Punxsutawney Phil’s prediction of an early spring is showing up in the latest housing activity report from the Northwest Multiple Listing Service. Its statistics for January showed a 14.4 percent year-over-year increase in pending sales and a 23.6 percent jump in closed sales amid a 31.3 percent decline in inventory.
The MLS reported 4,289 closed sales during January, surpassing the year ago total by 820 transactions. Last month’s completed sales of single family homes and condominiums had a median selling price of $239,300. That’s up 11.3 percent from the year-ago figure of $214,990.
Supply has dwindled to less than two months in some counties close to job centers, spurring bidding wars. Some buyers are even resorting to writing “love letters” to win over sellers in these competitive situations. Brokers also report an increasing number of buyers have little or no interest in making offers on short sales.
As a Broker, the ratio between active buyers and available inventory is so out of balance, even homes that were hard to sell for various reasons are being snapped up so those sellers were wise to list. So what does this mean exactly? Now is a good time for sellers to list. Sellers who are considering a spring or summer listing may want to consider listing now as demand is outweighing supply. This has given well priced sellers the advantage with the benefit of quick sales and multiple offers.
With multiple offers on the rise, buyers are seeking an edge as they vie for a desirable home. Brokers are reporting an increase in the use of heartfelt letters from would-be owners who want to distinguish themselves and forge an emotional bond with the sellers. Buyers should not forget the human element of appealing to a seller in this multiple offer market. You just never know who is on the other side of a transaction and what might be important to them.
Brokers in the 21 counties served by Northwest MLS added 7,096 new listings to inventory during January. That total was just slightly more than the number of pending sales (7,016) that members reported last month and brought the total number of active listings at month end to 18,008.
Often we don’t see momentum to really begin building until mid February to the first part of March. This year, I think due to the already low inventory and the continued low interest rates, the market feels like it started mid January.
Despite imbalance between supply and demand, more and more buyers are opting not to purchase short sale homes because of the uncertainty involved. It’s not uncommon for a lender to choose at the last minute to foreclose on a property instead of approving a short sale. When this happens it leaves the buyer high and dry with 2-to-4 months of time invested, only to have to start the process all over again. That can leave them at a disadvantage considering the current pace of sales.
Sixty percent of homes close to job centers are selling within the first 30 days of being listed – twice the average rate, according to figures compiled by MLS, therefore extremely favorable market conditions have brought a surge of local home buyers into the market. Historically low interest rates and a shortage of inventory are creating an environment for multiple offer situations.
Even though buyers are flocking to newly listed homes, sellers must be smart about pricing. In my area, a home that comes on the market that is well priced for the area, style and condition is usually under contract within a few days. Additionally, homes that have been on the market for more than 20 days are sometimes subject to price reductions. Today’s market defies basic economics for supply and demand. Interesting factors include sellers who are still holding back for myriad reasons. Some do not have the confidence or equity to put their home in front of buyers, and that is creating even more pent-up demand.
Yet another positive indicator of the state’s housing market recovery came from the National Association of Home Builders and its NAHB/First American Improving Markets Index (IMI). Six markets in Washington appeared on the list, the largest number since that gauge was created in September 2011. The IMI is based on six consecutive months of improvement in housing permits, employment and house prices.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.