Despite tight inventory, Northwest MLS brokers complete more than 77,000 sales valued at nearly $28 billing during 2014

Members of Northwest Multiple Listing Service reported 77,276 closed sales during 2014 to outgain the prior year’s volume by 1,759 transactions for a 2.3 percent increase. Measured by dollars, last year’s sales of single family homes and condominiums were valued at nearly $28 billion. Compared to 2013, that dollar volume represents a 9.4 percent gain. The sales activity reflects the work of more than 22,000 brokers across 21 counties in the member-owned Northwest MLS.

Last year’s completed sales included 66,716 single family homes (about 86 percent of the total) and 10,560 condominiums. The total units and dollar volume are the best since 2007 when members registered 82,197 sales valued at $32.3 billion.

The area-wide median price for last year’s sales of single family homes and condominiums was $285,000, improving on the previous year’s figure of $270,000 (up nearly 5.6 percent). Prices for single family homes (excluding condominiums) rose about 5 percent from 2013, increasing from $281,000 to $295,000. Condo prices jumped 11.4 percent, rising from the 2013 figure of $202,000 to last year’s median selling price of $225,000.

Home buyers who shopped during 2014 often had lots of company – and competition. Brokers notched more than 102,000 pending sales (mutually accepted offers) during 2014, while adding 107,722 new listings to inventory. Brokers said depleted inventory led to bidding wars for homes in the most desirable areas, and led to disappointment for indecisive or unprepared bidders.

During 2014, the average area-wide supply, as measured by months of inventory, fell below 3.5 months. King County had the lowest level, averaging only 1.9 months of supply. Industry insiders tend to use a 4-to-6 month range as an indicator of a balanced market, favoring neither buyers nor sellers.

Further evidence of a housing recovery is reflected in high-end sales. Northwest MLS members reported 2,069 sales of single family homes priced at $1 million or more, up nearly 28 percent from the 2013 total of 1,621 “luxury” sales. Condos priced at $1 million and up accounted for another 152 sales. A total of 878 condos commanded sales prices of $500,000 or more, up 20 percent from the figure for 2013.

The highest-priced single family home that sold during 2014 by a member of Northwest MLS was a property in the Town of Hunts Point that commanded $9.1 million. Topping the chart of high-priced condominiums was one in a downtown Seattle high-rise that sold for $6.1 million.

Among other highlights in its annual compilation of statistics, Northwest Multiple Listing Service reported:

• About 46 percent of last year’s single family home sales had three bedrooms.
• The median price for a 3-bedroom home that sold in 2014 was $250,000, about 5 percent higher than the previous year’s figure of $262,500. A comparison by county shows the median price for this size home ranged from $143,500 in Pacific County to $410,000 in San Juan County.
• More than three-fourths (75.2 percent) of condos that sold had two or fewer bedrooms.
• Of the condo sales, about six of every 10 (61.9 percent) were located in King County, primarily in Seattle or on the Eastside.

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.

  

Competition among home buyers “still fierce;” rising interest rates adding to fury

Well-priced homes continue to draw multiple offers and sell at a brisk pace around Western Washington as buyers react to increases in interest rates and asking prices. Northwest Multiple Listing Service reported double-digit gains in several key indicators it tracks for the 21 counties in its service area. Compared to a year ago, the number of new listings climbed 16 percent, pending sales increased about 10 percent, closed sales jumped nearly 22 percent, and prices rose more than 13 percent. Despite gains in listing activity, inventory remains tight.

Commenting on the latest report, brokers said the fast pace is frustrating some buyers -- and surprising sellers with unrealistic expectations. One broker cautioned against an overheated market. “We do not want a market that escalates too fast and topples again,” commented Frank Wilson, Kitsap district manager at John L. Scott Real Estate and branch managing broker for its Poulsbo/Kingston office.

“Overly aggressive sellers find themselves disappointed when no or low offers are presented,” remarked Northwest MLS director Kathy Estey, the managing broker at John L. Scott in downtown Bellevue.

With inventory apparently improving, some would-be buyers are staying on the sidelines. The increased inventory is “cooling some buyers,” reported George Moorhead, managing broker at Bentley Properties in Mill Creek and a member of the MLS board of directors. “We also have buyers who are stepping back as they are frustrated with current inventory and multiple offers going well above asking price,” he added.

Inventory showed signs of improving with the addition of 11,445 new listings during May, the highest number since April 2010. May’s total outgained the year-ago figure of 9,861 new listings for a 16 percent gain.

“It has been refreshing to see more listings coming on the market, but with overall inventory remaining low the competition among buyers is still fierce for homes that are priced properly,” commented Estey.

At month end, there were 21,943 total active listings in the Northwest MLS database, a drop of 4,248 from the same time a year ago for a decline of more than 16 percent.

Buyers looking for condominiums will find slim pickings. Condos currently account for only about 10 percent of the available inventory. The area-wide selection, which numbers 2,253 listings, is down more than 26 percent from a year ago.

Closed sales continue to track well ahead of a year ago. During May, member’s tallied 7,349 completed transactions, outpacing the year ago total of 6,027 by nearly 22 percent.  Prices jumped 13.4 percent from twelve months ago, rising from an area-wide median selling price of $242,500 to last month’s price of $275,000. The median price for homes and condos that sold in both King County and San Juan County was $375,000 ($100,000 higher than the area-wide figure). In King County, that represented a gain of 15.4 percent, while for San Juan County prices edged up only about 1.8 percent compared to a year ago.

“We're seeing the trajectory of home prices beginning to soften and the number of days on the market decline,” observed Mike Grady, president and COO of Coldwell Banker Bain, adding, “The trends suggest inventory levels are slightly more sustainable, but we're still clearly in a seller's market. For the foreseeable future, buyers will continue to pay more the longer they wait to purchase a home.”

Frank Wilson, who is also a board member for Northwest MLS, said recent market activity is affecting home values. In Kitsap County, where his office is located, brokers added 575 new listings to inventory during May, improving on the year-ago total of 515. During the same period, MLS members reported 567 pending sales to soar past the year ago figure of 414 sales for an increase of nearly 40 percent. Median selling prices in Kitsap County rose 5.3 percent, from the year-ago figure of $228,000 to $240,000.

“Slow and steady is the key here,” Wilson cautioned, while also raising concern about low appraisals, which he described as the “inchworm effect” of the market. “As prices begin to appreciate we will continue to see challenges with low appraisals,” he predicted.

Moorhead said increased activity is very noticeable, with mixed outcomes. “We are seeing multiple offers at 5-to-12 percent over list price in highly sought-after areas,” he reported, but also noted “there are other homes on the market that are not selling with no real reason why.”

Some brokers also commented on rising interest rates. Wilson said the biggest effect of the upswing in the real estate market has been the erosion of a buyer’s buying power. In May alone, interest rates jumped almost 0.75 percent, he noted, which reduces a buyer’s ability to purchase a $350,000 home by almost $31,000. Coupled with an increase in price, he said it “creates a compounding affect, which will frustrate buyers in today’s market.”  Estey said interest rate increases are “adding fury to the already frenzied buyers who must finance their purchase.” A one-half percentage point increase in interest rates reduces buying power by 5 percent, she explained, adding, “so as prices increase about a percentage a month, the feeling of urgency mounts too.”

Commenting on the challenges buyers are encountering, Estey said, “The joy of buying a home in today’s market is in the long-term result of settling in, but the competitive process is sometimes not so joyful! Hiring the right broker who can add some fun elements and insights while wisely guiding buyers through the decision process can make a huge difference,” she suggests.

Federal officials are downplaying rising interest rates. In a recent interview, Frank Nothaft, Freddie Mac’s chief economist, commented on the latest rise that marked three consecutive weeks of increases. “While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” he remarked, adding, “The rates are also lower today than they were a year ago at this time.”

 

Statistical Summary by Counties: Market Activity Summary – May 2013 Single Fam. Homes + Condos			LISTINGS				PENDING SALES		CLOSED SALES				MONTHS SUPPLY
New Listings		Total Active			# Pending Sales			# Closings			Avg. Price			Median Price
King	4,352			4,832		4,041		3,122		$457,903		$375,000			1.20
Snohomish	1,564			1,777		1,487		1,131		$309,112		$285,000			1.20
Pierce	1,576			3,025		1,648		1,116		$234,875		$210,000			1.84
Kitsap	575			1,426		567		345		$286,870		$240,000			2.51
Mason	206			759		94		71		$178,045		$149,900			8.07
Skagit	245			785		226		149		$238,902		$220,020			3.47
Grays Harbor	165			807		114		68		$143,411		$139,000			7.08
Lewis	187			700		90		74		$150,977		$134,500			7.78
Cowlitz	164			455		134		83		$174,330		$169,000			3.40
Grant	145			547		92		76		$169,412		$157,840			5.95
Thurston	506			1,121		482		332		$241,093		$225,500			2.33
San Juan	67			415		25		19		$519,047		$375,000			16.60
Island	279			834		199		117		$281,624		$240,000			4.19
Kittitas	150			447		66		60		$285,393		$217,995			6.77
Jefferson	123			466		53		40		$308,200		$298,750			8.79
Okanogan	114			447		48		28		$193,686		$147,950			9.31
Whatcom	552			1,448		398		279		$290,196		$250,000			3.64
Clark	83			149		69		54		$255,812		$229,000			2.16
Pacific	91			436		36		27		$136,736		$121,000			12.11
Ferry	11			76		4		5		$139,600		$151,000			19.00
Clallam	104			415		68		62		$191,923		$181,000			6.10
Others	186			576		104		91		$217,902		$179,900			5.54
MLS TOTAL	11,445			21,943		10,045		7,349		$343,639		$275,000			2.18

Source: NWMLS KIRKLAND, Wash. (June 5, 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.