Home listings fall in Seattle but worry remains

Aug 5, 2011

A decline in the number of homes for sale in the area has raised hopes the market is improving or at least stabilizing, but some analysts say it's actually proof of a bank foreclosure bottleneck.

The number of unsold homes listed for sale declined by 16 percent in Seattle during the second quarter. And according to Richard Hagar, a local real estate appraiser, that could be seen as a sign that the local market is starting to recover.

"The inventory is down because we have sales. We have people selling their houses. We are seeing in certain areas, multiple offers on properly priced houses. We see multiple offers in Magnolia, Queen Anne, Bellevue and to some extent even in Issaquah."

In other words, shrinking inventory is leading to higher prices – slowing the market slide in job centers.

Foreclosure bottleneck

As of the end of July, there were 37,465 active listings in the MLS system, compared to 44,770 for the same month a year ago.  

But in the current environment, the decline in available homes might also point to banks being hesitant to process foreclosures, Hagar said.

Over the last year, banks have come under intense scrutiny by federal and state agencies for trying to circumvent legal procedures leading to foreclosure. As a result, says Hagar, foreclosed homes are taking longer to hit the market.