Seattle Waterfront Home Prices Dip in 2009, Recovery in 2010?

In my last post, I took a look at the overall decline in the median prices for waterfront home sales from 2007 through 2009. While the numbers look bleak, there are a few bright spots to consider.

Median home prices are a good indicator of the direction of a market in general, but they often overstate a trend. Waterfront homes haven't lost nearly the value that the current median sale price might lead you to believe. To put it simply: 

 

If the majority of car sales in 2008 were Mercedes and BMWs, the median price for car sales that year could be near $70,000. In a tough 2009 economy, most people decide to buy Toyotas and Fords instead, and the median sale price for 2009 becomes $30,000. Does this mean that the 2008 Mercedes are now worth 60% less this year? Of course not. There is a definite downward trend in the market, but when the bulk of the market switches between price segments, the median presents an overly dramatic view of the trend.

 

This is the same effect we saw in waterfront homes this year. The market shifted dramatically in 2009 to lower-priced waterfront homes in King County and Seattle. Some of this is accounted for by overall decreases in prices, but much of it is just a shift towards lower-priced waterfront properties--houseboats, smaller houses, less land.

While you can see the total numbers dipping, there's also a striking rise in the number of home sales under $500,000. 2009, in particular, had the lower-priced waterfront homes become the top sale category for the first time in years. The shift shows the overall lack of buyers for high-end property in recent years.

 

Even more convincing are the trends based on percentage of the market. Both King County and Seattle show a quickly increasing percentage of waterfront home sales under $500,000. These lower-priced homes made up almost half of the total waterfront sales for 2009.

 

So, what does this mean for a recovery? We always have to stregthen the base of a real estate market before the mid-level and high-end homes begin selling again. The 2009 numbers for lower-priced waterfront homes seem to be a leading indicator for a healthier waterfront market. While there's no assurance of continued strength, the signs point toward a slow recovery from the bottom up.

 

Source: Individually compiled NWMLS statistics. The NWMLS database and statistics do not include many new construction pre-sale units, private sales or auction sales. These statistics were not compiled or published by the Northwest Multiple Listing Service.

 

Sam DeBord and Brian Wiegand
SeattleHome.com - Washington State Realty - (206) 658-3225
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