Brokers report “high velocity” market, but with hope for homebuyers

KIRKLAND, Washington (Feb. 6, 2017) – Western Washington’s “high velocity” market continued during January with the number of pending sales (7,745) outgaining the number of new listings (6,507), according to new figures from Northwest Multiple Listing Service.

“Properties are moving through the market at an unusually fast pace,” remarked broker and chairman of the board at Northwest MLS. “Although we have a high number of new listings, they are moving into a pending or sold status within the typical 30-day reporting period. This phenomenon causes a low active listing count,” he added.

Brokers added 6,507 new listings to inventory last month (163 fewer than during the same period a year ago), while year-over-year pending sales jumped by 492 transactions for a gain of about 6.8 percent. New listing volume was the highest monthly total since October when members added 7,591 properties.

At month-end, there were 9,752 active listings in the MLS service area, which encompasses 23 counties. That total was 2,605 fewer than the year-ago volume of 12,357, a decline of 21 percent. Only three counties (Ferry, Jefferson and Kitsap) reported improvements in the number of active listings compared to the same month last year.

Measured by months of inventory, the selection is at historic lows in many counties. At month end, there was just under 1.7 months of supply system-wide, which compares to the year-ago figure of about 2.5 months of supply. Both King and Snohomish counties have less than one month of supply.

“If home buyers were hoping that January would start to bring more balance to the housing market, they’re going to be sorely disappointed. The number of homes for sale remains at record lows, and the growth in pending sales tells us that sellers are still firmly in the driver’s seat,” said one broker.

MLS director agreed, pointing to five years ago when buyers could choose from 5,378 listings of single family homes in King County versus last month’s selection of 1,569 listings. “The real question is whether there will be relief in the near future, and the unfortunate answer is no,” he said, citing the combination of new jobs, a shortage of new homes, and a reluctance of sellers to list their home for fear of not being able to find their next one.

Commenting on “typical seasonal and beginning of the year adjustments,” one company president said he is encouraged by new listing activity. “There is no indication that the annualized trend of shrinking active inventory will reverse itself anytime soon, but we’re seeing momentary bubbles of increased inventory for buyers currently in the market” noted a broker.

“List it and they will come” is the new mantra as new listings come on the market, commented a broker. Despite having more sales than new listings over the past few months, He said there is hope for homebuyers. “As the days start getting longer the future will look brighter for the backlog of buyers waiting to find a home.” Describing February as the bridge month between winter and spring markets, Scott expects to start seeing an increase in the number of new listings.

“Buyers who are properly positioned to make quick decisions, and who have the proper negotiation tactics and guidance are finding success in this high velocity market,” one reported.

Not surprisingly given the imbalance in supply and demand, prices continue to rise. Last month’s median price for the 5,874 completed sales of single family homes and condominiums was $327,175, up 9 percent from the year ago figure of $300,000. There were 889 more closed sales in January than for the same month a year ago for a 17.8 percent increase.

Single family home prices (excluding condos) increased 9 percent, rising from $309,950 to $338,000. The median price for single family homes that sold in King County last month was $525,000, up more than 6.9 percent from the year-ago sales price of $490,970. Several outlying counties reported double-digit gains.

“The softening of single family home prices in King County over the last few months, combined with the relatively large price increase in Snohomish County (8.2 percent) suggests buyers are migrating north in order to find more affordable housing,” said a broker.

Brokers in Pierce and Kitsap counties also reported price hikes larger than King County’s. The median price of a single family home in Pierce County jumped nearly 11.6 percent from a year ago while the year-over-year price in Kitsap was up 9.4 percent.

Condo prices rose 5.5 percent in January compared to a year ago, increasing from $255,750 to $289,900. King County condo prices surged more than 9.8 percent, from $282,250 to $310,000.

“For buyers, it is a good news/bad news scenario in Kitsap County,” reported MLS director Frank Wilson. “More houses came on the market last month than a year ago, but pending sales surpassed that number to keep the market tight. Brokers navigated these challenges and buyers endured, “but the tightness will likely be magnified during 2017,” said Wilson.

Wilson said open house traffic has “started off with a bang” as more buyers have decided now is the time to buy, believing that prices will only continue to rise .” He expects escalation clauses, multiple offer situations and backup offers to “be the norm during the first quarter. The hierarchy of purchasers: cash, conventional loan, VA loan, and FHA financing will continue to be the pecking order,” he stated.

“We’re seeing the frenzy change to a fanatical desire to own a home as buyers scramble to beat increasing interest rates,” reported one. He expects the Feds to increase rates two more times between now and April, “and that will only increase buyers’ aggressive tactics to secure a home,” he suggested.

He also noted sellers are able to “get away with putting homes on the market in conditions that historically would be rejected by buyers.” Now, however, he said buyers are willing to turn a blind eye to repairs and future maintenance.

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 the state.

Inventory shortages persist, but Northwest MLS brokers notch record-setting sales totaling $40.3 billion during 2016

KIRKLAND, Washington. (Jan. 19, 2017) – Members of Northwest Multiple Listing Service reported 95,500 closed sales during 2016, outgaining the prior year’s volume of 88,331 transactions for an increase of more than 8.1 percent. Inventory was at record lows for much of the year.

Measured by dollars, last year’s sales of single family homes and condominiums were valued at more than $40.3 billion. Compared to 2015, that dollar volume represents a gain of nearly 18.2 percent.

The sales activity reflects the work of 25,888 brokers across 23 counties in the member-owned Northwest MLS.

Last year’s completed sales included 81,872 single family homes (about 86 percent of the total) and 13,628 condominiums. Of these sales, about 11.3 percent were newly built residences.

The area-wide median price for last year’s sales of single family homes and condominiums (combined) was $337,500, a gain of 8.9 percent from the year-ago figure of $310,000. A comparison by county shows median sales prices ranged from $102,500 in Ferry County to $489,000 in King County. With one exception (Ferry) all counties had year-over-year price gains.

Year-over-year prices for single family homes (excluding condominiums) increased 8.7 percent system-wide, rising from $320,000 in 2015 to last year’s median price of $347,950. Condo prices jumped 12.6 percent from the 2015 figure of $254,900 to last year’s median selling price of $287,000.

Only about 7 percent of the sales were for homes priced under $150,000. About one-third of the sales were in the $300,000 - $500,000 range, with the largest share (34 percent) selling for $150,000-$300,000.

Inventory shortages challenged brokers and buyers throughout 2016. Member-brokers logged 121,468 pending sales (mutually accepted offers) during 2016, while adding 113,305 new listings to inventory. Brokers said depleted inventory often led to competitive bidding and multiple offers for homes in the most desirable areas.

During 2016, the average area-wide supply, as measured by months of inventory, averaged only 1.86 months, down from the previous year’s figure of 2.4 months. King County had the lowest level, averaging only 1.1 months of supply. In general, industry analysts use a 4-to-6 month range as an indicator of a balanced market, favoring neither buyers nor sellers.

High-end sales also surged during 2016. Northwest MLS members reported 3,251 sales of single family homes priced at $1 million or more, up more than 21 percent from the 2015 total of 2,676 “luxury” sales. Condos priced at $1 million and up accounted for another 339 sales. A total of 1,711 condos sold for $500,000 or more, outgaining 2015’s total of 1,459 half-million dollar-plus sales (up 21.4 percent).

The highest-priced single family home that sold during 2016 by a member of Northwest MLS was a property on Mercer Island that commanded more than $9.75 million. Topping the chart of high-priced condominiums was one at Escala in downtown Seattle high-rise that sold for $8 million.

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

 About 45 percent of last year’s single family home sales had three bedrooms, while the vast majority of condos (nearly 76 percent) had two bedrooms or fewer.

 The median price for a 3-bedroom home that sold in 2016 was $311,000, about 9.8 percent higher than the previous year’s figure of $283,250. A comparison by county shows the median price for a 3-bedroom home ranges from $120,000 in Ferry County to $485,000 in King County.

 Of the condo sales, about six of every 10 (61.7 percent) were located in King County, primarily in Seattle or on the Eastside. That ratio matched the figure for 2015.

 For the new construction component involving Northwest MLS brokers, newly built condos fetched higher prices than single family homes, just like 2015. Last year’s sales included 9,416 newly built single family homes that sold for a median price of $455,000 (up 11.8 percent from 2015), and 1,375 condos that sold for a median price of $552,900 (up 22.9 percent from 2015).

 A comparison of 2016 and 2015 median prices of single family homes shows all but one county reported year-over-year gains. Going back to 2007, most counties have rebounded.

 Prices vary widely among school districts. Homes that sold last year in 13 districts reported median prices of more than a half-million dollars, topped by Mercer Island at more than $1.3 million.

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 nearly 26,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.

Home buyer frustration continues due to limited selection and ongoing increases in prices, interest rates

KIRKLAND, Washington (Jan. 5, 2017) – Like many other months of 2016, December was frustrating for buyers across Washington state as they encountered depleted inventory and rising prices. Post-election hikes in interest rates – with more on the horizon -- added to would-be homeowners’ worries.

Northwest Multiple Listing Service statistics for December show year-over-year drops in new listings, but gains in pending sales, closed sales and prices. Pending sales (mutually accepted offers) in the four-county Puget Sound region reached their highest level since 2005.

“The data just keep telling the same story – low inventory and increasing prices,” remarked a broker. “As one of our brokers put it, ‘Sellers received an awesome Christmas gift in December, but buyers, only a lump of coal.’”

Brokers added 4,217 new listings to the inventory during December to bring the supply up to 10,571 listings. The volume of new listings surpassed the year-ago figure of 4,041, but supply still fell, dropping to only 1.4 months for the Northwest MLS market area covering 23 counties. Both King and Snohomish counties reported less than a month of inventory.

A broker in Seattle said his analysis of the MLS data indicates the supply of single family homes for sale in King County just hit a post-recession low. “The only other time supply fell below one month was around this same time a year ago,” noted Wasser, a member of the Northwest MLS board of directors.

At month end, MLS figures show inventory (10,571 listings) was nearly 15.6 percent below year-ago levels (12,522 listings), with about 90 percent of the selection being single family homes.

Seventeen of the 23 counties in the MLS report had double-digit drops in active listings at the end of last month compared to December 2015.

Northwest MLS members reported 6,401 pending sales during December, up from 5,970 for the same month a year ago for a year-over-year gain of 7.2 percent.

“The housing market remains frenzy hot on a seasonal basis,” one remarked. Noting sales activity was substantially higher than the number of new listings, he said such conditions “continue to foster a competitive market where homebuyers are just waiting for the next new listing to come on the market.”

Commenting on strong sales in the Central Puget Sound region, he noted King County recorded the biggest year-over-year jump in pending sales of single family homes, surging nearly 11.3 percent, well ahead of Kitsap (up 4.5 percent), Pierce (up 4 percent) and Snohomish (up 3.2 percent).

“Buyers pursued homes aggressively all through November and December with little to no slowdown amid fears of rising interest rates and worsening inventory levels,” said MLS director. “Inventory levels have dropped to their lowest level, which makes buyer frenzy even more intense as prices approach double-digit appreciation,” he added. This director also calculates buyers have lost $37,000 in buying power due to interest rate increases. He likens the situation to having two cars, “one going forward, and one going in reverse. The gap is widening too fast for some buyers.”

Closed sales also finished on a strong note with brokers reporting 7,575 completed transactions during December. That’s up more than 6.8 percent from a year ago when members notched 7,091 closed sales.

Prices area-wide also continued trending upward, rising nearly 9.2 percent from a year ago. The overall median price for single family homes and condominiums that sold during December was $343,950; a year ago it was $315,000.

King County prices jumped 12.2 percent, from $450,000 in December 2015 to $505,000 for last month’s sales. For single family homes (excluding condominiums) the median price for December’s sales was $550,000, unchanged from October and November. Prices peaked this year in King County in June, reaching $573,522.

Condo sales slowed compared to a year ago, due at least in part to a sharp drop in inventory (down more than 19 percent). Pending sales were essentially flat (up 0.73 percent). Closed sales for December slipped nearly 6 percent, while prices on last month’s completed sales of condos rose 9.8 percent. The median price on last month’s closed sales of condos was $280,000. Condo prices in King County jumped more than 12 percent, from $279,975 a year ago to last month’s sales price of $314,000.

“Looking ahead to 2017, the Seattle market will continue to perform well, even with the expected interest rate increase,” stated a broker. The regional economy is in full stride, he noted, adding, “This will continue to create increased demand for housing across the board. Price growth should start to cool a little as inventory levels rise modestly, but overall, 2017 should be another banner year for the housing market.”

Consumers should expect prices to continue edging upward, suggested the NWMLS direction. “NAR indicates we are 70,000 units short of meeting the housing needs in the Puget Sound area. Builders are just flat out running out of urban land to work with,” he said. Also, he believes rising costs for construction labor are the driving force for price increases. Builder confidence continues to grow, reaching its highest levels since 2005, he noted, but added, “Naturally, some trepidation is heard as some feel this level of growth in the market is completely unsustainable.”

He believes the pattern of low inventory and increasing prices will continue. “We believe it is a predictor for what to expect throughout 2017,” he commented. “There’s simply not enough new construction to fill the needs of new employees being hired both locally and new to the state. The key is employment,” Grady continued, saying “There’s no reason to think that a new administration will cause employment to slow down; rather, it’s more likely we’ll see it increase in the Puget Sound region so we’re off to another strong start in 2017,” he stated.

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 the state.

Real estate brokers expect no holiday breather as sales stay strong and supplies remain low

KIRKLAND, Washington (Dec. 5, 2016) – Pending sales of homes hit an all-time high for the month of November according to the latest statistics from Northwest Multiple Listing Service. The report covering 23 counties around Washington state also shows the number of new listings added during the month plunged to the lowest level in 11 months, prompting MLS leaders to predict a busy winter for residential real estate as buyers compete for the smallest inventory since March.

“Last year’s holiday season ended up being the best time to sell a home around King County as sellers took the winter months off, but buyers remained persistent. The supply of homes for sale hit a post-recession low, and so far, this year is mirroring last winter’s trends,” remarked Northwest MLS director Robert Wasser in Seattle.

Figures for November show a 13.2 percent drop in inventory of single family homes and condominiums, a 9.4 percent gain in pending sales, a 31.3 percent spike in closed sales, and an 11 percent increase in prices compared to the same month a year ago.

At month-end, there was only 1.69 months of supply system-wide, believed to be a new low. For the 4-county Puget Sound region there is only 1.22 months of supply, with King County having the lowest level at under a month (0.96).

Pending sales (mutually accepted offers) totaled 8,217, and eclipsed the number of new listings (5,779) by 2,438 units. That imbalance depleted total inventory, dropping the number of active listings to 13,303, down 13.2 percent from a year ago.

“November’s pending sales for the four-county area of King, Snohomish, Pierce and Kitsap were the highest since 2005. There were 44 percent more pendings than new listings,” noted J. Lennox, who described market activity as a mini power surge. “Every time interest rates increase 0.5 percent we see these surges because buyers become anxious about increasing rates – but on a historical basis rates are still amazing,” he remarked.

 John Deely, vice chairman of the Northwest MLS board, said the Seattle residential real estate market is not taking time off for an end-of-year breather. “The seemingly inexhaustible supply of ready, willing and able buyers continues to purchase available inventory. This imbalance in supply and demand continues to fuel multiple offers and drive prices upward,” said Deely in Seattle. Well-paying jobs in the tech sector are fueling demand, with “the increase in equity and tick up in interest rates enticing more sellers to the market.”

George Moorhead, another member of the MLS board, echoed those sentiments. “We have seen the market pick up significant speed since the mild slowing during the summer months.” He cited NAR reports that the Puget Sound area is 73,180 units short of demand, calling it a staggering number.

“Like the last two years we expect strong sales to continue through December, then taper off in January, only to pick back up mid-February with another flurry of aggressive buyers,” Moorhead continued. He also believes an uptick in interest rates will driver buyers into the market even harder, with inventory likely to plunge even lower.

The median price on last month’s closed sales of single family homes and condominiums area-wide was $342,000, up 11 percent from the year-ago figure of $308,000. August was the only other month this year with year-over-year double-digit appreciation for prices area-wide.

Thirteen counties in the Northwest MLS service area reported double-digit price increases last month compared to 12 months ago. Prices in King, Pierce and Snohomish counties jumped between 14.4 and 15.3 percent, but the largest spikes were in Okanogan (up 41.4 percent) and Jefferson (up 39.5 percent) counties. Last month’s overall median price for single family homes and condos that sold was down about 2 percent from this year’s high of $350,000 for sales that closed in June, July and August.

Prices for single family homes (excluding condos) rose 10.9 percent from a year ago to $350,500. King County reported the highest median price for single family homes at $550,000 (up 10 percent year-over-year).

Condo prices reflected more modest price hikes, perhaps a reflection of depleted inventory (down 18 percent) that is dragging down sales. Pending sales fell nearly 1.9 percent from a year ago. Last month’s median selling price area-wide was $280,000, about 5.7 percent higher than a year ago. In King County, which accounted for more than six of every 10 condo sales, year-over-year prices jumped more than $30,000 -- from $298,500 to $328,844 (up about 10.2 percent).

“Seattle continues to defy all forecasts and now has the distinction of being the hottest market with the fastest-rising prices in the nation,” said Mike Grady, commenting the latest home price index from S&P Case-Shiller. “We believe the market will continue to be extremely active through the winter and beyond, although the Fed’s expected interest rate hike may affect this somewhat and provide some relief to buyers.”

Even with the much-anticipated increase in interest rates, Grady said he does not expect much leveling off of home prices or activity. Expectations of an easing of mortgage underwriting stringencies by the new Administration will result in additional buyers entering the market, which Grady believes “will add fuel to the fire. We anticipate being very busy through 2017.”

Other brokers agreed.

“Overall, the market continues to be frenzy hot on a seasonality basis, as we’re seeing the same positive momentum in the Puget Sound real estate market as last year,” stated Scott, adding, “We’ll be entering 2017 with an extremely severe inventory shortage that is going to lead us into a huge price appreciation boost after the first of the year.”

“Looking ahead to 2017, the Seattle market will continue to perform well, even with the expected interest rate increase,” stated OB Jacobi. “The regional economy is in full stride and this will continue to create increased demand for housing across the board,” he added. He also said he expects price growth to cool somewhat as inventory levels rise modestly, but he believes “2017 should be another banner year for the housing market.”

“This market engenders confidence and high expectations by sellers as they continue to command center stage,” remarked Dick Beeson in Tacoma. “Inventory levels were supposed to increase by this time of year, yet stubbornly, would-be sellers remain on the sidelines, so buyers will continue to struggle to find a home and compete with other buyers through most, if not all of 2017,” added Beeson, a member of the MLS board of directors.

Beeson also commented on the “hottest market” label from Case-Shiller. “It sounds like an enviable position, but it brings its own set of problems and issues,” he noted. Lengthy times to obtain appraisals due to the limited number of appraisers, low appraisals, buyers being forced to pay cash for the difference between appraised value and the sales price, sellers refusing to make repairs on their property, lenders requiring repairs to be done prior to closing, and multiple offers were among concerns he listed.

Industry-watchers say conditions are ripe for sustained activity through the holidays, citing historically low interest rates, motivated sellers, fewer players (less competition), faster closings (fewer transactions to process) and the appeal of year-end tax deductions are motivators.

Gary O’Leyar described the current market as “one of the most extreme I’ve seen in 42 years of working in the Greater Seattle area.” Although there may be a public perception that brokers are “having a heyday” he said it’s actually one of the hardest markets he and fellow brokers have encountered. One listing may generate multiple offers, but at the end of the day there is only one sale. “Along with buyers who are so tested by this market are the brokers who partner with them to work through this rugged gauntlet to secure a successful sale,” he noted.

Beeson also commented on the current market challenges, saying “even in a hot market sellers and buyers need the guidance of an experienced broker to navigate the waters.” For sellers, he said, finding a buyer is like the tip of an iceberg – it’s easily seen. “However,” he explained, “helping a buyer find the right home and winning in a multiple-offer situation, helping sellers choose the right offer, helping both parties close the sale are all under the surface and require a knowledgeable, experienced broker to avoid crashing against a failed sale.”

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.

Home sales and prices still climbing around Puget Sound, but brokers expect slowdown

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.

Western Washington housing market still strong, but some see signs of rebalancing

KIRKLAND, Washington (Oct. 5, 2016) – It’s still a seller’s market, but some leaders from Northwest Multiple Listing Service think the imbalance may be easing in some areas, pointing to a slower pace of sales and moderating prices. Others aren’t convinced, citing mixed indicators.

Northwest MLS statistics summarizing September activity show year-over-year gains in the volumes of new listings (up 14.5%), pending sales (up 9.3%), closed sales (up 9.5%), and prices (up nearly 9%). Inventory for single family homes and condominiums across the 23 counties in the report dropped about 8 percent from a year ago.

Commenting on September’s activity, Northwest MLS director George Moorhead reported “rumblings on both sides of the fence” by buyers and sellers. “Buyers are getting antsy to make a move before interest rates rise and they’re looking harder at homes that have been on the market longer than 30 days.”

Sellers are considering remodeling instead of buying as they cannot find a suitable new home, according to Moorhead. He noted builders also face challenges in their searches for new development sites near metro areas.

MLS members continue to scramble to replenish inventory. Compared to a year ago, they added 1,275 more new listings during September, ending the month with 10,047 total new listings. Like most months this year, however, September’s pending sales of single family homes and condos exceeded the number of new listings. Brokers reported 10,463 pending sales (mutually accepted offers) last month for a 9.3 percent improvement over a year ago.

September’s new listings marked the lowest monthly total since February – but it may be an expected seasonal slowdown.

 “We have one month until November when new listings coming on the market drop by 50 percent on a monthly basis compared to spring and summer months,” explained J. Lennox. With the decrease typically lasting until the end of February, “the best opportunity for homebuyers to find a home will be in the next 30 days.”

The current selection includes 18,136 active listings, down about 8 percent from the year-ago inventory. Only two counties -- King and Clallam – reported year-over-year gains in inventory during September.

Area-wide supply, as measured by months of inventory, improved slightly from August, rising from about 1.9 months to 2 months. Supply remained below two months in King, Snohomish and Pierce counties.

Demand for homes around Puget Sound remains strong, with the market showing “no marked change throughout the summer months,” remarked MLS director Dick Beeson. Well-priced, well-conditioned homes continue to command attention and draw offers in record time, he noted.

September was “an interesting month for a few different reasons”.. Among factors he cited were the modest increase in the number of new listings in the tri-county region (King, Pierce, and Snohomish) and the slowing pace of sales and prices. “The good news is that all of this points towards a market that is slowly beginning to rebalance itself.”

MLS director Frank Wilson believes Kitsap County is moving into the fall cycle, evidenced in part by slowdowns in listings and sales when compared to mid-year activity. He also reported fewer people at open houses and fewer multiple offer situations. “We are still heavily weighted to a seller’s market, but a small shift might be telling – we’re seeing more price reductions than in the recent past,” said Wilson.

Sparse inventory in many close-in neighborhoods, a shortage of appraisers, and the likelihood of an interest rate hike before year-end are sources of concern, according to some MLS spokespersons.

“We continue to see a seller’s market expansion in peripheral counties, with absorption remaining high and prices continuing their relentless increases,” said Mike Grady. Additionally, he cited reports on healthy job creation and single-family building permits, and increases in investments in the local market by foreign buyers. “We don’t expect things to moderate significantly any time soon,” he remarked.

A shortage of real estate appraisers is concerning to Grady and other MLS officials. “We are hearing concerns from brokers that closing times are increasing because appraisals are more difficult to get completed in a timely manner given the frenzied pace of activity,” Grady stated, adding, how rush fees can also slow down the process for those not paying a premium for expedited service.

“With the current shortage of appraisers and the lengthened time and increased costs it takes to get an appraisal, this market is even more challenging,” said Wilson. “We’ve gone from reductions in closing time over the past 20 years to now lengthening the process because of changes to our industry and the requirements to be an appraiser.”

Beeson agreed, saying “Appraisals continue to plague brokers and sellers.” The number of certified appraisers statewide has diminished by half from 5,000 to around 2,500 since Dodd/Frank regulations took effect. Longer appraisal time isn’t the only challenge, he noted. “Appraisers are struggling to establish values based on the continued rise in sales prices. Many buyers are faced with the prospect of paying above appraised values if they want to secure a home,” according to Beeson, who noted this difference must be paid in cash so the mortgage amount doesn’t exceed the valuation.

Median sales prices system-wide jumped nearly 9 percent from a year ago, from $312,000 to $340,000. Compared to August, prices dropped by $10,000.

“It is normal for median home prices to fluctuate the second half of the year,” stated Lennox. He noted the median home price for single family homes that sold in King County dropped from $550,000 in August to $538,000 for September. Compared to 12 months ago, the countywide median rose 9.7 percent for single family homes and 16.4 percent for condos.

Condo prices area-wide rose 17.3 percent from a year ago, escalating from $260,000 to $305,000. Supplies are tight, with only 1.3 months of inventory. In King County, where last month’s median sales price was $355,000, there is only one month of supply. Similarly, Snohomish County has only a month of inventory; year-over-year prices there rose nearly 9.8 percent.

“We have had many conversations with sellers who wonder if they have missed the market as inventory levels slowly rise and the Feds signaling a desire to raise interest rates in December,” remarked Moorhead.

“The looming prospect of higher interest rates is fueling buyer interest and prompting many buyers to take the plunge now rather than wait for a reset in prices,” reported Beeson. “Knowledgeable brokers coach buyers that a 1% change in interest rates equates to a $200-plus increase in monthly payments on a $400,000 home and more than $160 a month on a $275,000 home. That means property values would have to decrease by over 12% to balance the increase in payment due to higher interest rates. That's not happening anytime soon,” he stated.

In a recent report on actions consumers can take in anticipation of rising interest rates, Bankrate, an aggregator of financial rate information, suggested “considering your home first.” On a $200,000 mortgage, half of one percentage point of interest means a difference of $20,000 or more over 30 years. “If you are on the fence about buying or refinancing, now is the time to act,” the author of the Bankrate report wrote.

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.

Western Washington real estate brokers see early signs of “a more balanced market"

KIRKLAND, Washington (Aug.4, 2016) – Home prices are still rising but the supply of homes is improving, prompting brokers to suggest some relief is in sight for would-be buyers. “We might actually be starting to move very slowly back toward a more balanced market,” said OB Jacobi, commenting on July’s figures from Northwest Multiple Listing Service.

The MLS report summarizing last month’s activity shows active listings (including single family homes and condominiums) are at the highest level since September 2015 and the volume of new listings added to inventory topped the 12,000 marked for the third consecutive month.

With inventory shortages apparently easing in some areas, once-sidelined and frustrated house-hunters may be resuming their search, based on the latest statistics. Pending sales for the 23-county service area rose nearly 4 percent compared to a year ago, setting a new high for volume during July.

Member brokers reported 11,657 pending sales system-wide last month, a slight drop from June when they notched 11,995 mutually accepted offers. Despite that dip, the four-county Puget Sound region had its best-ever volume of pending sales for July (8,545), eclipsing last year’s record number (8,248).

“We are experiencing a record breaking market, last month was the best July in history in the Puget Sound real estate market. We’re in a frenzy hot market with a large backlog of buyers.” He credits improving inventory with spurring sales. “That additional inventory gave us the boost to not only be able to claim an all-time, best ever July, but to also position the last three months as the best in history for [pending] sales activity in the Puget Sound region.”

Some brokers, including MLS director Frank Wilson, expect the robust activity will slow in August as families focus on vacations and back-to-school preparations.

Brokers added 12,178 new listings to the selection during July, which compares to 11,198 additions during the same month a year ago for an improvement of nearly 8.8 percent. At month end, there were 18,287 active listings for sale versus the year-ago figure of 21,069. That represents a year-over-year drop of “only” 13.2 percent; it’s been hovering in the minus-20 ranges for most months since spring 2015.

King, Snohomish and Pierce counties still have less than two months of supply, with double-digit increases in prices compared to a year ago, prompting some buyers to expand their search to outlying areas.

 “Buyers are feeling the squeeze every day, and now, outlying areas are seeing multiple offers like the major cities have been experiencing the last two years,” noted Northwest MLS director George Moorhead.

Buyers are using driving apps with their searches to determine whether or not to consider a home and its proximity to their workplace, according to Moorhead.

“Our difficulty with limited inventory and multiple offers continues in Snohomish County; The biggest problem right now is a resurgence of low appraisals – often between $30,000 and $35,000 below the agreed upon price.”

Also concerning is a tendency to forgo due diligence during competitive bidding situations, something she says she sees nearly every day. “In my opinion, sellers and buyers should not consider offers with waived financing, inspection, investigations, etc. as good offers,” she stated, adding, “They should be mindful of our state’s ‘buyer beware’ protections and allow buyers the time and ability to perform their due diligence.”

The appraisal problem is plaguing all market areas of the county, and involves different appraisers.

“This is indeed a strange situation, especially when taking into consideration that most sellers are cautious in their decision to not take the highest offer – even in multiple offer scenarios,” Haines remarked. She is also troubled by appraisers’ current practice of using comparable properties that are only with one-half mile of the subject property, rather than the historically typical 2-to-3-mile radius, resulting in a “not good comp” that sometimes leads to failed sales.

One notable exception to the existence of low appraisals is new construction, according to Haines. “It continues to return to our marketplace at a slow but steady pace.”

“Our brokers in Seattle proper, and now more broadly in King County, say sales are slowing down. With the increase in inventory, there may finally be some relief for home buyers,” suggested Mike Grady. However, he added, “Prices continue to rise at impressive rates in many areas.”

Grady also mentioned the “ripple effect” is continuing, with Seattle’s experience of shrinking inventory and rising prices occurring in surrounding areas.

The median price for last month’s 9,466 closed sales of single family homes and condos (combined) was $350,000. That reflects a jump of 9.6 percent from a year ago when it was $319,250.Within the 23 counties in the report, the median price ranged from $57,950 in Ferry County to $505,000 in King County.

A comparison of prices by counties shows San Juan County topping the chart. The median price on last month’s sales (including single family homes and condos) was $507,500, a jump of nearly 21 percent from a year ago. That edged out King County where the median sales price of $505,000 was up 15 percent from twelve months ago when it was $439,000, but down slightly from June’s figure of $510,000.

For single family homes (excluding condos), the area-wide median selling price was $358,150, a 9.2 percent gain from a year. King County had the highest median price for single family homes at $555,000. That’s a 14.4 percent year-over-year increase.

Condo prices for July surged 17.3 percent from a year ago, from $260,000 to $305,000. Inventory shortages persist, with less than 1.3 months of supply area wide, and less than a month (0.90) in King County.

Commenting on the market in Kitsap County, where his office is based, MLS director Wilson said there’s a significant backlog of buyers. Multiple offers on new listings and steady traffic at open houses are continuing, he added.

Scarce inventory and end-of-summer priorities will likely create “a bit of a pause” in the market, predicts Wilson. He expects vacations and back-to-school shopping will divert some prospective buyers and sellers, but come mid-September “the market will take off again until Thanksgiving.”

Elaborating on his comment about a possible shift to a more balanced market, Jacobi said King County “really sticks out for me” when looking at the entire region. Single family home inventory levels match those of a year ago, yet home sales have slowed year-over-year. “Price growth also appears to be slowing from the rapid growth that we’ve become used to in recent months.”

Brokers who commented on the latest MLS report dismissed murmurs of a housing bubble.

Wilson emphasized this market is not like it was in 2005-2007 when it was driven by speculation and loans to people who could not afford them. He believes the market’s future holds two certainties: “Home prices are heading up and interest rates are soon to follow.” Wilson also described this market as “need driven based on an improving job market in King County as well as simple supply and demand.”

Remember, he added, “normal markets have adjustments . . . ours will come in a couple of years.”

“An imminent bubble is not likely,” said Moorhead. “Even though we cannot predict the future, if interest rates remain low and inventory levels remain at historic lows, a bubble is unlikely,” he said.

Scott expects current market conditions will continue at least into the summer of 2017. “The best opportunity for homebuyers to find a home will be in the next three months,” he suggested, noting new listings coming on the market historically taper off in November. “Because of the current increase in inventory, now may be a great time for buyers who were discouraged from entering the market to rethink their decision,” he added.

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.

Market showing signs of adjusting, but buyers still see double-edged sword

KIRKLAND, Washington (July 6, 2016) – Home sales around Western Washington continued at a torrid pace during June, but a 10 percent year-over-year increase in new listings has some brokers with Northwest Multiple Listing Service suggesting a little relief may be emerging.

In the meantime, “We have a long way to go to catch up with the demand,” stated Mike Grady. Citing reports of projected job growth in the region (pegged at 70,000 new employees) but only 8,000 new residential units in the same forecast, he said this imbalance is rippling to outlying counties. Inventory is now shrinking at a greater rate in some of the outlying counties than in the tri-county area of King, Snohomish and Pierce counties. Pending sales in some of these areas sales are rising at a faster clip, noted Grady, a past chairman of the MLS board. “It’s as if the splash in the center of Seattle’s pond is finally making ripples to the outlying counties,” he concluded.

He described the market as “frenzy hot” in June, but suggested there was a “short breath of fresh air for homebuyers.” He credits the combination of more inventory coming on the market and lower interest rates with bringing some “welcome relief to the backlog of buyers who have been waiting to purchase a home.”

There were fewer multiple offers for each new listing, according to Scott’s analysis of the latest data, but he said 80 percent of new listings are still selling within the first 30 days in price ranges where 90 percent of the sales activity is taking place. That, he said, contrasts with a “healthy” (more balanced) market with only around 30 percent of listings sell in the first 30 days.

Northwest MLS members reported 11,995 mutually accepted offers last month for a 4.73 percent increase over the year-ago volume of pending sales. For the four-county Puget Sound area, brokers reported 8,869 pending sales, the highest total for the month of June since 2005.

New listing activity improved compared to a year ago with 12,759 sellers putting their home or condo on the market. That’s a 10.2 percent improvement from twelve months ago and marks the largest number of new listings added in a single month since March 2010 when brokers replenished supply with 12,994 new listings. Last month’s additions brought the number of total active listings up to 16,838 properties. A year ago, across the 23 counties in the report, buyers could choose from 20,333 listings.

With only 1.7 months of supply system-wide (for single family homes and condos combined), inventory is well below the four-to-six month level many industry analysts use as an indicator of a balanced market. Both King and Snohomish counties have barely more than one month of supply.

Inventory of condos is more meager, hovering near 1.1 months area-wide. In both King and Snohomish counties there is less than a month of supply (0.80). For single family homes only, there is 1.82 months of supply – and even less than that level in all four central Puget Sound counties.

Not surprisingly, prices continue to escalate. In fact, a recent report from CoreLogic, a property analytics company, indicated home prices are rising faster in Washington than in any other state in the nation.

Last month’s 9,805 pending sales across all counties in the MLS report had a median selling price of $350,000, which is nearly 8.9 percent higher than the year-ago figure of $321,500. Seventeen of the 23 counties experienced double-digit increases, led by Grant County (up 24.9 percent), Jefferson County (up 24.4 percent) and Skagit County (up nearly 23.8 percent).

In King County, which accounted for about 40 percent of the sales, the median price surged 13.3 percent from a year ago, rising from $450,000 to $510,000. For single family homes only (excluding condos), prices in King County rose 14.7 percent, from $500,000 to $573,522. Condo prices skyrocketed nearly 22 percent compared to a year ago. The median sales price last month was $350,000; twelve months ago the buyer of a median-priced condo in King County paid $287,000.

Buyers are seeing rapidly-rising prices as a double-edged sword, according to George Moorhead. “On one hand, the market is a fabulous investment and a way to secure monthly housing costs,” he explained, but added, “On the other side, prices and scarce inventory are getting out of hand. For the first time, we’re hearing a common theme,” he stated. Buyers are willing to make “huge sacrifices,” such as significant concessions on a home’s square footage, in order to be closer to jobs and good schools, he said, and they’re foregoing once-desired “core features” for their family’s home.

Moorhead , a board member at Northwest MLS, characterized the current market as a “vicious cycle” and “predatory” but different than what led to the 2007-2008 housing crash, in part because buyers are making large down payments instead of relying on zero down programs. The high down payments (achieved at times by borrowing from family) are sometimes made to help cover the difference between the sales price and appraised value. When coupled with concessions on the “needs” or “wish” lists, Moorhead said these sacrifices are creating a market that cannot be sustained.

In the short term, activity continues at a brisk pace, and now Brexit (Britain’s vote to exit the European Union) may contribute to an uptick in home sles, according to some brokers and industry-watchers.

“Demand for U.S. real estate could rise,” said Lawrence Yun, chief economist for the National Association of Realtors®. He attributes uncertainty before the Brexit vote as the likely reason the Federal Reserve decided not to raise interest rates in June and said the U.S. could face an influx of foreign buyers looking to pull out of the U.K.

 “Buyers are seeing the benefit of world economic turmoil as interest rates remain low and have even dipped a bit. Sellers are benefitting from the 12 percent increase in the median sales price of a home in Kitsap County,” said Frank Wilson, immediate past chair of the Northwest MLS board.

“Like a Fourth of July fireworks, the Kitsap housing market is sparkling,” commented Wilson. “Sellers are recognizing this is a good time to put their homes on the market,” he reported, noting brokers added 20 percent more new listings in Kitsap County last month than the same period a year ago. Pending sales there rose 7 percent while closed sales surged nearly 14.7 percent year-over-year.

“While the world is watching Brexit, oil prices and political theatrics, the average American still needs to transfer, take a new job, receive orders to a new duty station, move to a smaller or one-level home, or purchase a bigger home to accommodate growing family needs,” Wilson remarked, adding, “We continue to see good traffic at open houses, multiple offers on correctly priced homes, and people excited about the next phase of life that a new home brings.”

Traffic is brisk on all new listings but buyers and sellers alike face hurdles, suggested Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. “New listings get the once-over quickly and if passed over for more than a week, maybe two, they typically are overpriced and need a ‘price-ectomy’,” he said, adding “All properties are in play, even ones where no one has ventured to make an offer in the past.”

“This market has buyers asking ‘what do I have to do to buy a home,’ while sellers ask ‘what don’t I have to do to sell my home,’” Beeson commented. Buyers can’t convince sellers to accept their offer unless they meet all established requirements, especially if there are multiple offers in play, according to Beeson, a member of the Northwest MLS board. Meanwhile, sellers wonder if buyers will still purchase without having to make repairs to fix deficiencies, or offer a price concession to compensate if an appraisal is lower than expected. Owners also worry about finding their next home.

“It all adds up to difficult times for buyers and confusing times for sellers,” Beeson commented, adding, “Both parties need a professional broker to navigate the waters in today’s housing market.”

Despite the challenges, Scott believes the market is encouraging for owners who have been considering a move. “It’s a cause and effect situation: they find a home to buy, then put their home on the market, thus adding to inventory.” He believes the best opportunity for buyers to purchase will be within the next four months because of expected improvements in inventory and lower interest rates.

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.

Housing inventory shortages persist despite increase in new listings

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.

Puget Sound area home sales, prices still strong as backlog of buyers compete for scarce inventory

KIRKLAND, Washington (January 6, 2016) – Home prices have “clearly recovered” in King County and a few other areas served by Northwest Multiple Listing Service. Many member-brokers say prices are likely to keep rising as a backlog of buyers compete for depleted inventory.

Those were among reactions from brokers upon reviewing the December statistics from the MLS. The latest report shows the year ended on a mostly positive note with pending sales, closed sales and prices all showing year-over-year increases. Not surprisingly, listing activity dropped, in part because some sellers are balking at listing their home for fear of not finding a replacement.

Selling prices for single family homes and condominiums that sold across the Northwest MLS 23-county service area surged 8.6 percent from a year ago, rising from $290,000 to $315,000. The price of a single family home (excluding condos) that sold in King County during December jumped nearly 15.5 percent, from $440,000 to $508,000, prompting one local broker “If December told us one thing, it’s that home prices have clearly recovered in King County. Last month the median price for single family homes broke the pre-recession record of $481,000 that was set in July 2007.”

Another industry leader, noted the 9.2 percent drop in King County’s pending sales during December, saying “The only reason pending sales dropped in King County was due to a lack of inventory.” MLS figures show active listings in King County were down 39 percent (about 1,400 fewer properties) from 12 months ago.

Area-wide, inventory was off 29 percent from a year ago, plunging from 17,659 active listings to 12,522. That total includes 4,041 new listings the MLS brokers added during December, which was down from 4,367 the members added during the same month a year ago.

Inventory levels dropped well below the threshold many industry experts use to gauge a balanced market.

Area-wide there was just under 1.8 months of supply, with four-to-six months generally considered to be a “balanced” level. In King County, inventory dropped to less than one month (0.84). It was slightly better in the adjacent counties, with Snohomish at 1.13 months and Pierce at 1.76 months. Kitsap County also reported less than two months of supply. Only five of the 23 counties in the MLS report had more than six months of supply.

“The lack of inventory makes buyers twitch when a new listing hits the market,” observed Dick Beeson, a member of the Northwest MLS board of directors. “These buyers and their brokers are ready, willing and able to pounce on well-priced, well-located properties,” added Beeson, the principal managing broker at RE/MAX in Tacoma. These prepared buyers helped propel last month’s 15 percent increase in pending sales in Pierce County compared to a year ago.

Pending sales system-wide, which totaled 5,970 during December, clearly outpaced the brokers’ ability to replenish inventory. The sales volume was up 3 percent from a year ago when members reported 5,794 mutually accepted offers. Measured another way, last month’s pending sales outnumbered new listings by a wide margin – a differential of 1,929 units.

“With the backlog of buyers waiting in the wings, any new inventory that comes on the market will be snapped up immediately,” predicts Northwest MLS director Frank Wilson. He expects 2016 may be “very stressful” for some buyers, citing low inventory, increasing prices, rising interest rates, plus a growing pipeline of qualified buyers as sources of house-hunter anxiety.

Other factors could also come into play to squeeze inventory, according to Wilson. They include buyers whose credit has been repaired after foreclosures or short sales, investors who see real estate as an alternative to the stock market, escalating rents that prompt renters to consider home ownership, and buyers from outside the U.S.

Wilson said the limited selection means “buyers are going to find themselves settling on a house because they need one instead of leisurely shopping for the home of their dreams.” He also foresees a fast-paced, “intense” market, with prices escalating in areas where inventory is low. “The lack of inventory near job centers persists,” he remarked. Buyers come out in big numbers beginning January 1, he noted, but new listings come later, typically toward the end of February.

The low inventory in the Seattle area market will send many first-time homebuyers looking at suburbs and put additional pressure on multifamily properties. He points to the formation of new households due to the strong job market as a factor in the imbalanced market. “Our economy is being charged by a multi-faceted job base and this is driving employment to new all-time highs,” he observed. Both long-time homeowners and new homebuyers are feeling the impact of rising prices and interest rates.

One consequence noted is decreased buying power. “For buyers, every 1 percentage point increase in interest rates decreases buying power by about 10 percent,” he explained. He believes the diminished power coupled with rising prices will push buyers who are on the fence to make their move. “The same two factors will also motivate long-time homeowners to jump into the market as they looking to maximize their profit and find suitable replacement properties,” he remarked.

Gary O’Leyar, a former chairman of the Northwest MLS board, also commented on interest rates. “There’s been a lot of buzz about the recent increase in rates. It has been nearly 10 years since the Fed raised its benchmark rate. Many current homeowners and would-be homeowners may not have been born, and/or may not recall the days when long term mortgage rates were 10 percent or higher.”

Some brokers say rising prices are more worrisome than upticks in interest rates.  Noting differences in the tri-county area where pending sales declined by 9.2 percent in King County but increased by double digits in both Snohomish and Pierce counties, he thinks price hikes in King County are “clearly pricing many buyers out and into the adjacent areas.”

MLS figures show wide differences in prices within the Central Puget Sound region. Pierce County had the lowest median price for December’s sales at $249,950, while King County had the highest at $450,000. Homes and condos that sold in Kitsap County last month had a median price of $266,500; in Snohomish County the median sales price was $335,500.

The median price on December’s sales increased 8.6 percent area-wide compared to a year ago. Ten counties reported double-digit gains; four counties had year-over-year decreases in median sales prices.

Condo prices increased about 6.7 percent, from $239,000 to $255,000. In King County, which accounted for about 55 percent of the sales, the median sales price was $279,975. That’s up about 7.7 percent from a year ago.

Despite rising prices in most areas, closed sales ended the year on a strong note. Brokers reported 7,091 closings during the month to outgain the year-ago total of 6,284 by more than 12.8 percent. For the year, Northwest MLS members logged 88,831 closed sales, up from 2014’s total of 77,276 for a 14.3 percent gain.

Note:Northwest MLS will publish a comprehensive summary of 2015 activity on Jan. 21.

Commenting on prices, Beeson said, “Although prices have risen year over year throughout the NWMLS region, it has not been a phenomenal rise as seen in the mid-2000s.”Beeson also dismissed speculation of a housing bubble – unless “lenders get greedy again.”

“The housing bubble created in 2005-2008 does not appear evident at this time,” Beeson stated, adding, “Today’s buyers are generally very well qualified and they are using real money as down payments -- their own money. They are not relying on creating a second mortgage as their down payment, thereby disguising the fact that they had no real money of their own for a down payment.” Beeson remains wary of some lenders, however. “Watch out for lenders if they begin allowing buyers with lower credit scores to qualify to buy homes as interest rates tick up. Those days are to be feared.”

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