Finally, some relief may be in sight for buyers. A Seattle Times real estate headline puts it plainly – “Market shift? Big spike in Seattle-area homes for sale slows price growth.” Simple economics is at work here – supply is catching up with the demand. There’s also plenty of talk in the real estate community of the aforementioned “market shift” or “slow down.”
Beyond simple economics, industry leaders have pointed to rising interest rates and also noted that “the slowdown in pending sales has an international angle,” according to a recent NWMLS report. The Puget Sound Business Journal also recently reported that Chinese spending in local real estate has decreased, though that impact has (until now?) more strongly affected the commercial and luxury residential market.
Like the Seattle market, Mercer Island has experienced an increase in inventory, and prices may be leveling. Certainly, the trends are shifting, as the real estate data for the month of June makes clear.
An Overview of Mercer Island’s Single-Family Residential Market
In June, there were 55 new listings, a slight increase from the 51 new listings that came on the market in May 2018. Listings have also increased year-over-year, as there were 47 new listings in June 2017.
The number of sales was consistent last month compared to the previous month. There were 29 sold homes in June compared to 30 sold homes in May. Compared to last year’s market activity, last month’s home sales marked a significant decrease – only 29 homes were sold in June 2018 – compared to 51 sold homes in June 2017.
Surprised to see this 40% drop, we decided to look more closely at the data, specifically comparing the market trends from the first half of this year compared to the first half of last year. One of our favorite market indicators is the absorption rate. In the first half of 2017, we noted that the absorption rate steadily increased until it reached 80.6% in June 2017. Basically, as most new listings hit the market (especially for homes priced under $2 million), there was a buyer that absorbed that new listing within a month. After June, the absorption rate dropped as the market experienced the summer slowdown.
Market Trends for January – June 2017
Absorption rate – January – June 2017
For Sale / New Listings / Pending / Sold Properties – January – June 2017
Market trends for January – June 2018
Absorption rate – January – June 2018
For Sale / New Listings / Pending / Sold Properties – January – June 2018
The market has done something a bit different the first half of this year. It appears that market activity peaked early – in April (vs June). We noted that the absorption rate reached 75.5% before it dropped to 50% in May and 42.5% in June. One reason for the early peak is that the year just got off to a faster start than usual. There were 35% more new listings in January and February than the same months last year. With rising mortgage interest rates, buyers were also exceptionally motivated early in the year, snapping up new listings and keeping inventory low. New listings dropped off as they usually do in March due to spring break and holiday activities, but when they rebounded in May and June, some buyers held back.
Possible explanations: rising interest rates caused buyers to look for homes in more affordable neighborhoods; “buyer fatigue” set in, and those parties that competed repeatedly and unsuccessfully in the spring bidding wars decided to take a break; and some buyers may just be taking things more slowly, encouraged to see more new listings and waiting to see what the market will bring this summer and fall.
Though while the market has slowed a bit, the change is not dramatic. Overall, the inventory is just over 10% higher in 2018 compared to the first half of 2017; and the number of sales is down about 5%. Yet we’re feeling the difference, and there is reasonable consensus in the real estate community that the frenzy is over and we may be heading into a saner, slightly more balanced market.
Mercer Island Price Trends
It’s difficult to make any definitive statements about price based on the monthly data – the quarterly and annual data on Mercer Island prices is much more reliable – though we still like to keep our eye on it. As shown in the table below, the Mercer Island median and average sale prices decreased month-over-month; however, prices are about 4-5% higher compared to last year. Remarkably, 18 out of 23 homes under $2.5 million sold at or above list price in June 2018, which you can see for yourself in our nosy neighbor report below.
A Snapshot of the Current Inventory
As of today, Mercer Island has 72 active listings, and the inventory remains low for homes priced under $2 million. We’ve seen some movement in the luxury market, though the numbers have remained fairly consistent as new listings replace pending and sold homes (along with a few canceled and expired listings too). In June, we saw a new ultra-luxury listing hit the market – a beautiful waterfront estate located in the desirable Faben Point neighborhood on the north end – priced at $13,888,888. It is currently the second most expensive listing on Mercer Island. The most expensive listing is priced at $19,888,000 – a waterfront estate located on the east shore of Mercer Island.
Mercer Island new listings, pending sales, homes for sale, and homes sold for the past 15 months (single-family homes – does not include condos)*
*Trendgraphix data may vary from other data provided in this monthly market update. For example, while a listing may appear to be a “new listing” to Trendgraphix, it may have been canceled and re-entered into the MLS as a strategy to repopulate IDX feeds. Additionally, town homes are occasionally listed as both a single-family home and as a condominium home. We filter for these types of “new” listings and duplicate listings.
Mercer Island absorption rate based on homes sold for the past 15 months (single-family homes)*
The absorption rate indicates how quickly homes are selling. It is calculated by taking the number of properties sold divided by the number of properties for sale (as a percentage). In a buyer’s market, the absorption rate is 16.67% or lower. In a balanced market, the absorption rate range is from 16.67% to 33.33%, and in a seller’s market, the absorption rate is 33.33% and above.
June 2018 Real Estate Market Stats
Single-Family Residential Market (All)
- 55 new listings
- 29 sold homes
- Median sale price: $1,630,000
- Average sale price: $1,921,219
- Lowest sale price: $995,000
- Highest sale price: $3,750,000
Non-Waterfront Homes
- 51 new listings
- 28 sold homes
Waterfront Homes
- 4 new listings
- 1 sold home (Westside)
Mercer Island Condo Market
- 4 new listings
- 6 sold homes
- Lowest sale price: $345,000
- Highest sale price: $1,750,000
Mercer Island “Nosy Neighbor Report” – June 2018
Here’s our monthly “nosy neighbor” report with data for all single-family home sales on Mercer Island (not including unlisted sales). If you’re curious about a recent sale in your neighborhood, you can learn the details with a quick glance at the report below or by clicking on the map for sale details.
Click here for a full-size PDF.
Current Mercer Island Listings
By Home Type / Location
- Mercer Island Condos
- Single-Family Residential Homes (All)
- New Construction Homes
- Waterfront Homes
- Search by Neighborhood
By Price
- $1 million or less
- $1 million to $1.5 million
- $1.5 million to $2 million
- $2 million to $2.5 million
- $2.5 million to $3 million
- $3 million to $4 million
- $4 million to $5 million
- $5 million or more
If you are in need of real estate services, we would love to help. Get in touch today. Check out all of our recent sales here, visit our Listings Portfolio here, and read our testimonials here.
Charlie Sirianni, JD, ABR
Managing Broker
Windermere Mercer Island
Call: 206-992-6151
Email: [email protected]
Erin Sirianni
My MI Founder & Editor / Residential Broker
Windermere Mercer Island
Call: 206-992-5272
Email: [email protected]
[Feature image: A beautifully remodeled south-end Mercer Island home with lovely surrounding gardens – we were thrilled to help our clients secure this wonderful property. Photo credit: NWMLS / Lilli Ann Carey, Coldwell Banker/Danforth]
