Home buyers are “better off,” but market is heating up

KIRKLAND, Washington (June 6, 2019) – The housing market in western Washington may not be as hot as it was last spring, but it is heating up, suggested one industry leader in commenting on the latest statistics from Northwest Multiple Listing Service.

Matt Deasy, president of Windermere Real Estate/East, Inc. said his analysis of single family home sales in King County reveals 7 out of 10 properties that sold during May had 15 or fewer days on the market. He also noted more than half the listings (55 percent) in the county sold for at or above list price, the highest ratio since July 2018.

Northwest MLS figures show last month’s 12,006 pending sales across its 23 county service area nearly matched the year-ago total of 12,168 mutually accepted offers. Nine counties notched increases.

Two other indicators of activity – the volume of new listings, and the number of closed sales – both showed slight gains from a year ago. MLS member brokers added 14,689 new listings to inventory during May, up 165 units from twelve months ago. Year-over-year (YOY) closed sales rose about 1.6 percent (from 9,011 in May 2018 to last month’s total of 9,153).

Several representatives of Northwest Multiple Listing Service commented on increasing activity:

• “The housing market definitely got busier in May with brokers reporting an uptick in showings, open house traffic, and offers.”- OB Jacobi, Windermere Real Estate Co.
• “We are swinging into our summer market at a little faster clip than last year, and have a few more houses for buyers to choose from.”- Frank Wilson, John L. Scott, Inc.
• “The spring real estate market remains very good for both buyers and sellers.”- Dean Rebhuhn, Village Homes and Properties.
• “Buyers rejoiced at lower interest rates in May.”- J. Lennox Scott, John L. Scott, Inc.

In addition to favorable financing, Scott said, “Increased inventory and continued job growth built on April’s momentum, translating to strong results in May.” While inventory has increased in many areas, Scott noted there are still severe shortages of listings in some price ranges.

Inventory improved 24.5 percent from a year ago, with brokers adding 14,689 new listings to outpace the 12,006 pending sales. The MLS report for May shows 16,133 active listings at month end, up from the year-ago total of 12,956. King County recorded the largest gain in total inventory, at more than 62 percent, but supply remained below 2 months in that and several other counties.

System-wide there was 1.76 months of supply at the end of May, well below the 4-to-6 months that experts say indicate a balanced market. “While our inventory has grown a little, we’re still well within the definition of a seller’s market,” said Frank Wilson, a broker in Kitsap County where there is only 1.46 months of supply.

An analysis of Northwest MLS inventory at the end of May underscores Scott’s point. It shows only 13.8 percent of the listings of single family homes have asking prices under $600,000. That compares to 25.6 percent in Snohomish County, 31.2 percent in Pierce County and 35.3 percent in Kitsap County.

Comparing May’s prices by housing types and geographic areas shows wide variation. Prices for single family homes (up 5.2 percent) outperformed condos (up nearly 1.4 percent). System-wide, sales of single family homes and condos that closed during May increased nearly 4.8 percent YOY, and rose more than 3.5 percent from April. A county-by-county comparison shows price changes ranged from a year-over-year drop of more than 20 percent (in Okanogan County) to a jump of more than 52 percent (in Pacific County).

Single family homes:

Home prices for single family homes (excluding condominiums) are up 5.2 percent system-wide, rising from the year ago figure of $429,500 to last month’s figure of $451,800.

King County prices for single family homes show a 3.6 percent decline from a year ago, but are at the highest level since June when the median price was $715,000. Snohomish nearly matched last June’s figure of $510,000, the highest for the year. A review of figures for the past five years shows both Kitsap and Pierce counties reached new highs (at $385,000 and $370,000, respectively) for last month’s median prices for sales of single family homes.

Three other counties (in addition to King) reported year-over-year drops in median prices on single family homes, led by Okanogan County where selling prices plunged more than 20 percent. Also reporting declines were San Juan County (-0.51 percent) and Snohomish County (-0.01 percent).

Condos:

Condo prices also rose, but at a smaller rate, as inventory continued to build (up nearly 65 percent).  Area-wide prices increased about 1.4 percent from a year ago. Pierce County prices surged 18 percent, while condo prices in King County were mostly flat (up 0.7 percent). Only six counties reported year-over-year price declines.

Prices overall (single family homes and condominiums):

Prices overall, including single family homes and condos are up $20,000 (nearly 4.8 percent) from a year ago, increasing from $420,000 to $440,000. In King County, the median sales price was $645,000, down less than a percent (-0.77) from a year ago. Snohomish County also reported a fractional drop, declining from $478,615 to $476,025 (down 0.54 percent).

“Home prices in the Seattle metro area are still lower than they were a year ago, but only marginally,” remarked Jacobi, but added, “Thanks to the pretty significant drop in interest rates last month, we can expect to see home prices trending higher through the end of the year, but at a far more moderate pace than the last several years.”

Rebhuhn agreed, crediting lower interest rates, lower median prices, and new jobs as driving factors in South King County, Pierce County and Tacoma. “We look for a very active summer market,” he remarked.

James Young, director of the Washington Center for Real Estate Research at the University of Washington, also attributed strong activity along the I-5 corridor and outer urban centers to low interest rates. Also noteworthy, he suggested, was Douglas County where YOY prices surged more than 24 percent.  “Cowlitz, Thurston, and Lewis counties continue to outperform,” he added.

Young said interest rates could drop further as 10-year yields continue to fall. “Given the search for value among those sellers trading down along with first-time buyers in all urban areas across the state, prices should continue to rise throughout the peak season,” he stated.

“The data for May extends the same phenomenon we’ve been part of for nearly five years,” said Mike Grady, president and COO of Coldwell Banker Bain. “Recall that just one year ago the headlines were asking, ‘Has the hot market ended?’ as inventory increased from 3-to-5 days to 1.8 months between May and August. Now, one year later, while we see many more listings are available, accepted offers are keeping pace and inventory remains relatively stable at 1.7-to-2 months.”

“A balanced market should have about a 6-month supply,” explained WCRER’s Young, noting the national month’s supply figure is at about 4 months. “Except for a few small counties, every county in the NWMLS area has a month’s supply of 4 or less. Except for Skagit County, with 2.2 months of supply, every county along the I-5 corridor has less than 2 months.”

Wilson, the Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo, emphasized “the numbers are all relative, relative to a ‘normal’ market which we are not in.” Noting the current inventory of 644 homes and condos is higher than last year when there were 519 active listings at this time, “it is half of what might be considered a balanced market here in Kitsap County.”

What people read about the Puget Sound market “is not reflective of our micro market” Wilson continued, noting one “huge difference” is the amount of vacant land that is available. “We have seen a bump in vacant land listings,” he reported, adding, “For those looking to build a home, there are a lot of opportunities in this area, though be prepared for a lengthy process to get a home plan approved and built here in Kitsap.”

“We’re in the midst of the four best months in the year for buyer activity,” Scott emphasized. “I recommend sellers ensure their home’s appearance, marketing strategy and broker associate relationship are all in tip-top shape,” 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 around 2,200 member offices includes more than 29,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in the state.

Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)

NWREporter June, 2019