We got some pushback recently when we
described Madison Park as an extreme “buyer’s market” on the residential real
estate front — in other words, a “very cold” sales environment. That was not an
original conclusion on our part, however; we were simply quoting the opinion of
real estate website Zillow.
Not surprisingly, some readers disputed the notion that this
is not a seller’s market, and they seem to have a point.
According to Merriam-Webster, a buyer’s market is “a market
in which goods are plentiful, buyers have a wide range of choice and prices
tend to be low.” That seems to be pretty much the opposite of the situation
here, where, at the end of the first quarter, there were only 22 residential
listings — hardly a “goods are plentiful” situation for a market that saw more
than 100 listings during the downturn, with prices significantly lower than the
current median sales price.
Here’s a capsule summary of the market at the end of the
Median list price: $2.595 million
Median square footage: 4,105
Median price per square foot: $625
Average days on market: 78
Percentage with price reductions: 9%
New listings: 22
Pending sales: 10
Median list price: $475,000
Median square footage: 1,025
Median price per square foot: $463
Average days on market: 132
Percentage with price reductions: 60%
New listings: 2
Pending sales: 0
This market snapshot seems to prove we’re experiencing a
seller’s market, which the dictionary defines as “a market in which goods are
scarce, buyers have limited range of choice and prices are high.”
We went back to Zillow to get a clarification of its
reasoning, and here’s how the website defines its approach: “Based on three
metrics — sale-to-list price ratio, the prevalence of price cuts on home
listings and time on market — the market temperature provides
information on the current balance of bargaining power between buyers and
sellers in this neighborhood relative to other neighborhoods in the same
So the “hot/cold market” issue for Zillow has do with other
variables than simply inventory levels. In the case of Madison Park, Zillow
showed 21.3 percent of Madison Park properties as selling below the list price
earlier this year, with 26.7 percent of properties on the market having
undergone a price cut from the point of the original listing.
The days-on-market metric, however, was not high at the end
of the first quarter.
Here’s an overview of the first quarter’s sales activity:
Median sale price: $1.499 million
Average square footage: 3,457
Average price per square foot: $434
Average days on market: 80
Average discount from list price: 5.8%
Median sale price: $597,500
Average square footage: 1,500
Average price per square foot.: $542
Average days on Market: 81
Average discount from list price: 6.8%
An average rate of six sales per month is certainly not
barn-burning performance, but for the market as a whole, it’s clear that
discounts are still being required of many sellers and price cuts are common.
So Zillow has a reasonable point to make about a “cold” buyer’s market in
Madison Park, using its definition of what that means.
Different sales patterns
As we discussed last month, however, the market here can
really be divided into two segments, each of which is exhibiting a different
Houses priced under $1.5 million or so are selling quickly,
may garner multiple offers and are sometimes being sold at a premium from the
original list price.
At the upper end of the market, however, price cuts and
discounts are the norm and the waiting time is longer — hotter (a seller’s
market) at the bottom, but colder (a buyer’s market) at the top.
Interestingly, Zillow has now removed the “Hot/Cold”
thermometer from the Madison Park home-value page
(www.zillow.com/madison-park-seattle-wa/home-values/#). Perhaps the company’s
methodology was just not in keeping with the generally accepted definition.
We noticed some other changes, as well. When we first
reported on Zillow’s analysis of our market, we were looking at the website’s
Madison Park page in mid-March. At that time, Zillow showed a 7.1-percent
year-over-year increase in Madison Park home values and was projecting a
4.8-percent increase for the upcoming year.
The Zillow Home Value Index for Madison Park (Broadmoor
excluded) then stood at $925,200 (the estimated median value of homes in the
neighborhood). Now, just two months later, Zillow shows a Madison Park Home
Value Index of $964,300, an 11-percent increase in neighborhood values over the
last year and a one-year forecast of a 7.9-percent rise.
Things are looking up, at least in Zillow’s significantly
BRYAN TAGAS writes the Madison Park
blog (www.madisonparkblogger.com), from which this column was excerpted with permission.
Laura Halliday of Windermere Real Estate compiled the sales data. Listing
data is courtesy of Redfin, using information from the Northwest Multiple
To comment on this column, write to