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Is real estate ripe for a rebound?
Is it true? Is the real estate market beginning to come back?
Yes, maybe, kind of — perhaps slowly and hopefully surely.
A look back at the Island’s April real estate numbers shows again that fewer homes were on the market. The number of new listings added last month were nearly double that of a year ago, but the total number listed remained flat. The number of closed or final sales remained about the same as last year, but prices were up sharply to just over $1 million from $859,000 a year ago. Condos for sale remain few and far between with only four active listings here last month compared to 14 a year ago. There were just eight pending sales and only four condo sales were finalized.
The market is improving for sellers, but not for buyers. Desirable inventory remains low, driving up prices.
Because of the limited inventory, realtors say that they are receiving multiple offers for some properties.
At the annual housing issues briefing held last week in Bellevue by the Northwest Multiple Listing Service’s government affairs committee, regional economist John Mitchell noted that growth is returning. Consumer spending is up.
But conversely, higher than healthy unemployment keeps interest rates low.
A mixed blessing oth markers are advantageous for real estate.
Mitchell said as long as the relationship between inflation and unemployment remains stable, interest rates will remain low. Historically low interest rates are helping to drive the fledging return in the housing market.
“It is the federal government that is now a ‘drag’ on the economy,” he said, as it has cut programs, spending and federal workers. Offsetting those effects somewhat is a slight uptick in wages for employed workers, who despite everything, are beginning to feel better and are starting to spend. And due to population growth, more people are looking for homes.
Wild cards are global events, consumer prices (which have gyrated wildly over the past 15 months) and falling energy prices, Mitchell said. Also unknown is the effect of Obamacare and longer term impacts of the fate of the Bush tax cuts. Many people are employed now but work part time.
Mitchell concludes that the economy has not improved as much as it has simply recovered.
“It is now the economy we had in 2007,” he said. So despite some return to normalcy, consumers — or most importantly, homeowners — now find their wealth at the same level as it was five or six years ago. Those years of gaining wealth through homeownership have been lost, he said.
On Mercer Island, as of May 9, there were 106 properties on the market; all but three are single family homes. They range in price from $16,750 million for a 14,000-square-foot, eight-bedroom, eight-bath waterfront mansion with a pool to a 1,300-square-foot, $269,000 Town Center condo.
For the residential properties as of May 9, 19 were offered for sale at $1 million or less, and only 3 were offered at less than $500,000. They are all condos. The majority of properties, 46, are priced between $1 million and $2 million. Twenty properties are offered between $2 and $4 million; 18 between $4 and $6 million.