March ushered in spring and a blazing hot real estate market in Western Washington, according to the Northwest Multiple Listing Service (NWMLS) press release for April. Incredibly low interest rates (below 4% for 30 year fixed mortgages!) and our region’s healthy job market have numerous buyers primed for a home purchase. The downside to our current market is the anxious atmosphere buyers are facing. Stiff competition among them has produced a situation where competitive offers often feature paying above list price, releasing earnest money, and waved safeguard contingencies, to be in the race for desirable homes. This frenzy is moving buyers out their comfort zones, and some sellers are trying to push the envelope on home pricing. Those sellers are finding, however, that their homes are not receiving the same activity as market ready properties priced correctly for the neighborhood. While listing volume in March increased 9.4% year-over-year in Western Washington, by the end of the month our inventory supply region-wide was down almost 14%. Additionally, home buyers who are currently homeowners are reluctant to place their homes for sale before coming to mutual agreement on a house – this phenomenon is impacting on our inventory levels. Single and multi-family building permit levels are also up, but not enough to make a dent in buyer demand. With low interest rates in the foreseeable future, the potential for job relocation within our area, and this pesky low inventory dogging us, the spring and summer housing market is promising to be lighting fast in Western Washington.
Below are excerpts of the April NWMLS press release. To read the whole press release, click here.
Buyer anxiety is rising as the pace of home sales is faster than brokers are able to replenish inventory, according to members of Northwest Multiple Listing Service. Figures just released for March show 11,408 pending sales during the month while only 10,505 sellers listed their homes for sale during the same period.
[New listings are selling quickly and the] multiple offer market has become commonplace on well-priced new listings, [when priced well. Some sellers are testing pricing boundaries and finding their homes sitting on the market.] …buyers are flooding into the Greater Seattle market due to abundant job opportunities… also attributed [to] the high demand [are] low interest rates and skyrocketing rents.
This market is pushing buyers beyond their comfort level… [Buyers are being asked to move faster when making offers, to pay more for houses with less help from sellers, often while facing multiple offers – this is a perfect storm to create stress.] The market imbalance is played out with rising prices, an acute shortage of listings — particularly in areas close to job centers — and bidding wars.
The volume of new listings (10,505) added during the month increased 9.4 percent compared to a year ago, but fell short of satisfying demand in many areas. At month end, inventory in the MLS service area that encompasses 23 counties was down almost 14 percent, dropping from 19,736 listings to 17,007. Twelve counties reported double-digit declines from this time a year ago.
Measured by months of supply, there is about 2.5 months of inventory area-wide. In King County there is slightly more than 1.3 months of supply and in Snohomish County supply stands at just under 1.7 months.
[With buyers grappling with lack of inventory, it’s noteworthy that] many would-be purchasers are current owners who are unwilling to put their homes on the market until they can secure their next home. [This phenomenon is affecting what our area’s inventory truly could offer to buyers. In addition, buyers are paying above market in desirable neighborhoods, releasing earnest money, and waving contingencies that are supposed to safeguard transactions, to be competitive in our current market.]
Some brokers expect the pressure will continue with Expedia’s announcement of plans to relocate around 3,000 employees from Bellevue to its new headquarters in Seattle. “It has us all wondering how this might impact housing in the neighborhoods surrounding Elliott Bay,” admitted OB Jacobi, president of Windermere Real Estate Co. With an estimated 75 percent of the company’s current employees living on the Eastside, traffic congestion around South Lake Union is expected to worsen. “It stands to reason that as commute times go up, some of these folks will pack up and move west, adding pressure to Seattle’s already highly competitive market,” he commented.
Stiff competition is reflected in part by rising prices – but MLS officials emphasized sellers still need to be realistic.[It’s definitely a seller’s market as long as the home is in market ready condition and priced correctly.]… buyers’ agents are often up at the crack of dawn scouring new listings, price reductions and the back-on-market properties in search of opportunities for their clients, but fierce competition is leaving many house-hunters disappointed and frustrated.
Northwest MLS figures show prices on last month’s closed sales of single family homes and condos jumped more than 6.7 percent compared to the same month a year ago. The median price on last month’s closed sales area-wide was $292,500 which compares to the year ago figure of $274,000.
Home prices were considerably higher in San Juan and King counties. For the 26 completed sales in San Juan County during March, (one more than a year ago), the price jumped 25.5 percent, rising from $400,000 to $501,900. King County prices rose about 8.8 percent, increasing from $378,000 to $411,200.
Prices on single family homes (excluding condos) rose about 6.8 percent system-wide, increasing from a year-ago figure of $282,000 to $301,143. Within the four county Puget Sound region, Snohomish reported the sharpest hike at nearly 8 percent. The median sales price for a home in that county was $340,000 last month; twelve months ago it was $314,975. Buyers can expect to pay about 30 percent more in King County where a single family home that sold last month fetched a median price of $440,250.
MLS members logged 6,769 completed transactions of single family homes and condos during March to outgain the same period a year ago by 1,016 transactions for a 17.7 percent increase. Of that total, condos accounted for about 14 percent of the volume. The median price on last month’s condo sales was $240,000, which was about 9 percent higher than a year ago. In King County, the median sales price was $269,600.
… both residential single- and multi-family building permits are up substantially compared to this time last year in the Seattle-Bellevue-Tacoma metro areas, but the gains are not enough to curb demand. …analysis indicates foreclosures have dropped close to pre-crisis levels. Even so… would-be sellers are caught in the same inventory crisis as they too are unable to find suitable move up housing. …escalating prices may ease later in the year, when interest rates edge up as the Fed stops buying mortgage-backed securities. [However, with such high employment levels in our region and historic low interest rates readily available now, the spring and summer housing market should be full speed ahead!]
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 23,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington State.