Market offers hope to homebuyers…but may be temporary

Homebuyers may find some good news in the latest report from Northwest Multiple Listing Service (NWMLS). The number of active listings at the end of June, 6,358, reached the highest level since November when buyers could choose from 6,505 properties. The volume of new listings added last month was the highest number in 17 months (13,111 last month versus 14,689 at the end of November 2019).

“Homebuyers will be happy to hear that between May and June the number of listings in King, Pierce, and Snohomish counties rose, giving them more homes to choose from and possibly easing the pressure just a little,” remarked Matthew Gardner, chief economist at Windermere Real Estate.

For the tri-county area, total active listings of single family homes and condominiums increased 14.5% from May. System-wide, the report covering all 26 counties served by Northwest MLS shows month-to-month inventory improved 14.9%.

“Buyers need some relief, so I hope this trend continues,” said Gardner.

Broker Dean Rebhuhn, owner at Village Homes and Properties, agreed the slight increase in new listings is good news for buyers, but tempered his optimism. “Low inventory and high demand coupled with low interest rates continue to drive up the market.” He also noted Kittitas County “is no exception to brisk sales. Many homes in that county are selling within one or two weeks.”

NWMLS director Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale, described Kitsap County as another “heated market” but said brokers there are growing inventory very slowly, resulting in more selection for buyers. Brokers added 621 new listings to that county’s inventory, improving on May’s volume by more than 13%. That number also marked the first time since May 2019 that the number of new listings in Kitsap County topped 600.

Other industry analysts suggested the uptick in inventory might be short-lived, citing vigorous activity as Washington state lifts several strict coronavirus restrictions.

“We continue on a trajectory that will keep the Puget Sound region at the top of national lists for one of the hottest housing markets,” stated John Deely, executive vice president of operations for Coldwell Banker Bain. “Inventory on hand remains at two-to-three weeks in the larger counties,” he noted.

The latest report from Northwest MLS shows a year-over-year (YOY) drop in active listings of more than 34%, with only about two weeks (0.58 months) of supply available areawide. Last month marked the first time since July 2020 that the year-over-year decline fell below 40%.

Only 10 of the 26 counties in the MLS report have more than one month of supply. Of these, only one (Ferry) has more than two months of supply. Snohomish County’s inventory declined more than 44% from a year ago, leaving it with only about 10 days of inventory (0.35 months of supply), the lowest of all the counties served by Northwest MLS.

“While pending sales saw a significant drop over this time last year, we believe that rather than that being an indication of a flattening of the market, this is a result of our extreme heat events, a typical summer slowdown as schools let out and people starting vacations, and, this year, the reopening of the country and discontinuation of COVID-19 restrictions,” explained Deely.

Pending sales rose about 3.5% compared with a year ago (from 11,916 to 12,328) but fell slightly from May when mutually accepted offers outgained the number of listings added during the month.

“The local real estate market is virtually sold out in the more affordable and mid-price ranges, even into the luxury market in some areas,” reported J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “This places extra focus on each new resale listing as it comes onto the market.”

An analysis of last month’s statistics by price range illustrates Scott’s point. Fewer than 23% of June’s listings had asking prices under $400,000. About a third of the inventory was listed at $800,000 or above.

James Young, the director of the Washington Center for Real Estate Research at the University of Washington, said the decline in active listings volume suggests homes are selling and closing very quickly once listed. He noted that while listing levels for June were higher than two years ago, pending and closed sales are much higher. “This indicates that well priced properties are closing very quickly.”

Lennox Scott concurred. “Many homes are going under contract within days due to the intense buyer demand.” He anticipates two more months of “elevated new resale listings” before the selection starts decreasing. “We expect the extremely high intensity for each listing will continue in most price ranges locally into the spring of 2022 due to historically low interest rates creating a large backlog of buyers looking to purchase a home.”

Deely said affordability, especially for first-time homebuyers, continues to be a concern. “Given indications from tech companies like Amazon and Microsoft to lease large office spaces and hire thousands of employees in our region, drawing people from higher-priced markets like Silicon Valley with lots of money to spend, we don’t see much change in this scenario for buyers in the short term.”

Brokers reported 10,923 completed transactions during June, a 31.4% increase from twelve months ago, and up 16.5% from May’s total of 9,374. Prices on last month’s sales, which includes single family homes and condominiums, rose nearly 27% from a year ago, from $465,000 to $589,000.

The single family segment accounted for about 86% of the sales. The median sales price on those 9,417 transactions was $611,000, which was 27% higher than the year-ago figure of $480,950.

Condo sales jumped a whopping 59% from a year ago, with prices increasing more than 20%. For last month’s 1,506 closed sales, the median price was $440,000; a year ago it was $365,000.

Looking at month-to-month, rather than YOY changes, Gardner noted King and Pierce counties experienced only modest price increases, while prices in Snohomish County rose by “a solid 3.1%. I believe this points to an uptick in buyers who can continue working from home and have made the choice to move from King to Snohomish County where housing is more affordable. The same can be inferred for Kitsap County.”

A comparison of Northwest MLS figures shows the median price on last month’s completed transactions in King County was $779,919, while in Snohomish County it was about $105,000 less ($675,000). In Kitsap County, where the median price was $505,000, the difference is nearly $275,000. Pierce County homes that sold last month had a median price of $507,375.

Commenting on the NWMLS report, Dick Beeson, managing broker at RE/MAX Northwest, Tacoma-Gig Harbor, said it reflects a “slight turn of the wheel. Sellers are still in control, but their expectations need a slight readjustment. Instead of 20 offers, there may only be five or fewer. Maybe even only one.”

When that happens, some sellers balk at selling, thinking they are being undersold, according to Beeson. “Sellers must remember, you can’t underprice a home in this market. You can still overprice a property. The market will find you out and drive the price to the appropriate market value.”

Given the strong, competitive market across all price ranges, Beeson offered a recipe for buyer success. “Scour the new inventory coming on the market daily; write the best offer you can using all the offer strategies you’re equipped to employ, and then decide if the extra cost to win the sale is an acceptable value to you. Close the sale quickly, and don’t whimper!”

Rebhuhn also offered hope for buyers who are prepared to act. “Generally speaking, July and August provide more opportunities for buyers as there is less competition because of vacations and fewer relocation buyers in mid-summer.”

Builders are also caught in the frenzy. “Builders are racing to bring new communities online and hoping to hit the sweet spot as prices on building materials for new construction begin to fall,” reported Frank Leach. He said new apartment buildings and condos are being approved and built all across Kitsap County to accommodate newly arriving residents. Notably, Leach said an aircraft carrier due to arrive shortly could potentially add 3,500 people to that county’s rental market.

Although pending sales in Kitsap County dipped slightly from a year ago, they were up nearly 12% from May. “The market in Kitsap County is expected to remain very competitive with exposure of only eight days on the market, on average, across all price ranges,” Leach noted.

NWMLS Press Release, July 7, 2021

Puget Sound region sees ‘extraordinary’ drop in housing inventory

Amid the ongoing pandemic, the Puget Sound housing market has become a peculiar one to say the least, thanks in large part to plummeting inventory.

Housing prices across King, Snohomish, and Pierce County have skyrocketed over the last month, with double-digit year-over-year increases in median home prices in all three areas. This comes amid an historically low inventory for prospective home buyers Windermere Chief Economist Matthew Gardner says.

“We have to go back to good old Economics 101,” Gardner said. “When you have net new demand and you limit supply, what happens to prices? They rise, and that’s very much the case.”

According to the Northwest Multiple Listing Service (NWMLS), all three major counties had under a month’s worth of inventory in September, a year-over-year decrease of 43%. Looking at historical data dating back to 1999, Gardner couldn’t find a single month with inventory supply that low.

“It is quite extraordinary,” he noted. “Yet at the same time, buyers are clearly out in force.”

Despite the economic recession brought on by the COVID crisis, demand has been buoyed by “remarkably, historically low mortgage rates,” and a surge in high-income buyers.

“In most areas, we are virtually sold out in the more affordable, mid-price and upper end segments of the market,” John L. Scott Real Estate CEO J. Lennox Scott told the NWMLS in a recent news release. “We’re also seeing a record-setting number of luxury properties going under contract across King, Pierce, and Kitsap counties.”

Elsewhere, the downstream effects of the recession have largely been felt by lower income renters, rather than homeowners.

“Middle and upper middle classes are doing just fine,” Gardner described. “The wealthy are doing really well, and lower income households are absolutely not. They are hurting more than anyone else.”

~Nick Bowman, KIRO

Too Few Housing Units Built in Washington for Demand

Not enough housing has been built in Washington to meet in-migration and job growth, which has fueled home price and rent escalation, longer commutes as people drive farther for affordable housing, and lower quality of life, according to a January report that calls for more high-density housing walkable to transit corridors and other amenities. More high- and medium density housing and fewer single-family homes would improve lifestyles, the environment, Gross State Product (GSP) and tax revenues, it projected.

The report, Housing Underproduction in Washington State: Economic, Fiscal, and Environmental Impacts of Enabling Transit-Oriented Accessible Growth to Address Washington’s Housing Affordability Challenge, was authored by Up For Growth, a national nonprofit.

The housing problem is especially acute in King and Snohomish counties, where only 0.65 units of housing were built per new household between 2010 and 2017, according to data in the report. A functioning housing market needs to produce at least one new housing unit for each new household formed, the report says, noting the national ratio has been about 1.1 housing units per new household since 1960.

The report also notes that King County added 3.33 jobs for every new housing unit during from 2010-17, the highest imbalance between job growth and housing unit production in the state. Snohomish added 2.12 jobs per new housing unit.

“In counties with large imbalances, rents and home prices have rapidly increased and have even surpassed the previous housing bubble’s peak prices,” the report said. “If these ratios worsen in the short run, substantive policy interventions may be necessary to bring the ratio of jobs-to-units back into longer-term equilibrium.”

From 2000 to 2015, Washington underproduced housing by about 225,600 units, about 7.5 percent of the total 2015 housing stock, creating a supply and demand imbalance reflected in the housing and homelessness crisis in myriad communities, the report said.

The report also notes too little housing produced for low- and moderate-income households, those making 80 percent or less of area median incomes (AMI). Since 2000, Washington underproduced 181,000 rental units for this category, accounting for 80 percent of the total housing units underproduced from 2000 to 2015.

In King County, the underproduced units were equivalent to about 61 percent of all renter households earning less than 80 percent of AMI, and 42 percent in Snohomish County, which demonstrates the need for more rental units available to households earning less than 80 percent of AMI in the state’s most populous areas, the report said.

Currently, housing development is allocated roughly 4 percent to high density residential apartment towers; 29 percent to “missing middle” (accessory dwelling units, duplex, triplex, and quad homes, or courtyard-style apartments) and medium density (podium apartments); and 67 percent to low density single-family homes. This is what the report calls a “more of the same growth pattern.”

If an “accessible growth pattern” were used instead, those 225,600 units could be divided into 38 percent high density, 54 percent medium density, and 8 percent low density, the report said. That would use 12 percent of the land to produce the same number of units, and with developments closer to transit and employment centers, could reduce vehicle miles traveled by up to 36 percent. That kind of development pattern also could increase GSP by $25 billion over 20 years and generate an additional $660 million in state revenue (via sales, business and occupation taxes), the report said.

The accessible growth approach prioritizes building housing near transit and “job-rich but housing-poor areas,” Up For Growth said on its website in prefacing the report. “Such an approach could be achieved by increasing and expanding funding for affordable housing, zoning reforms, regional planning and accountability, and public-private partnerships.”

Up For Growth adds, “The report makes it clear that Washington is indeed experiencing a severe shortage of housing for people of all income levels. Solving it will require leadership and the state and local levels, as well as the private sector.”

~425 Business

Puget Sound housing supply dwindles as prices continue to climb

Despite seeing a dip at the start of 2019, housing prices increased in the Puget Sound region in 2019, all while supply continued to dwindle.

“Inventory shortages persisted throughout 2019,” said the Northwest Multiple Listing Service in a newly-released report on 2019’s housing market.

The NWMLS reported the addition of 110,040 listings in 2019, a 5.3 percent decrease over the previous year. All while the median price of single-family homes sold by NWMLS brokers jumped from $410,000 to $435,000 between 2018 and 2019.

According to a recent report from Redfin, that trend persisted in Seattle city limits as well, punctuated by a 6 percent increase in the median price of a home year-over-year, while seeing a 39.7 percent decline in available homes for sale.

Median home prices in Tacoma climbed 9.3 percent, paired with a massive 44.3 percent decline in inventory.

“Prices heated up in West Coast metros like Seattle and Los Angeles, which indicates the slowdown of 2019 has officially ended in these markets,” said Redfin chief economist Daryl Fairweather.

That trend started in late 2019, when inventory began to dip dramatically across King, Pierce, and Snohomish Counties.

“The most recent data certainly appears to bolster the idea of a ‘new normal,’ as we see the same trends continuing,” Coldwell Banker Bain President and COO Mike Grady predicted in November.

~Nick Bowman, My Northwest

Puget Sound real estate tightened by supply squeeze

According to the latest report from the Northwest Multiple Listing Service, experts are finding many potential home-buyers are expanding their search beyond the major job centers in King County as a result of the crunch on supply in the month of August.

System-wide the 23 counties serviced by the MLS have less than two months of supply — a number that drops to 1.6 months in the four-county Puget Sound region. Year-over-year, that looks like a 13% drop in supply system-wide, and an 18.5% drop in King County.

Within King County the median sales price has held steady at $760,000 for single-family homes, and areas outside King are becoming a draw for more affordable prices.

“Areas immediately outside the Puget Sound region and along the I-5 corridor continue to see double-digit house price growth,” noted James Young, director of the Washington Center for Real Estate Research at UW. “[It’s] due to first-time homebuyers who struggle to afford housing in King and Snohomish counties as well as from existing homeowners cashing out of Seattle and King County.”

That’s backed up by a recent report from SmartAsset, which ranked the top 10 most affordable places in Washington state, taking into account costs, real estate taxes, homeowners insurance and mortgage rates. The closest one to Seattle is Duvall — ninth on the list. The only other Puget Sound-area locale is tenth, Prairie Ridge.

“While August is always a slower time for listings and sales, what is really surprising this year is the decrease in new listings taken, while pending sales increased,” observed Mike Grady, president and COO of Coldwell Banker Bain.

Although June and July are usually seen as “peak” for real estate, Grady noted that June and July were relatively lackluster this year, when usually they are active (especially coming off spring).

“The pending sales numbers indicate that buyers are indeed out there and willing to purchase, but there are simply not enough homes,” he added. “Everything that is listed is getting sold and fairly quickly.”

Which means that while the median sale price in King County is holding steady, it’s still not the easiest market to break into.

~Zosha Millman, Seattle PI

Would-Be Sellers Appear Ready to Boost Inventory

There’s a fresh sign that more inventory may be coming to the market, as homeowners deepen their faith in selling. The percentage of consumers who are “strongly” optimistic that now is a good time to sell hit 46% in the second quarter of this year, a significant increase from the 37% who said the same thing in the first quarter, according to the National Association of REALTORS®’ Housing Opportunities and Market Experience Survey, which was released Wednesday.

Home prices have begun moderating in recent months, which may be prompting homeowners to consider selling sooner in order to cash in before prices go any lower. “With home price appreciation slowing, home sellers understand the days of large price gains from holding an extra year are over,” says NAR Chief Economist Lawrence Yun.

Homeowners have been putting off a move in recent years, reluctant to give up low interest rates on their current loans and fearing the difficulty of finding another home to buy amid an inventory crunch. The inventory problem, though, could be eased if more would-be sellers decide to put their homes up for sale.

Other findings from the HOME Survey include:

Not just seller optimism. More Americans also believe now is a good time to buy. Thirty-eight percent of respondents to NAR’s survey say they “strongly agree” that now is the right time to purchase a home, and 27% “moderately agree.” Thirty-five percent say it’s not a good time to buy, according to the survey.
Confidence in the overall economy. A rosier economic outlook may be generating some of the optimism in the housing market. Fifty-five percent of consumers now say they think the economy is improving, up from 53% in the first quarter of 2019. Consumers who are the most upbeat about the economy tend to earn $100,000 or more and reside in rural areas, the survey shows.
Generation X offers important clues. The most notable change in consumer economic perceptions, Yun says, is among Gen Xers, who have tended to face the most financial pressures in recent years compared to other age groups. Fifty-three percent of Gen Xers say they believe the economy is improving, up from 50% in the first quarter. “Many in the Generation X population find themselves needing to purchase multigenerational homes,” Yun says. “Also, they may be feeling financial stress from caring for aging parents and children of all ages. Nonetheless, they have an optimistic outlook about the future.”
Mortgage rates boost sales. Overall, of the respondents surveyed who don’t currently own a home, 27% say they believe it would be difficult to qualify for a mortgage due to their financial situation; 30% said it would be somewhat difficult to qualify. Mortgage affordability showed some improvement in the second quarter, and the trend likely will continue, Yun says. “Lower mortgage rates, along with job and wage growth, will lead to an increase in sales and thereby contribute positively to economic growth in the upcoming quarters.”

~Realtor Magazine

Nearly 2-year streak broken: Seattle no longer leads nation in home price increases

After 21 months of leading the Case-Shiller’s home price index, the latest report shows that Las Vegas has overtaken Seattle as the nation’s hottest housing market. It reflects the mood Seattle has been seeing so far, with many realtors and reports expressing a bit of a slowdown in the market.

Case Shiller’s report has a bit of a lag, this month’s report uses June numbers, so time will tell if Seattle’s summer season brought a little more frenzy to the market. But even the most recent Northwest Multiple Listing Service report (on July’s figures) has seen a steadily improving supply, and slight drop in sales.

“In Seattle and King County supply is at the highest level since first quarter 2015, which has me thinking about the longevity of seller luxuries like offer review dates, pre-inspections, and escalation clauses,” Robert Wasser, owner of Prospera Real Estate and an officer of the Northwest MLS board of directors, said in the report.

“People are taking notice of the evolving real estate landscape ̶ even my mom tells me she’s noticing more for sale signs!”

However, King County is still well below a balanced market of supply of four to five months; right now King County is boasting about 1.5 months. And in Case-Shiller’s latest report the metro area registered a 12.8 percent increase in single-family home prices in June compared to a year earlier.

But either way, the latter number dropped from 13.6 percent, and the city is now enjoying its time as number two on the hottest cities nationally according to Case-Shiller.

~Zosha Millman, Seattle PI

Seattle home inventory is even lower than this time last year

Heading into 2017, the number of homes on the market in the Seattle metropolitan area had dropped 10 percent from the previous year. Now, at that same time in 2018, inventory is even lower, dropping an additional 19 percent from this time last year, according to a report by real estate group Zillow.

In the metropolitan area, which includes Pierce and Snohomish counties, that inventory drop drove bidding wars in 2017; per Zillow, 52.4 percent of home sales ended up above asking. The report speculates that with an even bigger inventory crunch, that’s not expected to stop anytime soon.

Initial listing prices have grown, too—not a huge surprise to anyone who’s been watching home values for the past several years. Specifically, Seattle-area homes saw a year-over-year increase of 13 percent, with a median home value of $472,900 for the whole metro. (In the Seattle city limits, that number is, of course, much bigger; Zillow estimates $727,400.)

As prices have grown, sales times have shrunk to less than half what they were in 2010. Average days on the market in the metro was 51 days in 2017, per Zillow, compared to 58 in 2016 or 114 in 2010.

The bottom line: Zillow’s numbers point an exaggerated version of the same this year, with a cutthroat market, rising sales costs, and not enough homes to go around.

Sarah Anne Lloyd, Curbed Seattle