As we looked at Mercer Island’s data and charts this month, we saw an automated market evaluation that we haven’t seen for a while – “September 2018 is a Buyer’s Market” (you can see this market highlight for yourself in the first Trendgraphix chart below). Contributing to this shift, inventory has increased, sales have decreased, and home prices are appearing to stabilize.
A recent Forbes article, “Home Prices Are Decelerating But Not Falling,” was our most interesting read this month; and “deceleration” is an apt description for our current market. The author points to a likely explanation for this deceleration, quoting David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, who stated that “the index of housing affordability has worsened substantially since the start of the year,” full article here.
With Mercer Island’s absorption rate hovering around 20% based on pending sales for the past two months, the velocity at which homes are selling has certainly changed as well. Buyers have some great opportunities and more leverage that they’ve had in years; however, mortgage rates continue to tick up. The rate for a 30-year fixed loan is currently at 4.7%, an increase from about 3.7% compared to one year ago.
An Overview of Mercer Island’s Single-Family Residential Market
In September, there were 26 new listings, slightly down from the 30 new listings we saw in August, though consistent with September 2017, when there were 27 new listings. Home sales were down significantly last month, with only 13 homes sold. Historically, home sales tend to slightly dip in August and September; however, this drop was unseasonably low. It’s more typical to see such a low number in January or February. By contrast, just the previous month we saw over double the number of sales, with 32 homes sold in August 2018. Looking back a year ago, there were 23 homes sold in September 2017, showing a considerable change year-over-year as well.
In our last monthly update, we remarked on the low number of pending properties, with 17 homes under contract at the end of August. Again, part of this adjustment may have been related to the late summer weather, resulting in buyers not venturing out during the two weeks of smoky skies and poor air quality. Additionally, with media reports highlighting a market slowdown and increased inventory region-wide, many buyers may have opted for the fence, watching and waiting for market conditions to increasingly turn in their favor, or for just the right house to come on the market.
Mercer Island Price Trends
As shown in the table below, the Mercer Island median sale price is slightly decreased month-over-month, though increased year over year. The average sale price is significantly decreased month-over-month and year-over-year. The data set was smaller than usual, so it’s always better to look at the quarterly data reports to make any meaningful analysis on price; though we noted that there were fewer sales of homes at luxury price points. However, we were interested to see that 8 of the 13 homes that sold last month sold at or above their list prices, and half of those homes sold above list price, indicating continued competition for some properties.
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.
