KIRKLAND, Washington (Nov. 4, 2016) – Home sales around Western
Washington outgained new listings again in October, fueling competition for
scarce inventory and pushing prices higher. Some seasonal slowdown is still
expected – and the Nov. 8 elections may be in play as well, according to
brokers at Northwest Multiple Listing Service who commented on last month’s
activity.
MLS members reported 9,950
pending sales during October, but they added only 7,591 new listings, the
lowest number since January. A year-over-year comparison of pending sales shows
there were 633 more mutually accepted offers last month than twelve months ago
for a gain of 6.8 percent.
Closed sales improved even
more, rising from the year-ago total of 7,769 completed transactions to last
month’s volume of 8,554 (up 10.1 percent).
“While the stock market remains
somewhat skittish regarding the upcoming presidential election, this feeling
clearly has not transferred to the housing market, unfortunately for buyers who
were hoping to have more homes to choose from this fall, listings in October
fell to levels we haven’t seen since the 1990s – and at this point, we probably
won’t see any sizable increase in inventory until the spring at the earliest,”
he added.
Active listings dropped more
than 13 percent compared to a year ago, with further shrinkage expected. At
month end there were 15,690 single family homes and condominiums offered for
sale in the MLS system, which encompasses 23 counties. That’s 2,378 fewer than
the year-ago total of 18,068, and 2,446 fewer than September. All but two
counties (Clallam and Ferry) reported year-over-year decreases in inventory.
Overall, there was only 1.8 months of supply. King County had slightly
more than one month (1.1), with several areas within that county reporting less
than a month’s supply. In Snohomish County, where inventory plunged more than
20 percent from a year ago, there was with 1.3 months.
“The further we move into
November, the more we’ll start feeling the typical seasonal drop when new
listings coming on the market decline by 50 percent on a monthly basis compared
to spring and summer months,” suggested J. Lennox. Buyers are still out there,
he emphasized. “We’re heading into winter with a repeat of last year’s
conditions: low inventory, a backlog of buyers, and historically low interest
rates.” On the heels of the “best October on record” Scott predicts “a strong
winter market where the inventory remains tight throughout the season.”
Not surprisingly given the
large MLS territory, which includes both rural and urban areas, activity is
stronger in some sub-markets than others. Prices also reflect a wide spectrum.
Of the four counties comprising the Puget Sound region (King, Kitsap, Pierce
and Snohomish), only Kitsap had an uptick in new listings compared to a year
ago, but that county’s robust pending sales (up 20.7 percent) helped deplete
its total inventory versus twelve months ago (down about 7 percent).
“The market in Kitsap is still
very active,” according to Frank Wilson in Poulsbo. He noted Kitsap typically
lags the Seattle market by 6-to-9 months.
Wilson expects a slowing in
Kitsap County, at which time the upward pressure on pricing will begin to ease.
“For now, the median price is up almost 13 percent from a year ago,” added
Wilson, a board member at Northwest MLS.
In South Sound, prices rose at
a more moderate rate, around 9.6 percent in Pierce County and just over 6.8
percent in Thurston County. “Homes priced under $400,000 are looked at hard by
buyers on ‘day one’ and often draw multiple offers,” said Northwest MLS
director Dick Beeson in Tacoma. Above that figure, things slow down markedly,
he noted, adding that’s true in other areas, but the starting numbers and wait
times might vary.
Beeson also cautioned sellers
to be realistic in pricing, even in the current imbalanced market when sellers
may have the upper hand. “Price cures all ills. No amount of marketing a
property will cure the ill caused by too high a price,” said the veteran
broker, citing data on expired listings that eventually came back on the market
but oftentimes sold at a reduced price.
System-wide, prices for single
family homes and condos (combined) rose nearly 8.2 percent from a year ago,
increasing from $318,000 to $344,000. In the four-county Puget Sound region,
King County claimed the largest increase and the highest prices. Year-over-year
prices jumped 14.5 percent, from $432,750 to $495,500.
Single family home prices
(excluding condos) increased 9.2 percent from a year ago; in King County the
gain was nearly 14.6 percent, climbing from $480,000 to $550,000. That
countywide median price is higher than September (which was $538,000) but lower
than the year-to-date peak of $573,522 in June.
Condo prices increased $20,000
from a year ago (more than 7.3 percent), climbing from $265,500 to $285,000.
The median price on closed sales of condos in King County was $320,000, about
10 percent higher than a year ago. Inventory area-wide fell more than 21
percent, leaving only 1.1 months of supply.
While prices continue to appreciate,
Wilson said the “appraisal situation” is tempering activity. “We’ve spent the
last 20 years improving the closing process, making it faster and more
efficient. With the reduced number of appraisers in the marketplace now, we are
seeing 2-to-4 weeks being adding to closing times, and costs doubling or
tripling.”
Along with appraisal delays and
seasonal adjustments, another industry leader mentioned reports indicating real
estate markets nationwide are experiencing an “election cycle slowdown” due to
the uncertainty surrounding next week’s elections. “People may be taking a
‘wait and see’ approach before buying or selling,” said Mike Grady. However, he added, “We believe that regardless
of who wins, there will be no major impact on the Puget Sound region’s
economy.”
Grady cited solid local
economic indicators and the Federal Reserve’s decision on Wednesday to hold off
on increasing interest rates as signals for a good time for home buyers and
sellers to make a move. “It actually could be a great window of opportunity,”
he stated.
MLS director George Moorhead
also commented on jitters associated with Election Day. “We are hearing
concerns from buyers relocating from other countries and how policies may
change job security,” he stated.
On an encouraging note for
buyers, Moorhead said there has been more flexibility involving new
construction incentives and upgrades, notably among larger national builders
wanting to close out inventory. He believes it’s been at least 18 months since
such offers were available to buyers.
“New construction projects are
still going forward and are only hampered by the lack of available land for
larger development sites,” reported Moorhead. Both national and mid-sized local builders are
completing smaller 4-to-6 lot plats, even though they prefer plats of at least
12 lots, according to Moorhead.
Asked about activity from
foreign investors who might be shifting attention from British Columbia to
markets in Washington because of tax hikes and other measures being imposed
there, and recent reports of plunging sales, brokers with Northwest MLS had
varied reactions:
Moorhead said they’re seeing an increase in foreign money, but it’s more in the
commercial arena. He also noted they are a hearing of foreign buyers looking
not just in Puget Sound, but also in California, Texas and other states.
Gary O’Leyar described it as “a great example of what happens when you impose a
restriction (excessive taxes or restraints) onto a free market. Although the
circumstances are not exactly the same, rent control in a free trade market
could have similar detrimental results.”
Grady’s response was: “It’s not at all surprising that pending sales in
Vancouver (B.C.) dropped comparing month-to-month, after the huge surge that
happened in the final month before the new fees commenced.”
Beeson was upbeat. “This move
[by the British Columbia government] to put an additional tax burden on foreign
investors should bring smiles to Washington brokers, particularly in the
Greater Seattle and Eastside markets. It's only a matter of time until these
investors find a welcome mat out just a few miles south of Vancouver and
property prices worth writing home about.”
Northwest Multiple Listing
Service, owned by its member real estate firms, is the largest full-service MLS
in the Northwest. Its membership of nearly 2,100 member offices includes more
than 25,000 real estate professionals. The organization, based in Kirkland,
Wash., currently serves 23 counties in Washington state.
