Northwest MLS brokers say home buyers are sprinting, but sellers are stalling

Home buyers are in “full sprint” mode while sellers are stalling, according to brokers from Northwest Multiple Listing Service. As a result, MLS members are juggling severe inventory shortages and multiple offers in many Seattle neighborhoods and beyond.

MLS figures for May show double-digit drops in inventory compared to a year ago and double-digit gains in both sales and prices. Commenting on the numbers, Northwest MLS director Dick Beeson said “The crush between the lack of inventory and desperate buyers may soon generate the next TV reality show! The stressed market is exhausting everyone in its path, with no relief in sight.”

Last month’s volume of 11,425 pending sales across the 23 counties in the latest report nearly matched the number of new listings added to the database (11,862). At month end, the total number of active listings stood at 19,515, a drop of more than 18 percent from a year ago when members reported 23,917 active listings. Only two counties (Douglas and Ferry) reported year-over-year gains in inventory.

George Moorhead, another director with Northwest MLS, said multiple offers are commonplace for well-priced homes in desirable areas. “We are definitely feeling the squeeze on inventory levels with sellers holding off until they can find a home,” commented Moorhead, the designated broker and owner at Bentley Properties.

MLS figures for May show supply has dwindled to about 1.2 months in King County and 1.6 months in Snohomish County. Several neighborhoods near Seattle’s job centers have less than a month of supply.

For the MLS service area overall, there is about 2.4 months of supply – well below the 4-to-6 month figure used by many industry watchers as an indicator of a balanced market. About half the counties reported less than four months of supply.

Beeson, the principal managing broker at RE/MAX Professionals in Tacoma, noted supply in Pierce County has slipped to record lows, at just over 2 months. For sellers, there may be little solace. When they decide to sell they’ll need a replacement home “which may or may not be there,” he explained.

Pending sales jumped more than 10 percent in May compared to the same month a year ago, rising from 10,373 mutually accepted offers to 11,425. Last month’s pendings rose slightly from April’s total of 11,384.

“This is a supply-demand-distance type of market,” said Frank Wilson, branch managing broker at John L. Scott in Poulsbo. “They have run out of inventory in the Seattle market so now it’s just a matter of how far a buyer needs to drive to find a home that is available and affordable. Kitsap is seeing that demand increase with a bit of a lag as the market rolls from east to west into Kitsap and beyond,” said Wilson, another director on the Northwest MLS board.

With demand exceeding supply, prices continue to climb. MLS statistics show an area-wide year-over-year gain of more than 11 percent. The median price for last month’s 8,229 closed sales, including single family homes and condominiums, was $317,000. That compares to the year-ago median sales price of $285,000 for the 7,187 completed transactions.

In King County, the median sales price for single family homes and condos (combined) was $434,000, an increase of 9 percent from twelve months ago when brokers reported a median sales price of $398,000. Prices on single family homes (excluding condos) that sold in King County jumped to $480,942, about the same as April ($480,000), but up nearly 8.8 percent from the year ago figure of $442,250.

“Locally, home prices are continuing to rise at a steady pace, and they continue to outpace both inflation and wage gains,” observed Mike Gain, CEO/president at Berkshire Hathaway HomeServices Northwest. Pent-up demand is pushing inventory lower, he notes. Gain believes the supply challenges could be alleviated if more sellers put their home on the market. “Sellers may never see a better time to be a seller,” commented Gain, a former chairman of the Northwest MLS board.

OB Jacobi, president of Windermere Real Estate, echoed comments about the supply. “We’re still in desperate need of inventory. The irony is that there are plenty of people who want to sell, but won’t put their home on the market until they can buy something new. But they can’t buy something new until there are more homes on the market. It’s the proverbial chicken and egg situation for which I see no end in the near future.”

Demand exists across the price spectrum, fueled by renters, high wage earners and investors.

Gain noted renters are re-entering the housing market as they find they are better off buying than continuing to pay rent. “They are finding their monthly payment to be less than their rent payment for a similar home. They also like the fact their payment will remain the same. And they’re finding there are numerous low down payment assistance and no down payment mortgages available at incredibly low interest rates.”

Luxury home buyers are also active participants in the current market. A check of MLS statistics shows 887 single family homes priced at $1 million or more have sold during the first five months of the year. That compares to 696 for the same timeframe a year ago for a jump of more than 27 percent.

The segment of distressed properties is also rebounding. Moorhead cited figures showing 57 percent of REO (bank-owned) listings sold at or above 100 percent of list price.

Given the fast pace of housing activity, Northwest MLS brokers urged buyers and sellers alike to make sensible decisions and to take advantage of assistance from professionals.

Sellers should avoid the temptation to be greedy suggests Moorhead. “Our message to sellers is to be cautious with pricing or it will cost you thousands by over pricing.”

Frank Wilson advises sellers to refrain from agreeing to “select showings.” “To maximize on this market sellers should be sure their listing is exposed to all brokers in the Northwest Multiple Listing Service,” he explained.

Wilson also offered advice to buyers to avoid disappointment. “We are still seeing buyers who think getting a loan is like it was in the old days: fog a mirror and get a loan. That’s no longer the case,” he said, adding these misinformed buyers are offended when they are asked for documents and verifications all the way through closing. “Buyers need to be ready to buy on day No. 1,” he emphasized. “This means getting approved with their lender, being clear about what they want in a new home, becoming educated about the market, and being ready to write a strong offer when they find the right home.”

Mike Gain expects historically low interest rates, a growing economy, improving consumer confidence and consumer finances will continue to fuel activity and push up the numbers. “Anyone who can buy a home today at today’s prices with today’s low interest rates should do it. In my opinion, prices and monthly payments will never be lower than they are today.”

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 23,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.

Spring market “not waiting for tulips” but limited inventory frustrates homebuyers

New figures from NWMLS show year-over-year increases in pending sales, closed sales, and prices, while inventory fell by double digits.  Many brokers are city inventory levels have never been this low, in the last 20+ years.  The number of active listings in the NWMLS dropped 11% in the past year.  We saw sales at a higher pace this superbowl season, as compared to last years.

In today’s market, we often see multiple offer situations.  How can a buyer prepare to enter this market?  They must be “buyer ready” so they can react quickly.  Not only should a buyer have a firm pre-approval before they begin there search, they should have an honest and real conversation with their agent about expectations – not only of the agent, the market, as well as themselves.

Home sales stay strong, but prices approaching “affordability ceiling” for some buyers

Pending sales of homes around Western Washington surged more than 13 percent in September compared to a year ago, and listing activity picked up slightly, fueling both broker optimism and words of advice for sellers.

Along with increases in the number of mutually accepted offers, the latest report from Northwest Multiple Listing Service shows year-over-year gains in the number of closed sales (up 4.6 percent) and prices (up 2.5 percent). Inventory for its service area, which encompasses 21 counties in Western and Central Washington, declined slightly (just under 1.2 percent).

We expect the Greater Puget Sound real estate market will maintain a “healthy glow” in 2015 so long as there is no radical increase in interest rates.

Northwest MLS members reported 8,875 pending sales during September to outpace the year-ago total of 7,839 pendings. The volume tapered off about 5 percent from the August figure of 9,342 mutually accepted offers. All but one of the 21 counties served by the MLS reported year-over-year increases.

The number of closed sales for September also rose, climbing from 6,711 a year ago to 7,020 for a 4.6 percent increase. Prices on those sales were up 2.5 percent.

The median price on last month’s closed sales of single family homes and condominiums was $285,000, which compares to the year-ago figure of $278,000.

September/October 2013 Market Pulse: Interest rate hikes and rising home prices are taking a toll on sales

July saw a monthly dip in pending sales nationally, though the rate was above one-year-ago figures for the 27th straight month. Higher prices are affecting the availability of FHA financing in some areas. And some areas are seeing higher mortgage and flood insurance premiums. On the plus side, households are jumping into the market to buy before rates and prices rise further. All trend lines are from July 2012 to July 2013.

Existing-home sales is a seasonally adjusted annual rate, which is the actual rate of sales for the month, multiplied by 12 and adjusted for seasonal sales differences. Pending home sales is an index that measures -housing contract activity. An index of 100 is equal to the level of activity during 2001, the benchmark year. Price indicates the national median. Inventory measures the number of existing homes on the market at the end of the month. 

Buyer and seller traffic, current conditions, six-month expectations, and time on market derive from a monthly REALTOR® Confidence Index. Results for July are based on 3,342 responses to 6,000 surveys sent to large and small real estate offices. The survey asks practitioners to indicate whether conditions are strong (100 points), moderate (50), or weak (0). Some data may be revised from previous issues.  Information from the National Association of REALTORS September/October 2013

Home sales, prices still rising in Western Washington despite lean inventory and increasing mortgage rates

Rising interest rates, rising prices and rising consumer confidence are creating a "positive cyclone of home sales activity," according to members of the Northwest Multiple Listing Service. A robust job market around the Greater Seattle area is also spurring sales.

Member-brokers reported 9,565 pending sales during July for an increase of more than 13.6 percent from a year ago – the highest year-over-year gain since January. Last month’s mutually accepted offers across 21 counties also marked a slight improvement on June’s total of 9,484 pending sales.

Northwest MLS director John Deely said multiple offers are being reported in all price ranges "with properly priced new listings, and we’re still seeing a surprising number of all cash buyers." He also noted many transactions are conditioned on the closing of a pending sale as move-up sellers enter the market to buy a new property.

The number of closed sales and the prices on those transactions both rose by double digits compared to a year ago. Members recorded 7,772 completed transactions area-wide to outgain the year-ago volume by 27.5 percent. The median price of those closed sales, which included single family homes and condominiums, was $282,363. That’s up 10.8 percent from the year-ago figure of $254,900.

"We experienced a mini power surge of sales activity that was touched off by a sudden raise of interest rates during the month of May," observed J. Lennox Scott. Scott attributes part of the surging activity to buyers who rushed forward to purchase a home before rates climb higher. He also reported more sellers are listing their homes "due to the realization that the next home they purchase will be at a higher interest rate." As these sellers become buyers, they’re contributing to the "positive cyclone of sales activity," Scott stated.

MLS members added 10,860 new listings to inventory during July to boost the system-wide selection to 25,272 active listings. That is only about 5.5 percent fewer listings than a year ago when inventory stood at 26,747 active listings.

Despite improving inventory overall, supplies remained low, particularly around job centers. Area-wide there is about 2.6 months of supply, which indicates a seller’s market. (In a normal market, a healthy supply level favoring neither buyers nor sellers is around 6 months, according to industry analysts.)

Three counties have less than three months of supply. At the current pace of sales in King County, it would take just 1.5 months to sell the current supply. In Snohomish there is only 1.6 months of supply and in Thurston County the existing supply would be exhausted in about 2.9 months.

Deely said some sellers are testing the waters with aggressive pricing, but they are experiencing longer market times.
MLS director Frank Wilson, representing Kitsap County where there is 3.3 months of supply, expects the seller’s market will continue for at least the next few months. He noted 16 percent more homes in Kitsap County went under contract than the same month a year ago, crediting some of that uptick to the sense of urgency that buyers are feeling because of recent jumps in interest rates.

The average fixed rate on a 30-year mortgage was 4.37 percent last week, up from January’s rate of 3.41, according to Freddie Mac.

Buyers should be aware of interest rates now and lock in a rate. "There is nothing more disappointing than having your offer accepted on a home, then have an interest rate jump disqualify you from the purchase," he remarked, adding, "If you want to gamble go to Las Vegas; if you want to buy a home lock the rate."

Brokers believe robust private sector job growth should have a positive impact on sales momentum. "Builders will have to keep up with the influx of families moving to the area for employment in order to sustain our growing need for housing," remarked Mike Grady.

Although some economists expect weaker U.S. economic growth for the remaining months of 2013 and moderating home price increases, brokers say investors are active participants in the local housing market.

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.

Thurston County Stats

New listings: 486

# Total Active: 1,268

# Pending Sales: 441

# Closings: 340

Avg. Price: $240,469

Median Price: $228,500

Month's Supply: 2.88

Source: NWMLS KIRKLAND, Wash. (August 7, 2013)  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.