KIRKLAND, Washington (June 6, 2016) – Just as expected, the month of
May had an uptick in new listings (12,272), but just as many buyers (12,275)
made offers on homes during the month to keep inventory depleted, according to
the latest figures from Northwest Multiple Listing Service.
“Inventory is being squeezed from
all directions,” reported Frank Wilson, branch managing broker at John L. Scott
in Poulsbo. He said the pool of house-hunters includes young first-time buyers,
renters whose rents are escalating, buyers who are returning to the market
after recovering from a foreclosure or short sale, investors, and baby boomers
who are purchasing for their retirement needs. Additionally, in Kitsap County
where his office is located, there are military families who are transferring
to a base there and want to buy.
By month end, member brokers reported 15,198 active listings in the
Northwest MLS database. That’s down more than 22 percent from a year ago when
buyers could choose from an inventory of 19,515 listings across the 23 counties
served by the listing service.
“The May housing market was not
just hot, it was frenzy hot, brokers are working like bees in a hive as the
housing market creates a buzz of sales activity in the Seattle-Central Puget
Sound area.” By his analysis, 80 percent of the homes coming on the market in
King and Snohomish counties are selling within the first 30 days. “Many sell
within the first week,” Scott reported, adding, “A healthy/normal market would
have 30 percent selling in the first 30 days.”
MLS figures show there is only
1.76 months of supply system-wide. In both King and Snohomish counties, there
is barely more than one month of supply – well below the 4-to-6 months that
many experts use as an indicator of a balanced market.
“With less than two months of
inventory, every new listing seems to draw multiple offers,” Wilson remarked.
He also said homeowners who want to move up in this same market know they face
a conundrum: “If we sell today, will we be able to buy tomorrow?”
Buyers are becoming more and
more aggressive with offers and pricing, and that concerns some brokers, said
Northwest MLS director George Moorhead. As the gap between pricing and value
widens, some would-be buyers may overextend themselves. Also, appraisers are
struggling with a lack of comparable sales versus multiple offers that escalate
well beyond the listing price, said Moorhead, the designated broker at Bentley
Properties. Since lenders base loans on appraised values, buyers will likely
need to make up the shortfall.
Even though brokers say paltry
inventory is limiting sales, the year-over-year volume of pending sales rose
more than 7.4 percent last month. Members reported 12,275 mutually accepted
offers, up from the year-ago total of 11,425. MLS data going back to 2004 shows
that one-month total is the highest on record.
Prices also rose. The median
price area-wide for last month’s 8,630 closed sales of single family homes and
condominiums (combined) was $339,950. That’s up more than 7.2 percent from
twelve months ago when purchasers paid $317,000 for the median-priced home. Ten
counties reported double-digit price hikes.
In King County, the median
price jumped more than 11.7 percent, from $434,000 to $485,000. Prices on
single family homes surged nearly 16.5 percent, rising from $480,942 to
$560,000. Condo prices were up 9 percent, but finding one proved challenging as
inventory dropped 29 percent in King County.
In Olympia, last month set
records for both pending and closed sales. “Low inventory coupled with the huge
number of buyers has our market moving at a record pace,” according to his
calculations. “Well-priced homes are selling in an average of just 12 days – a
full month faster than the peak of the market in 2006,” he commented.
Brokers offer various
suggestions to prospective buyers as they vie for scarce inventory:
• “The best advice I can offer
to potential first-time buyers is to think outside the box” said Gary O’Leyar,
a past chairman of the Northwest MLS board. He encourages buyers to consider
purchasing a “stepping stone” property. Since the close-in neighborhoods in
Seattle and Bellevue hold little opportunity for first-time buyers, their best
option is to look further out, he suggests. “Consider future growth, such as in
areas near light rail or other transit services, and areas that have good
public schools,” said O’Leyar, the owner and designated broker at Berkshire
Hathaway Home Services Signature Properties in Seattle. “Waiting on the
sidelines to buy will likely lead to increasing rental costs, so why not make a
real estate investment purchase and have some hedge against future inflation,”
he added.
• “Relationships are paramount
in this market,” said Lennox Scott. “If you’re looking for a home, make sure
your broker knows your story and can convey it in a compelling way.”
• “Buyers must carefully study
the market so they can make decisive but smart offers when new listings arrive
on the market,” emphasized Anderson. “With the robust activity, success for
buyers means making an offer that stands above the competition.” He also urges
buyers to not forgo important protections like home inspection contingencies.
Wilson and other brokers do not
see an easing in the inventory crunch “for some time to come.” Even if the Fed
raises interest rates, he believes shortages will persist because of the
backlog of buyers.
Moorhead noted new home
construction is also seeing prices soar as many of the defunct projects from
2008 to 2012 are being completed and built out. “Finding land for new home
plats is forcing more teardowns and pushing builders/developers farther out
where services are not as prevalent. He said first-time buyers tend to be
hardest hit since they’re priced out of many close-in areas and must look at
commute times of 45 minutes or more.
“There’s good news for luxury
homebuyers,” Scott suggests. It’s prime time to showcase such properties, he
explains, and “this is the season when more luxury inventory hits the market.
The good selection in King County is easing the pressure for homebuyers in the
luxury ($1 million and above) market. A search of the MLS database shows there
are currently more than 900 listings in King County with asking prices of $1
million or more.
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.
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