First, small correction. 98199 is Magnolia and 98119 is Queen Anne. The reason you are seeing few sales of townhomes in Magnolia is that most of the sales have been smaller single family homes in the $400,000 to $500,000 price range. Given the choice, people opt to own a 2 bedroom home on a 4,000 to 6,000 square foot lot for better future value protection. Also to have a yard. Townhomes sell better in areas where you can't buy a home in that price range. As to Queen Anne, people opt for view. There are some fabulous views in Queen Anne from large 2 bedroom condos. So people opt for the condo with view vs. the townhome without view in the $400,000 to $500,000 price range.
Part of what is going on in that particular price range is the drying up of funding for people with little to no money down and less than stellar credit scores. The asking prices that are now reducing were based on sale prices from a time when lending practices were a lot looser. So price dropping is not helping since too many cannot buy at any price.... more