island had 83 active listings on August 11th, 2018, the largest volume since August 2016. Buyers are enjoying this increased supply of inventory, though we’re still not looking at a large surplus of homes for sale by any means. We’ve seen an increase in inventory of homes priced between $1.25 and $1.5 million, as well as an increase in homes priced between $2 and $3 million.