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.

  

New numbers just released from NWMLS: data for today's buyers and sellers

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.

I listed this beautiful custom home in Olympia on 5 acres for $379,000.  On day 1, I secured a more than asking price offer and have a list of buyers eager to be notified if the current transaction fails.  This is a prime example: supply is low, demand is high.  Call me today for these results.

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.

Washington Real Estate Market Research