Though inventory did not increase as much as usual in July, our normal seasonal slowdown is reflected in longer market times and increasing price reductions. On the Eastside, the median cost of a Single Family Residence (SFR) decreased slightly (less than 2%) to $1.58M in July. Seattle experienced over a 6% drop in the SFR median price to $1.01M, but they also had a big increase last month, so some of that adjustment is to be expected.
One surprise was the 19% drop in the Eastside condo median price to $629,000. The Seattle condo median price decreased almost 7% to $550k. While the significant drop on the Eastside may be somewhat of an anomaly, I do believe that the more stringent underwriting guidelines for condo insurance and mortgages are having an impact. HOAs are facing huge increases in their insurance costs and there is little they can do about it. A property manager recently told me that insurance premiums for one of the complexes she manages have gone up 8-fold in the past couple of years! Similarly, a review of the finances for one of my recent condo listings revealed that over 40% of the operating budget was being spent on insurance. The increase in dues necessary to offset these costs makes condos less affordable, which is putting downward pressure on sales prices. Older complexes are particularly vulnerable as they often have deferred maintenance and low reserves, which lenders are no longer willing to overlook. The moral of this story is that, if you’re considering purchasing a condo, it’s critical to use an experienced agent who can ensure you receive all the information needed to assess the financial health of the complex. If you already own a condo, it’s important to be active in your HOA and stay informed when maintenance and financial issues are being discussed or voted on.
As always, I’m happy to help you with your real estate needs and/or to discuss the market – just text, email or call me.
Until then, I hope you are enjoying our beautiful summer weather!
