King Co median price up 15% over year ago

The pattern was repeated in Snohomish and Pierce counties: Median prices were $286,250 in  Snohomish and $222,000 in Pierce, with double-digit appreciation over the year, according to the  Multiple Listing Service.

The median price of single-family homes sold in King County last month rose to $426,000, a 15 percent increase over the year.

After a remarkable frenzy of home buying in early summer sent the median price to $434,000 in July, the highest level in five years, October’s activity showed a more balanced market, with more inventory for sale.

Buyers closed on 2,187 homes, 10 percent more than in the previous October, the Northwest Multiple Listing Service (MLS) reported Tuesday.

While extremely tight inventory drove bidding wars in spring, October was the first time this year that inventory of single family homes was higher than a year earlier. In King County, there were 4,575 single family homes listed, 6 percent more than a year earlier. In the condominium market, there were 1,133 units listed, 8 percent more than a year ago.

The Eastside, as usual, had the highest median price in King County: It was $575,377, up 14 percent from a year ago. Southwest King County had the lowest median price at $240,000, about 7 percent higher over the year.

The median price was $286,250 in Snohomish County and $222,000 in Pierce County, with double-digit appreciation over the year, according to the MLS.

Pending sales slipped to 2,579, down almost 4 percent from a year earlier, perhaps related to the federal government’s partial shutdown from Oct. 1-16. Pending sales are where the shutdown’s impact would have shown up, but it’s hard to tease that out from other possible causes, said Glenn Crellin, associate director of research at the Runstad Center for Real Estate Studies at the University of Washington.

“I’m very encouraged by the fact that listings are increasing gradually,” he said. Regionally, inventory remains tight: King, Snohomish and Pierce counties all have less than three months’ supply, the MLS reported.

A balanced market generally has enough supply for four to six months. “It still looks like a potential housing shortage in Puget Sound come 2015 if building doesn’t increase,” Dick Beeson, principal managing broker for RE/MAX Professionals in Tacoma, said in a statement. Mike Gain, president and CEO of Prudential Northwest Realty Associates, said the shutdown “definitely hurt consumer  confidence” and caused would-be buyers to pause.

~Sanjay Bhatt, Seattle Times

Demand for Puget Sound area homes “still incredibly strong,” but brokers report frenzy is easing in some neighborhoods

NWMLS, Kirkland, WA – . Northwest Multiple Listing Service figures for August show brisk sales, escalating prices and some improvement in inventory, prompting one MLS director to declare, “What these numbers tell us loud and clear is that buyer demand in the Puget Sound region is still incredibly strong.”

In making that comment, OB Jacobi, president of Windermere Real Estate, noted the housing market tends to experience some slowing during August, but rising inventory levels and sustained buyer demand fueled “higher than expected home sales and another month of strong appreciation.”

The latest figures from Northwest MLS show pending sales (mutually accepted offers) during August increased 8.7 percent from a year ago. Brokers in the 21 counties served by the MLS reported 9,065 pending sales system-wide. That’s a drop of 500 units from July, but an increase of 727 transactions compared to a year ago (August 2012). In the four-county Puget Sound region (King, Kitsap, Pierce, and Snohomish), the total of 6,916 pending sales was the highest volume for August since 2006 when members notched 7,692 sales.

Prices also reflected an upward trajectory. The area-wide median price for last month’s completed sales of single family homes and condominiums was $283,000, which compares to the year ago figure of $250,000 for a gain of 13.2 percent. Only two other months this year have had higher year-over-year increases: March (14.9 percent) and May (13.4 percent). Since January, prices have jumped 18.3 percent.

Prices on single family homes (excluding condos) that sold during August increased from $263,495 to $294,000 for a gain of 11.6 percent.

An analysis by Lennox Scott, chairman and CEO of John L. Scott Real Estate, shows King County median prices for August ($392,500, including single family homes and condos) are at 92.4 percent of the peak price of $425,000, set in July 2007. He credits a surge in sales activity and a shortage of homes for sale as primary drivers of spiking prices during the past two years.

“We have seen 22 straight months of strong-surge sales activity,” Scott reported. “Job growth, pent up demand by local home buyers, residential investors, incoming transferees, a strong local economy and historically low interest rates have led the way during this recovery phase of the residential housing market,” Scott stated.

Inventory is showing signs of stabilizing in many Western Washington areas, with members adding nearly 1,800 more new listings to the MLS database during August compared to the same month a year ago. With that 21 percent increase in new listings, the total number of active listings at month end (26,433) was almost on par with a year ago when the selection encompassed 26,506 homes for sale.

Dick Beeson, the principal managing broker of RE/MAX Professionals in Tacoma, noted some key indicators are trending lower or slower as the market adjusts to a “new normal.” The former chair of Northwest MLS also said it would be hard to continue the near record-setting pace of the last few months.

“While the overall market remains vibrant and active, we don’t appear to have the frantic ‘must have this home because there may not be another’ mentality among buyers,” Beeson reported, adding, “The increase in both inventory — a near return to 2012 levels — and the sharp increase in interest rates have been the most influential factors in an end-of-the-summer market adjustment.”

Another past chairman of Northwest MLS, Mike Gain, said inventory shortages are still common in many parts of King County. MLS figures show of 22 of the 29 map areas it tracks in King County had fewer listings at the end of August than at the same time a year ago.

Measured by months of supply, King County, with only 1.7 months of supply, is well below the 4-to-6-month level that many analysts use as an indicator of healthy levels or a balanced market. The selection is also squeezed in Snohomish County, where there is 1.8 months of supply. System-wide, the figure is at 2.9 months.

Gain, the CEO and president of Prudential Northwest Realty Associates, said many industry-watchers predicted rising interest rates would slow down the market. “Well, it has not, because despite jumps in prices and interest rates, homes are still more affordable than they have been in decades.” He said buyers are on “heightened alert” because of the recent upward movement in interest rates. “We don’t expect interest rates to stay as low as they are today and prices in our area are expected to continue to rise. For anyone who is thinking of buying, now is the time,” he suggests.

Darin Stenvers, a director with Northwest MLS, called the current market “the strongest in four or five years,” with signs of stability that should continue into 2014. “If a buyer finds the home of their dreams, they should make their first offer their best offer or risk losing that home,” he stated.

The condominium market is rebounding in some areas, offering a good alternative for renters who are seeking good housing at affordable prices. Although the inventory is still below year-ago levels (down 4.8 percent), Stenvers said there is a good selection with great pricing options. Also, he pointed out buyers can purchase with a down payment that is in line with landlord demands for upfront rent and large deposits, and have a more affordable monthly payment.

Pending sales of condos area-wide rose about 6.3 percent during August. Closed sales jumped more than 17.4 percent, with prices surging 26.7 percent.

“We are definitely working our way nicely through this housing recovery, with all of the latest data showing strong year-over-year gains in prices and sales of both pending and closed transactions,” Gain commented. He also noted the National Association of Realtors® (NAR) reported the national median existing home price increased at an annual rate of 12.2 percent – the biggest yearly price increase since Q4 of 2005.

Seattle home prices up 11.8 percent over year

Thirteen of 20 cities nationally saw a slowdown in the pace of price increases.

Home prices in the Greater Seattle market increased in June 1.8 percent over the previous month and 11.8 percent over the past 12 months, according to the closely watched S&P/Case-Shiller 20-city home-price index.

As of June, average U.S. home prices have returned to their spring 2004 levels, although the pace of the increase appeared to be slowing, officials said. The 20-city index posted a 2.2 percent monthly gain in June and was up 12.1 percent over the past 12 months.

“With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

The Case-Shiller index figure for June represents a three-month moving average and includes resales of foreclosed homes by lenders.

While all 20 cities in the index posted monthly gains, 13 saw a slowdown in average price growth. Atlanta’s average home price grew 3.4 percent, the highest among the 20 cities. Las Vegas and San Francisco notched annual gains of more than 20 percent.

“Over the next year, home value appreciation rates will slow as investors exit the market, mortgage interest rates rise, negative equity falls, builders ramp up and more homes come on the market,” said Stan Humphries, chief economist at Seattle-based Zillow, in a statement.

Steady job gains and low mortgage rates have encouraged more Americans to buy homes. And even as demand has risen, a limited number of homes have been available for sale. The combination has led to sharp prices gains.

But mortgage rates have climbed more than a full percentage point since May. The increase has already slowed sales of new homes in July. And economists expect it could drag re-sales lower in August.

A slowdown from the strong price gains in recent months isn’t necessarily a bad thing, economists said. It may keep home prices from becoming unaffordable.

~ By Sanjay Bhatt, Seattle Times

Seattle home prices zipping upward, but slowdown likely

The Seattle market is up 11.9 percent for the 12 months ended in May — nearly enough to keep pace with a 12.2 percent surge for a 20-city index of U.S. home prices.

The housing market in Seattle and other major U.S. cities has been racing ahead on full throttle in recent months, but experts say the price growth should soon slow to a more normal pace.

The Greater Seattle market in May posted a 3.1 percent monthly gain, its largest since April 1990, according to data released Tuesday. The region’s 12-month increase was 11.9 percent — the biggest annual gain since December 2006.

Seattle’s not alone: The widely watched S&P/Case-Shiller 20-city home-price index rose 2.4 percent from April to May, and 12.2 percent over the year.

All cities registered price gains, and for the first time two cities, Denver and Dallas, surpassed their pre-crisis peaks. Seattle was one of five cities posting monthly gains of over 3 percent.

“You have to go back to the bubble years to find something that strong, although we’re still making up for lost ground,” said Craig Lazzara, senior director at S&P Dow Jones Indices.

May was the third straight robust monthly gain, showing the recovery in Seattle, like elsewhere, was accelerating.

Cities hit hard by the bursting of the housing bubble are roaring back: Atlanta, Las Vegas, Phoenix and San Francisco all recorded annual gains of more than 20 percent in May.

But that doesn’t mean a new bubble has formed, experts said: Seattle’s price level in May was still 20 percent below the previous peak, Lazzara said; the national average is 25 percent below.

Homes on the bottom end of the price range aren’t seeing as much recovery as the top end, data from S&P Dow Jones Indexes show.

In the Seattle market, homes in the lowest third of all transactions are about 33 percent below their pre-crisis peak, while those in the highest third are just 17 percent off their peak.

The index’s May figures adds to mounting evidence of a real recovery in the housing market and that all major areas are coming off the bottom:

• There were 20 percent fewer completed foreclosures nationally in June — the 19th straight month of decline — with 49 states seeing declines, Calif.-based CoreLogic reported Tuesday.

Nationwide, 2.5 percent of all homes with a mortgage were in some stage of foreclosure, down from 3.4 percent a year ago. In the Seattle area, 2 percent of mortgaged homes were in the foreclosure process, down from 2.2 percent last year.

• Seattle-based Zillow, which produces its own home-value index, reported last week that U.S. prices at the end of June were up 5.8 percent over the year, the largest annual gain since August 2006.

“The housing recovery is here to stay,” said Svenja Gudell, a Zillow senior economist. “We’re not at the edge of another cliff where we’ll see housing prices fall.”

• Last week, the Federal Housing Finance Agency reported that U.S. house prices rose 0.7 percent in May — the 16th consecutive monthly gain in its index — and 7.3 percent over the previous 12 months. Home prices, by that index’s measure, are back at January 2005 levels.

Pace not sustainable

But homeowners shouldn’t assume their homes are appreciating by double digits just because the Case-Shiller index has risen by that much, Gudell cautioned.

The 20-city home-price index includes sales of foreclosed homes by banks.

Banks tend to sell foreclosed homes at a discount, Gudell said, and investors who bought many of these properties are now selling them for unusually large gains. Those distort the actual rate of growth in home prices, she said.

Still, Zillow’s own index showed Seattle area home prices rose in June 12 percent over the year.

Even if prices are rising at double-digit rates, experts agree it won’t last long.

Home prices essentially track inflation over the long term, but now home prices are far outpacing inflation, said Glenn Crellin, associate director of research at the University of Washington’s Runstad Center for Real Estate Studies.

Inflation is nearly 2 percent, yet home prices have risen about 12 percent, if the Case-Shiller index is correct.

“That’s not a sustainable disparity,” Crellin said.

The question is when the rate of growth will begin to slow down.

Experts say a combination of rising mortgage interest rates and more homes going on the market should lead to a moderation in home price increases. In Washington State, the average current fixed rate on a 30-year mortgage is 4.21 percent, according to Zillow, the same as last week.

A weakening of the economy could also cool the market’s red-hot pace.
Last week the Mortgage Bankers Association forecast weaker U.S. economic growth for the rest of this year, partly due to higher inflation related to sharp increases in oil prices and housing rental costs.

And while the economy continues to create jobs, more and more of them are part-time or temporary positions. As a result, the nation is unlikely to see this job growth translate into the same demand for homes seen in previous recoveries, the bankers group said.
~By Sanjay Bhatt, Seattle Times

Home Equity is Back!

Americans’ equity in their homes is at its highest level since the real-estate bust, thanks to recovering home values

Home equity is back! And it’s growing fast: According to the latest data from the Federal Reserve, Americans’ net equity holdings in their houses jumped by nearly half a trillion dollars during the last three months of 2012, and have increased by $1.7 trillion since spring 2011.

What does this mean to you? Depending on where you own your home, it could mean that finally — after years of struggling with an underwater mortgage — the market value of your property has risen enough to put you into positive equity territory. Or closer to break-even equity than you assumed.

Zillow Real Estate Research estimates that nearly 2 million owners exited negative equity status during 2012 alone.

It could also mean that should you wish to sell your house, you’re in a better position to do so. And if your home is in one of dozens of local markets experiencing severe shortages of listings for sale combined with strong buyer demand, this spring could bring you a higher price than at any time in the past seven years.

Here’s what the Fed found in its “flow of funds” study released March 7:

• Thanks to recovering housing values, total home equity is at its highest level — about $8.2 trillion — since the bust and gaining rapidly. From January 2012 through December, it rose by a stunning $1.2 trillion.

• Outstanding mortgage debts continued to fall as owners paid down their balances and refinanced into smaller loans, taking advantage of unprecedented low mortgage rates. Foreclosures and principal forgiveness by lenders also have helped whittle away mortgage debt. Americans now owe about $1 trillion less on their homes than they did in 2008.

Jed Kolko, chief economist for Trulia.com, an online real-estate research and information company, says growing home equity has three key effects. First, owners feel wealthier and are more likely to spend some of that perceived wealth — even if it’s illiquid in the form of real-estate equity — on goods and services.

Second, higher equity stakes reduce the likelihood of mortgage defaults. People have a deeper financial stake in their properties and are less willing to risk loss through foreclosure. Fewer delinquencies, in turn, Kolko said, “mean less stress on the financial system,” thereby reducing the probability of another banking crisis a la 2008-09.

Finally, by encouraging owners to consider selling — either now or later in the cycle when prices could be even higher — growing equity holdings allow the real-estate market to work better, with more transactions, more mobility for families, more new construction, more jobs, and so on.  

                                                                                                         ~The Seattle Times

 

Six Reasons Housing Inventory Keeps Declining

Home sales in December dropped by 1% from November, the National Association of Realtors reported on Tuesday, but still stood nearly 13% above the levels of one year ago. That means home sales have risen from the year-ago month for 18 straight months.

For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.

Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.

Here’s a breakdown of why inventory has continued to drop this year:

Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed. Data from CoreLogic show that inventory has been the most constrained in housing markets where there’s the largest concentration of underwater borrowers.

Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equitied” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.

Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.

More purchases from investors of all stripes: From the big institutional investors that have been grabbing all the headlines, to the mom-and-pop landlords that have traditionally played a much larger role renting out homes, investors have increasingly bought homes that can be rented out rather than flipped and resold for quick profits. This is further keeping inventory off the market in two ways: homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.

Banks have been slower at foreclosing: Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modifications and foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.

Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels. Consequently, there’s been much less new home inventory being added to the market at a time when demand (boosted by increases in household formation) is picking up. If more homes are held off the market—for any of the five reasons above—you can bet that builders will move in to fill the void.

Many of these factors that have been dragging down inventory aren’t signs of “normal” or “healthy” housing markets—but then, we probably haven’t had a normal market for around a decade now. If anything, declining inventory shows that normal supply-and-demand dynamics are returning, which is an important step towards putting a floor under home prices and giving markets time to get back to health.

~Nick Timiraos, Wall St journal