June’s press release from the Northwest Multiple Listing Service (NWMLS) is all about low inventory. Quality homes priced right are being snatched up as soon as they are listed. The NWMLS’s year-over-year inventory figures for May demonstrate double-digit drops. By the end of May, NWMLS’s total inventory had dropped over 18% when compared to May 2014.
There is approximately 2.4 months of supply across Western Washington. In King County, the inventory has slipped to around 1.2 months. Snohomish County is in the same boat, at 1.6 months. Pierce County is a little higher, at approximately 2 months worth of inventory. OB Jacobi, president of Windermere Real Estate, shared this about our housing supply, “We’re still in desperate need of inventory. The irony is that there are plenty of people who want to sell, but won’t put their home on the market until they can buy something new. But they can’t buy something new until there are more homes on the market. It’s the proverbial chicken and egg situation for which I see no end in the near future.”
The statistics are showing demand is hot across all price levels, from the renter who is a 1st time home buyer all the way to the luxury home buyer purchasing at a $1Million+. Even more than half of foreclosed homes are garnering offers in the full price range. During May, the NWMLS reported double-digit gains in both home sales and pricing.
Take-aways from June’s press release
- Buyers need to have their financial ducks in a row, including having all their important docs prepared and readily available, from pre-approval all the way to closing. They need to educate themselves about current market conditions, pricing and think about the supply-demand-distance equation in the Greater Seattle real estate climate. “How far out would be acceptable versus how long to wait to secure a home,”— that is the compromise Seattle area buyers should ponder before starting their home searches.
- Sellers need to consider the amazing opportunities available to them right now. The market conditions for sellers couldn’t be better, and as more sellers list the low supply challenges will start to dissipate.
Below are excerpts of the June press release from the NWMLS. To read the press release in its entirety, please click here.
Home buyers are in “full sprint” mode while sellers are stalling, according to brokers from Northwest Multiple Listing Service. As a result, MLS members are juggling severe inventory shortages and multiple offers in many Seattle neighborhoods and beyond.
MLS figures for May show double-digit drops in inventory compared to a year ago and double-digit gains in both sales and prices…Last month’s volume of 11,425 pending sales across the 23 counties in the latest report nearly matched the number of new listings added to the database (11,862). At month end, the total number of active listings stood at 19,515, a drop of more than 18 percent from a year ago when members reported 23,917 active listings. Only two counties (Douglas and Ferry) reported year-over-year gains in inventory.
… multiple offers are commonplace for well-priced homes in desirable areas. [There is a definite stall in the inventory due to sellers waiting to list until they have more moving options themselves] MLS figures for May show supply has dwindled to about 1.2 months in King County and 1.6 months in Snohomish County. Several neighborhoods near Seattle’s job centers have less than a month of supply.
For the MLS service area overall, there is about 2.4 months of supply – well below the 4-to-6 month figure used by many industry watchers as an indicator of a balanced market. About half the counties reported less than four months of supply. … supply in Pierce County has slipped to record lows, at just over 2 months. For sellers, there may be little solace. When they decide to sell they’ll need a replacement home [but their options are so limited with the current inventory levels.]
Pending sales jumped more than 10 percent in May compared to the same month a year ago, rising from 10,373 mutually accepted offers to 11,425. Last month’s pendings rose slightly from April’s total of 11,384. For the Central Puget Sound region encompassing King, Kitsap, Pierce and Snohomish counties, the MLS recorded 8,620 pending sales – the highest total for the month of May in at least 15 years.
… MLS figures note cumulative pending home sales in the four-county Puget Sound area for the first five months of the year are outpacing the previous record year of 2005. [In 2015, however, the housing market’s foundation is strong, built with qualified buyers.]
[In the current market, with the absence of inventory in Seattle, buyers may need to evaluate how far out they need to drive to find available homes they can afford.] With demand exceeding supply, prices continue to climb. MLS statistics show an area-wide year-over-year gain of more than 11 percent. The median price for last month’s 8,229 closed sales, including single family homes and condominiums, was $317,000. That compares to the year-ago median sales price of $285,000 for the 7,187 completed transactions.
In King County, the median sales price for single family homes and condos (combined) was $434,000, an increase of 9 percent from twelve months ago when brokers reported a median sales price of $398,000. Prices on single family homes (excluding condos) that sold in King County jumped to $480,942, about the same as April ($480,000), but up nearly 8.8 percent from the year ago figure of $442,250.
[Local homes prices have grown at a steady pace and continue to outpace wage gains and inflation.] Pent-up demand is pushing inventory lower… [and yet] supply challenges could be alleviated if more sellers put their home on the market. [Sellers may not see a better time to be a seller.] OB Jacobi, president of Windermere Real Estate, echoed comments about the supply. “We’re still in desperate need of inventory. The irony is that there are plenty of people who want to sell, but won’t put their home on the market until they can buy something new. But they can’t buy something new until there are more homes on the market. It’s the proverbial chicken and egg situation for which I see no end in the near future.” Demand exists across the price spectrum, fueled by renters, high wage earners and investors.
… renters are re-entering the housing market as they find they are better off buying than continuing to pay rent. [Monthly fixed rate mortgages are often less than rent payments for a similar home with today’s interest rates and housing prices. Renters who transition to buyers like the fact their monthly payment will remain the same. Buyers are also able to utilize several low-to-no down payment mortgage options at low interest rates.]
Luxury home buyers are also active participants in the current market. A check of MLS statistics shows 887 single family homes priced at $1 million or more have sold during the first five months of the year. That compares to 696 for the same timeframe a year ago for a jump of more than 27 percent.
The segment of distressed properties is also rebounding… figures [are] showing 57 percent of REO (bank-owned) listings sold at or above 100 percent of list price.
Given the fast pace of housing activity, Northwest MLS brokers urged buyers and sellers alike to make sensible decisions and to take advantage of assistance from professionals. Sellers should avoid the temptation to [over price their homes. Over pricing a home may cost sellers both time and money in the long run.]…
… buyers [must do their homework to] avoid disappointment. [Buyers should familiarize themselves with the lending process and preemptively have their documents ready to go for pre-approval all the way through to closing. They should by savvy about our current housing market and be ready to write a strong offer when they locate the right home for their lifestyle.] … [it’s] expect[ed] [that] historically low interest rates, a growing economy, improving consumer confidence and consumer finances will continue to fuel activity and push up the numbers [in our housing market. Those who can afford to purchase a home at today’s price levels, to take advantage of historically low interest rates, should definitely consider a home purchase. Our future housing market may not ever see monthly payments as low as they are right now.]
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.