My North Seattle Home

February 13, 2012

OMG! The median sale price of Magnolia and Capitol Hill homes dropped 16% and 12% in 2011. Yes, but not really.

• Posted by Conor
• 2 Comments

For Magnolia real estate and Capitol Hill real estate in Seattle, a comparison of the median sale price of all single family homes that sold in 2011 versus 2010, showed that prices dropped by 16% and 12% respectively. Holy cow! When I first saw this data, I thought I must have made a mistake with my calculations, so I ran the numbers again and got the same answer. Admit it, you love statistics and are just dying to know what my great explanation is for these less than inspiring numbers.

So yes, the median sale price for the combined sales of all single family homes DID actually drop a lot in one year…..statistically speaking that is. Obviously there is no way that home prices could have dropped that much in two of Seattle’s best and high end neighborhoods. A similar comparison showed Ballard median prices dropped 3% and Green Lake increased 3% (see graph below). Sought after, north Seattle neighborhoods close to downtown are generally considered to be stabilizing price wise and probably “bouncing along the bottom” (however, the proof is in the pudding and time will tell if this is actually the case).

Note that median price is the price at which half the homes sold for more than that price and half the homes sold for less than that price.

I generated this data from recorded sales between Jan 1st and December of 31st of each year from the NWMLS and Realist databases. Single family homes are comprised of houses and townhomes but not condos. I excluded distressed properties (short sales and bank-owned homes).

So what do both Magnolia and Capitol Hill neighborhoods have in common that Ballard and Green Lake don’t? They both have a higher percentage of high end million dollar homes but also lower priced “more affordable” homes. I suspected that the “statistical aberration” had something to do with that particular property mix. I broke down the home sales data a little further to see if there were any obvious differences between 2010 and 2011 sales.  I separated sales into different price ranges and compared the percentage of sales in each price range. And therein lay the answer……….

 For Magnolia single family home sales…

The total number of sales of single family homes in 2011 was 181, a drop of 8% from 2010 (199 homes). For distressed properties there were 28 and 30 sales for 2010 and 2011 respectively (not shown). Sales of homes above $600,000 dropped from 49% of all sales in 2010 to 32% in 2011. However, sales in the sub $600,000 range increased from 51% to 68%.

Similarly, for Capitol Hill single family home sales….

For Capitol Hill real estate, there was a 20% increase in the number of sales of single family homes in 2011 compared to 2010 (120 and 98 respectively). Capitol Hill homes that sold for above $800.000 dropped from 57% of all sales in 2010 to 41% in 2011. Conversely, the number of sales for homes that sold for less than $800,000 increased from 43% in 2010 to 59% in 2011.

Conclusions:

• For both the Magnolia and Capitol Hill neighborhoods in Seattle, from 2010 to 2011, there was a substantial drop in the percentage of sales of high end homes and a corresponding increase in the sales of more affordable homes. I use the phrase “affordable” loosely in reference to these two neighborhoods.
• The shift towards sales of the lower priced homes in each neighborhood resulted in an overall median sale price drop from 2010 to 2011 (when comparing the medians for combined sales for each year).
• It is highly unlikely that the value of an individual home dropped by 16% in Magnolia and 12% in Capitol Hill over the past year. The market may not be great, but it’s certainly not that bad (see Ballard and Green Lake above).
• All statistics have limitations, especially in real estate where there is a large spectrum from condos to houses, from short sales to three million dollar homes…..proverbial apples and oranges even though they’re all oranges (or is it apples?).

You can exhale now and put down those tranquilizers!