With holidays approaching, real
estate brokers usually expect a slowdown as buyers and sellers shift their
attention elsewhere. “This year is different,” say some industry leaders.
Today we have one of the best
markets we’ve ever seen for sellers. Buyers are still surging to the market and
inventory is low. It’s a very good time to sell. Owners who are eager to make
the next move don’t have to wait six months or until spring to act.
Newly released MLS figures for
October show pending sales are up 7.8 percent from a year ago, rising from
8,643 transactions to 9,317. Nearly half the counties in its service area
reported double-digit gains in the number of mutually accepted offers. For the
four-county Puget Sound region encompassing King, Kitsap, Pierce and Snohomish
counties, Northwest MLS members tallied 6,977 pending sales, the highest
October volume in a decade.
For 19 of the 23 counties in the
latest MLS report the number of pending sales surpassed the number of new
listings added to inventory. System-wide there were 8,094 new listings that
came on the market during October, about the same as 12 months ago when members
added 8,102 listings. With those additions (the fewest monthly total since
February) inventory at the end of the month stood at 18,068 listings, well
below the year-ago total of 23,501 for a 23.1 percent year-over-year drop.
Closed sales rose 7 percent
from a year ago, increasing from 7,257 to 7,769. Last month’s total slipped
below 8,000 closings for the first time since April, with some brokers citing
inadequate inventory as a factor.
Given the severe shortage of
homes for sale, I’m not surprised to see that both pending and closed sales
slowed down last month. If we just had more homes to sell the number of closed
units would have increased even more during October. Selling more homes at a faster rate than we
are replenishing supply shows just how good the local real estate market really
is.
The MLS reported 2.33 months of supply area-wide, well below
the 4-to-6 months figure many in the industry say indicates a balanced market.
The months of supply figure has not been above three months since February when
the figure was 3.56.
Both King and Snohomish
counties had less than two months of supply. The most acute shortages are in
King County with only 1.29 months of supply; Snohomish has 1.91 months of
supply.
Based on the gap between supply
and demand, this is not sustainable and will create a market condition where
buyers will overpay for a home. Multiple
offers are now being seen in outlying areas as buyers look farther out just to
find a home that is a perfect fit while sacrificing distance to work and
services. Good schools remain the
highest sought-after criteria.
Even with inventory shortages
in some areas, strong open house traffic is expected for the coming weekend,
thanks to the bye on the Seattle Seahawks schedule, suggested MLS director
Frank Wilson. “A weekend without a Hawks game is good news for real estate
brokers and sellers who hold open houses on Sundays, commented Wilson.
Open houses for new listings
draw decent traffic, Wilson reported, adding. “New listings get picked through
pretty quickly, and homes that are correctly priced are selling within days,
with multiple offers.”
He also said homes that have
been on the market for more than 60 days have little traffic unless they have
had a price reduction. “Some sellers are tending to overprice their homes due
to all the hype.”
Gain noted the Seattle area’s
home price gains are outpacing the nation’s, earning the city No. 1 ranking on
a recently released list of the hottest single-family housing markets in the
U.S. He credits strong demand, rising prices, low interest rates and the area’s
healthy economic conditions as reasons for the strength. “We will experience a
hot housing market over the winter months,” who also expects 2016 to be
“another fantastic year for sales activity.” Noting home sales activity is
historically lower during this time of year, he believes activity this winter
will be “red hot” in price ranges where inventory is low. He believes continued
low interest rates and job growth will ratchet up demand as spring approaches. Despite
general optimism among Northwest MLS leaders, some pullback is anticipated.
Jacobi, who last month
commented on the market being on the cusp of a slowdown, faults scarce
inventory. “I expect this trend (of slower pending and closed sales) will
likely continue through the end of the year due to the lack of available inventory
for buyers.” Jacobi also said appreciation may start to slow over the winter
months, adding, “but overall the housing market continues to benefit from our
thriving local economy.”
Diedre Haines, principal
managing broker-South Snohomish County for Coldwell Banker Bain, said they are
noticing some slowdown, but “not as much as we’ve seen historically.”
“There remains a lot of
frustration with multiple offers and getting transactions to actually make it
to closing,” reported Haines, a past chairman of the Northwest MLS board. She
attributes failed sales to several factors including low appraisals, financing
issues, and an increase in sellers and buyers not being able to come to terms
on inspections.
Prices on last month’s closed
sales jumped nearly 9.7 percent from a year ago. Area-wide the median price for
sales of single family homes and condos that closed during October was
$318,000. That compares to a price of $290,000 for the same month a year ago.
For single family homes (excluding condos), year-over-year
prices increased nearly 8.4 percent, rising from $299,950 to $325,000. In King
County, the median price for a single family home was $480,000, rising 7.3
percent from the year-ago figure of $447,250, but dropping from September’s
median price of $490,250.
“Appreciation for most of
Snohomish County has continued, but not exorbitantly,” noted Haines. Prices in
that county are up more than 5.8 percent from a year ago. “Modest gains in
value are in reality much better for the market than the rapid gains we’ve seen
in the past. For us, this means no sign of a growing bubble.”
The MLS reported strong sales
in the condo segment, with both the volume and prices rising by double digits.
Area-wide, closed sales rose 13.2 percent, from 990 units to 1,121. Prices
surged 16.2 percent, jumping from $228,500 a year ago to last month’s median
price of $265,500.
Condo inventory is also
depleted with the number of active listings down nearly 26 percent from a year
ago. MLS figures show only about 1.6 months of inventory area-wide; in King
County there is less than 1.2 months of supply.
Looking ahead, Gain and many of
his colleagues expect the area’s housing market will continue on a “gradual
upward trend” into 2016. “As rents continue to rise, it makes buying a home
more affordable than renting in many cases. It also insures that the monthly
payment will remain the same as rents continue to escalate,” he stated, adding
“Buying a home today is simply a smart decision for most who have the ability
and resources to do so.”
Wilson said low inventory in
areas like Kitsap County where his office is based will pose challenges.
Inventory in that county is down nearly 30 percent from a year ago, while
prices climbed more than 5.7 percent. “Some buyers are feeling beat up having
to put in multiple offers or offer more than they are comfortable with,” he
reported. Nevertheless, “buyers realize as we move into 2016 both prices and
interest rates are likely to move upward,” he noted, adding, “We are
anticipating a difficult spring market. The numbers are lining up for
double-digit price increases in the first half of 2016.”
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.
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