Seattle SFR

The monthly stats were recently released and deserve a look (charts from Seattle Bubble).

 Closed sales have picked up a bit from 2008/2009 levels and are close to 2010 tax favored levels.  While by no means robust, closing might be stabilizing.

 Pending sales look even better this year than 2008/2009.  The end of the tax incentives last April is clearly shown by the severe sales drop off last May.  There's only a couple more months to the "Selling Season."  A stable Summer/Fall of sales similar to 2009 would be very constructive for the market.

Interestingly, inventory levels have stayed relatively flat this year.  Even with slow closings, months supply of homes is less than 4, which historically has resulted in firmer pricing.  If new sales can stabilize, inventory levels should drop accordingly.  While looking for a catalyst for continued sales low mortgage rates come to mind, but market based prices seem more likely to compel more purchases.

Prices have continued their downward direction, dropping about 10% since last Summer.  Home prices are at their cheapest level in 3 1/2 years, matching prices not seen since 2004.  Low sales and inventory levels are making it look like most people have simply lost interest in the real estate market (which is a necessary step in the recovery process).  Those that have to sell are resorting to lowering their asking price.  Prices aren't going to stabilize until these homes are sold, and, volumes start to pick up.  Lower prices are the best way to achieve this.  If this doesn't happen by the Fall, it will have to wait until next Spring.