June 19, 2008
Cutting Bait
I saw a discussion Monday over on seattlebubble.com about West Seattle houses on the market being sold for less than their purchase price. Since that’s my area, naturally it piqued my interest.
There are evidently lots of houses for sale in West Seattle where people lost money. In some cases, lots of money. The general consensus among those commenting on the blog post was that this was a big problem in West Seattle. I wondered if nearby neighborhoods had similar symptoms, so I dumped some data from Redfin and had a look. Here’s a summary:
| Where | Total Inventory | Number/Percentage | Loss Range |
|---|---|---|---|
| West Seattle | 393 | 30/7.6% | $50-$1.28M |
| Queen Anne | 160 | 11/6.9% | $40K-$453K |
| Capitol Hill | 87 | 2/2.3% | $2K-$50K |
| Mercer Island | 194 | 1/0.5% | $35K |
There are some footnotes about this data. First, not all houses contain past sale information; maybe one third or so of them don’t list a previous sale price and date. Second, this does not factor in the age of the house, but I think you can probably guess when most of these money losers were purchased: all but one of the 44 of them were purchased in 2005 or later–the single outlier was bought in 2003.
What does this data tell me? It’s hard to say. To confirm what people were saying on seattlebubble.com, yes, West Seattle is showing the worst of it by percentage of total inventory, but only slightly ahead of Queen Anne. It looks to me like Capitol Hill and Mercer Island homes have held their value well.
Even this is not certain though, since these latter areas generally have more expensive homes than the former, which may imply something about their homeowners’ ability to wait longer to sell a home and therefore not resign themselves to losing money. Furthermore, it may be that investors and home flippers generally could not afford homes in the more expensive areas.
As a homeowner in West Seattle, this makes me wonder about what my neighbors will be selling their homes for in five or ten years. It also reminds me that it’s a buyer’s market right now, unfortunately for sellers.
