To know if the market is getting better or worse, we have to expect something of the market.  That is the only way to know if the market is doing better or worse “than expected”.  Active markets anticipate.  If a company’s earnings are down to the same degree as anticipated and expected, there will be no change in prices.  So we have to expect something to happen, and this post is all about what I expect to happen in the King County – Seattle Area Real Estate Market.

To keep saying the market is down from peak for 3-5 years is both boring and of no value, and only fun ad nauseum for whiners.  I call that NSS (No Sh_t Sherlock) meaning no kidding the market is down from peak; that news is a year old now.  What’s next?

To those who hate it when an agent sticks their neck out and makes predictions, I say…go away then or get used to it or get over it.  Agents are paid good money to answer the question “Where is the real estate market going?”  If we only got paid to open doors and say “do you like this house”, we’d be paid $15 an hour.  That’s the going rate for a good real estate assistant. 

Sellers need to know if selling next year is better than selling this year.  Sellers need to know when they get an offer today, if that offer is or isn’t likely the best offer they are going to see in their timeframe.  Buyers need to know if they can sell in 1-3 years without taking a loss.  People need agents to have an opinion about the future, both the near term future and the foreseeable future,  They can’t simply rely on personal experience and say “well I’ve never seen that happen” because the future is not about the recent past.

The graphs below show what I expect the market to do as to volume, which will assist us in determining true Absorption Rate and knowing whether the market is getting better or worse (than expected). 

I’m calling Absorption Rate as of now, 10 months. Current inventory is 12,403 and I expect it to take 10 months from today for 12,403 Residential properties to sell in King County.  That also means it will be a Buyer’s Market until and unless we see inventory drop from 12,403 to 7,500.  That can happen by property selling, or sellers deciding to rent or withdraw from the marketplace, at a higher rate than properties are coming on market.  I expect that to start happening on September 1 and continue through year end.  Whether or not prices will continue to decrease into next year and beyond will depend on how close we can get to 7,500 properties on market by December 31st.

The two graphs below are a double check system.  On a month to month basis we would expect to see variance.  Sometimes August sales are higher than September, and sometimes September sales are higher than August.  So the double check is for the Quarterly sales stats to fall into the prescribed ranges within a reasonable variance.

I took the year notations off the monthly stats, as I don’t expect these numbers to change unless there are changes in the mortgage market that create additional buyers.  That could be lower interest rates and.or looser lending standards.  Until then, we have to learn to live with what we can most likely expect to happen.