Western Washington Real Estate Market Update

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.

ECONOMIC OVERVIEW

The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.

The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.

Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.

I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.

HOME SALES ACTIVITY

There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.

Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.

The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the final quarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.

HOME PRICES

With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.

Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.

 

 

DAYS ON MARKET

The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the first quarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.

Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.

 

~Dr. Matthew Gardner, Windermere Real Estate

Western Washington Real Estate Market Update

ECONOMIC OVERVIEW

Washington State finished the year on a high with jobs continuing to be added across the market. Additionally, we are seeing decent growth in the area’s smaller markets, which have not benefitted from the same robust growth as the larger metropolitan markets.

Unemployment rates throughout the region continue to drop and the levels in the central Puget Sound region suggest that we are at full employment. In the coming year, I anticipate that we will see substantial income growth as companies look to recruit new talent and keep existing employees happy.

HOME SALES ACTIVITY

There were 19,745 home sales during the fourth quarter of 2016—up by a very impressive 13.4% from the same period in 2015, but 18.7% below the total number of sales seen in the third quarter of the year. (This is a function of seasonality and no cause for concern.)
Sales in Clallam County grew at the fastest rate over the past 12 months, with home sales up by 47%. There were also impressive sales increases in Grays Harbor and Thurston Counties. Jefferson County had a fairly modest decrease in sales.
The number of available listings continues to remain well below historic averages. The total number of homes for sale in the fourth quarter was down by 13.7% compared to the same period a year ago.
The key takeaway from this data is that 2017 will continue to be a seller’s market. We should see some improvement in listing activity, but it is highly likely that demand will exceed supply for another year.

The full report is continued here:  http://www.windermere.com/blogs/windermere/posts/western-washington-real-estate-market-update–9

2013 MLS Annual Review

Brokers report nearly $25.5 billion in 2013 sales

Members of Northwest Multiple Listing Service reported 75,517 closed sales during 2013, surpassing the 2012 volume by around 11,000 transactions for an increase of nearly 17 percent. Measured by dollars, last year’s sales of single family homes and condominiums were valued at nearly $25.5 billion to outgain the previous year by more than $5.5 billion (up 27.4 percent).

Last year’s completed sales included 65,122 single family homes and 10,395 condominiums, as tallied by nearly 21,000 real estate brokers in the 21 counties that make up the Northwest MLS service area.  The total units and dollar volume are the best since 2007 when members registered 82,197 sales valued at $32.3 billion.

The area-wide median price for last year’s sales was $270,000, improving on the previous year’s figure of $245,000 (up 10.2 percent). A comparison by county shows median sales prices ranged from $118,750 in Pacific County to $372,000 in King County.

Prices for single family homes (excluding condominiums) also rose 10.2 percent from 2012, increasing from $255,000 to $281,000. Condo prices jumped 15.3 percent, rising from the 2012 figure of $175,200 to last year’s median price of $202,000.

By one measure, buyers who shopped during 2013 had a bigger selection as members added more than 104,000 listings to inventory during the year. That was an improvement over 2012 when members added 91,359 new listings. However, brisk sales meant the total number of active listings, which averaged 21,946 during 2013, fell below the previous year’s average of 24,604.

During 2013, the area-wide supply, as measured by months of inventory, ranged from a low of 1.95 in March to 3.68 in December. Industry watchers tend to use a 4-to-6 month range as an indicator of a balanced market, favoring neither buyers nor sellers. Supply tended to be tightest in King and Snohomish counties.

Further evidence of a housing recovery is reflected in high-end sales. Northwest MLS members reported 1,621 sales of single family homes priced at $1 million or more, up 45.2 percent from the 2012 total of 1,116 such sales. Condos priced at $1 million and up accounted for another 137 sales, about the same number as 2012 (138 sales).

The highest-priced single family home that sold during 2013 by a member of Northwest MLS was a property in Medina that fetched $9.75 million. A penthouse in downtown Seattle that sold for $6.2 million topped the condo list.

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

• Single family homes accounted for 86 percent of last year’s residential sales.
• Nearly half (49 percent) of last year’s single family home sales were 3-bedroom      homes. More than three-fourths (77 percent) of condos that sold had 2      bedrooms.
• The median price for a 3-bedroom home that sold in 2013 was $250,000. A      comparison by county shows the median price for this size home ranged from      $128,000 in Pacific County to $450,000 in San Juan County.
• Of the condo sales, about two-thirds (64.1 percent) were located in King      County. Within that county, the Eastside edged out Seattle for the largest share (39.7 percent versus 37 percent).
• Last year’s sales included 8,298 newly built single family homes that sold for a median price of $325,000, and 846 condos that sold for a median price of      $350,214.
• A 10-year comparison of median prices of single family homes shows prices      peaked in most counties in 2007. In 2013, Grant County selling prices returned to 2007 levels, Okanogan prices were at 96.7 percent of 2007 prices, and King County prices were at 91.2 percent of 2007 prices. Other counties have not yet reached those levels, but most are experiencing steady gains.
• Prices vary widely among school districts. An analysis of some of the largest      districts in the MLS market area shows single family homes on Mercer Island have the highest prices, followed by homes in the Bellevue, Issaquah, Lake Washington and Bainbridge school districts.

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.

Real Estate Recovery is Continuing!

September Housing statistics around Washington indicate recovery is continuing:

Pending sales, closed sales and prices all increased in August compared to a year ago, according to the latest figures from Northwest Multiple Listing Service. Those key indicators, coupled with the persistent shortage of inventory, prompted one industry leader to declare the market has flipped.

Brokers reported 8,338 pending sales of single family homes and condominiums last month for a year-over-year increase of 9.3 percent. Fourteen of the 21 counties in the Northwest MLS service area reported double-digit gains in the number of mutually accepted offers.

Last month’s pending transactions nearly equaled the July total of 8,416 sales and marked the fifth consecutive month of at least 8,000 pending sales.

Closed sales, reflecting several months of strong pending sales, reached the highest volume so far in 2012. Brokers tallied 6,612 closings last month, continuing a streak of four months of 6,000-plus completed transactions.

“In housing markets, slow and steady recoveries are good,” said MLS director Frank Wilson, the branch managing broker at John L. Scott’s Poulsbo office. “A market that runs too high or too fast leads to a quick decline in short order,” he commented, adding he expects good momentum to continue into the fall.

The median price on last month’s closed sales rose more than 5.9 percent, to an area-wide figure of $250,000. That’s up from the year-ago median sales price of $236,000 for single family homes and condos combined, but tapered off from the July figure of $254,900. Clark County claimed the largest year-over-year gain at 18.3 percent, followed by Cowlitz (18 percent), Mason (nearly 16 percent), and Kittitas (13.7 percent) counties.

For single family homes only (excluding condos), prices jumped nearly 6.7 percent, from $247,000 to $263,500. Buyers of single family homes in King County paid $378,000 for last month’s sales, an increase of 8 percent from the year-ago median selling price of $350,000.

“The biggest story this year is that the market has flipped,” proclaimed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He attributes the shift to a seller’s market in most areas and prices to a combination of factors, including historically low interest rates, lower adjusted prices, the shortage of inventory, an elevated number of investors, and the return of local home buyers.

Northwest MLS directors OB Jacobi and Joe Spencer are similarly encouraged by the latest numbers, mentioning steady momentum, rising consumer confidence, low inventory, a pickup of activity in new construction, and improving prospects for homeowners who are underwater.

Northwest MLS members were hard-pressed to replenish inventory last month. They added 8,379 new listings to inventory — 749 fewer new listings than a year ago, and about the same as the number of pending sales (8,338). Last month’s additions brought the month-end total to 25,506 listings, down more than 28 percent from the year-ago inventory of 36,907 homes and condos.

“Inventory levels are incredibly low, but our hope is that many homeowners who were underwater can now afford to sell because of the continued appreciation of home prices,” remarked OB Jacobi, president of Windermere Real Estate Company. He also noted a pick-up of activity in the new construction housing market, which he expects will add much needed inventory throughout Puget Sound.