By now you've heard that December was a blistering month regarding existing property sales. It's probably no surprise given that Seattle's real estate prices were about 26.3% off the market peak of June 2007. The 2010 year end absorption rates for homes city-wide was 3.8 months while condos were 8.3 months. Six months is considered a balanced market. Drop below it and your in a Seller's Market. Move above it and the Buyer is in the driver's seat. But it doesn't take much for this residential engine to shift gears.  

Already January shows hints of idling as reflected by a 42% drop in closings from the prior month. Couple that with a 7% increase in overall inventory for the same time period and absorption rates quickly transcend into a Buyer's Market territory. But it's too early to say what course this ride will take. Lower sales can somewhat be attributed to the holidays. People simply have other things to focus on during December. If they didn't make an offer on a house well before Christmas then there's no closing in January. It's just a matter of logistics really. 

It's going to take at least the month of February to see just where this road leads. Certainly prices are very attractive and while the industry experts predict further declines you have to wonder at what expense. A 5% drop in a home's purchase price (the average decline in Seattle over 2010) can easily be run down by an  iinterest rate jump. And while waiting for that possible price discount, you're reducing your next year's tax deductions. All in all the good houses that are well priced will likely sell quickly. There may even be multiple offers in the choice locations. But for now it's a little early in this road trip to say we're off to a good start.