Seattle SFR

Time for a look at how the Single Family Residential market is faring in Seattle.  On the demand side:

Closings have been pretty stable since March averaging over 1500/month.  That's a stark contrast to the slow down in closings last year after the expiration of the tax credit.  At this point stable is good since that would put closings at the highest level since the 2007 meltdown.
On the Supply side:

Inventory also remains stable averaging near 8,000 units, the lowest amount in years.  That puts the month's supply a little over 5, which is pretty good.  With the selling season almost over seasonality should kick in resulting in lower inventory.  The typical pattern is for homeowners who failed to sell earlier to take their homes off the market.  The remaining inventory would be from motivated sellers.  Just eyeballin' it, inventory usually drops 30% into yearend.  That would take inventory available for sale down to 5,600 units at yearend.  It seems to me that the inventory would consist primarily of bank influenced properties (REO's/short sales) with owners (banks) attempting to shore up their 12/31 financial statements.
The balancing mechanism between supply and demand is price:

So far, the bounce in prices appears to be due to seasonality.  Since 2008, the selling season bounces have been; 2008 - lasted 1 month and increased 3%, 2009 - lasted 9 months with no price appreciation, 2010 - lasted 4 months and increased 3%, 2011 (ytd) has been 4 months with 3% appreciation.  So the increase this year, at this point, looks seasonally driven.  After the selling season appreciation in 2008 prices fell for 10 months resulting in a 17% decrease.  In 2009, prices fell for 5 months for a 5% decrease.  In 2010 prices fell for 8 months for a 9% decrease.  It seems the key to the market will be how prices behave during the slow months.

Taking a closer look at recent prices it is evident that the lower priced homes are taking the brunt of the decrease.  Anecdotal information suggests that well priced nice homes are being snatched up quickly, often resulting in multiple bid situations.  Over priced POSs are being passed up resulting in lower listing prices driving prices down.  As disappointed would be sellers take their homes off the market during the slow season I would expect the remaining motivated sellers to aggressively price their homes to move.  The result will be that prices will drop, with some amazing values appearing in the lower end of the market.  Investors and Flippers would be well advised to scour the market for these upcoming gems.

Charts from Seattle Bubble.