(This is a sponsored post by Kris Murphy and Daniela Dombrowski, Wallingford realtors)
Bidding wars continue to be the norm rather than the exception in our Wallingford & Tangletown neighborhoods as well as rest of the region. While we see escalations as much as 50% in one case, the overall average in the last 6 months was 7.3% over asking price which is 0.6% higher than during the same period in 2014 which shows that the market is even more competitive than a year ago. We find that pricing along with condition and presentation is the key to maximizing your return on investment. Some sellers attempt to price at the highest end of the range or higher and this strategy tends to backfire often necessitating price drops down road and ending up with a lower sales price as the end result . While you don’t want to leave money on the table, you also need to leave some room for the market to drive the sales price to the highest level. Pricing and negotiations in this competitive market are both an art and a science.
We are often asked if we think this is another bubble, or when the escalations will stop. While the market is certain to change at some point, the current demand is based on a solid local economy rather than risky lending practices which caused the Great Recession in 2007/2008. Seattle is one of the fastest growing cities in the US and has been hailed as the next Silicon Valley. Compared to San Francisco home prices are still a bargain in our region. The quality of life and natural beauty are other factors driving the growth as a recent Puget Sound Business Journal poll revealed. If and when interest rates begin to rise the escalations and demand may ease gradually, however, the strong sellers’ market is likely to continue for the foreseeable future.
In this forum, we will focus on Wallingford & Tangletown numbers specifically so that you may get an idea of how your investment may be impacted by the current boom.
The statistics provided in this post are hyper-local, capturing only Wallingford and Tangletown. The numbers are for single family homes including townhomes.
Statistics in the table below are based on home sales in the area outlined on the map above and are derived from the Northwest Multiple Listing Service data.
| Second Quarter + July 2014 to 2015 Home Sales Comparison | 2014 | 2015 | Difference | % |
| Number of Closed Sales | 101 | 116 | +15 | +14% |
| Average Days on Market | 11 | 9 | -2 | -18% |
| Average List Price | $674,005 | $699,266 | +$25,261 | +3.7% |
| Average Sales Price | $708,867 | $750,228 | +$41,361 | +5.8% |
| List to Sales Price Ratio | 106.7% | 107.3% | +.6% |
Single Family Homes
The number of sold homes in second quarter is up 14% from the same period in 2014. This is most likely because Wallingford was among the first neighborhoods to experience intense inventory shortages and subsequent bidding wars. Homeowners encouraged by the resulting sales prices may have decided to take advantage of these favorable market conditions resulting in slightly higher sales numbers.
Average days on market dropped from only 11 days to 9 days (18%). Although the inventory drop is less drastic than last quarter (see blue chart below), the trend of extremely low inventory continues, fostering the fiercely competitive conditions in our local market. The result is that the average sold price has risen 5.8% year over year to $750,228 in our neighborhood.
Escalations are intense. We have seen several single story with finished basements bungalows (around 2000 sqft) escalate well into $900,000 range this year. Several homes in this category escalated more than 20%. The sweeter the home, the better the location or the bigger the lot, the more intense is the bidding.
What the Trends are Telling Us
The following charts capture Wallingford and Green Lake (area as defined by NWMLS data) real estate trends for the last 15 months, beginning with May 2014.
The bar graph below tells us how many homes were available for sale (light green), how many went under contract (red line) and how many sales closed each month (dark green). We can see from the light green bars that there were far less homes available for sale in the second quarter of 2015 than during the second half of 2014. Actual closed sales (dark green) are lower than last year due to the lower supply in active listings. However, you can see that buyer demand is far outpacing supply (red line) and even as more houses came on the market in the spring and summer months, buyer demand kept pace and absorbed most available homes for sale quickly! Intense bidding wars and price increases are how these statistics continue to play out in the marketplace.
In the chart below, the yellow bar graph shows average days on market. You can see that even though days on market were low last year, they are even lower this year. Sellers are generally keeping their homes on the market for about a week before looking at offers; otherwise, the days on market figures would be even lower. If consumers could buy a home on the spot, they would, but sellers would rather create competition to drive the price up. Also reflected in this chart is the original list price to sales price ratio which shows that average escalations are higher this quarter (ranging between 105% and 109%) than during the second half of last year (in the range of 103% to 104%).
The chart below illustrates months of inventory. It is derived based on a calculation dividing the number of active homes for sale by the number of homes that closed in a given month and attempts to project how many months it will take for the entire available inventory to sell. Anything under 2 months of inventory represents a sellers’ market. You can see how inventory in the second quarter of 2015 has significantly dropped even below the already low numbers of 2014.
Summary
For sellers, there has never been a better time to sell. Real Estate markets, like stock markets can change quickly and right now is kind of like getting the chance to buy Netflix shares before Blockbuster went, well, bust. However, we have no current indicators that conditions will change in the near future. Once interest rates begin to rise, as is predicted, the market may change as buyers will have less buying power and feel less pressure to act quickly. Also, once sellers begin taking advantage of this market, inventory may rise and we may start seeing a slowdown in the market.
Investors are now in the game
In our practice, we have been seeing numerous long-term landlords taking advantage of the market and realizing their returns. Foreign buyers with cash also represent a big buyer segment which has also intensified price increases for multi-family and other investment properties.
Price Thresholds Broken
Another trend we are overserving is previous price limit thresholds in both Wallingford and Green Lake have changed. Consumers are taken with these neighborhoods and are willing to pay top dollar to be here. In both neighborhoods there have been multiple properties that have sold over 1.6 million dollars.
(Kris Murphy and Daniela Dombrowski are Wallyhood sponsors and real estate brokers who live and specialize in the Wallingford and Green Lake neighborhoods. They practice out of the Keller Williams Greater Seattle office located on the corner of Stone Way and N 45th St.)
Thanks for the detailed report! I have two questions:
(1) isn’t Tangletown part of Wallingford?
(2) do you think current demand and prices are factoring in the impact from the U-District light rail station and HALA rezone?
I moved in to 52 and Kensington in 1969 and have always looked at “neighborhood” maps. All I could find and I looked. Traditionally, no matter what anyone tells you – Wallingford was defined as I-5 to Stone Way (after I-5 went in; not that long ago, really), Lake Union to N.E. 50th. That left out I-5 to Stone/Grn Lk Way, N.E. 50th to 65th. When Briggs Pharmacy Left and rXtra care pharmacy moved in (sp?) they put out a newsletter called “Tangletown.” Some told me there was/had been/is a coffee (?) place called “Tangletown.” So, I always figured “Yea! We have a name!” … and indeed, it is a tangletown – although “Maps” of all kinds keep the numbers of lost people down. That is my imperfect knowledge of the ‘hood. And I have seen several maps that included north of N.E. 50 as Wallingford, but they were not the majority, and came later.
Technically, yes, Tangletown is a part of Wallingford. I believe that Wallingford technically goes to 60th. However this is not how people think of the areas. Common perception is that Wallingford stops at 50th, and it feels that way as well. As realtor/brokers we have to make a judgment call when selling homes in Tangletown should we call it Green Lake or Wallingford because there is no official area called Tangletown in the MLS. Usually Green Lake wins out. But if it is very close to 50th we sometimes go with Wallingford.
Good point about light rail, this could very well factor in as our area values are definitely higher than other close-in neighborhoods. Our central location and convenience for commuting have always been key selling factors in both Wallingford and GreenLake as well.
Neighborhoods are imaginary. If there’s a Tangletown in your head, so there is. If you instead find that same place to be Wallingford, so it is, and on top of that there’s no reason at all it can’t be both. (Or Queen Anne for that matter, but if that’s where you are, it would probably be better to keep that to yourself.)
Plenty of people who live on the “other” side of Stone Way feel like they’re in Wallingford, and they’re certainly welcome to in my opinion. A Stone Way boundary really illustrates the pointlessness of boundaries — is Tutta Bella in Fremont, while Stone Way Hardware is in Wallingford? Not really.
Kris, does Greenlake have a “neighborhood” ? Is there a particular location that feels like neighborhood in Greenlake? Wallingford has the feeling of being a neighborhood where people go to get a meal, do errands, support local budsinesses, chat with business owners and with each other. I have lived in the between Wallingford and Greenlake area for 36 years. I have not found a “neighborhood” feeling around Greenlake and would like to. .
IMO, the area at the East end of the lake is the most neighborhood-y. You’ve got the library, restaurants and shops, cafes, yoga studios, and now the new PCC!
Plus, the lake is right there.
Absolutely, I concur, it is growing by leaps and bounds. The new Shelter restaurant, the Mykonos Greek restaurant, Jodee’s desserts, coffee joints abound, PCC and several more and all next to the Central Park of Seattle, Green Lake. The Green Lake Chamber of Commerce launched a few years ago and is definitely building community as well.