For months our region has shared the same real estate news – we need more inventory. The September Press Release from the Northwest Multiple Listing Service (NWMLS) shared this same information about our local housing market stats. Pending sales have outpaced new listings for the 5th month during 2015. There were 10,603 mutually accepted transactions in August, while only 9,921 new listings came to market. Consequently, that has also been the fewest new listings in a month since February. Our region’s housing market saw a 23.3% year-over-year decrease in inventory. Conversely, home prices in Western Washington saw good-sized increases during August; many counties experienced double-digit increases in median home prices. Are these price increases sustainable? Windermere Real Estate President OB Jacobi does not think so, with our current low inventory. “The continued double-digit increases in home sales simply cannot be sustained unless we see inventory growth,” he emphasized. That is unlikely, he suggested, “since we’re entering the time of year when fewer people list their homes.” Jacobi projects that our housing market is on the “cusp of a slowdown” due to the time of year and the low inventory that’s been dogging our area during 2015. There are also concerns about looser lending criteria that has been creeping into the housing market.
Below are excerpts of the September NWMLS Press Release. To read it in its entirety, please click here.
Some brokers from Northwest Multiple Listing Service detected a slowdown in housing activity during August, “but nowhere near what is typical,” according to one industry veteran. Among MLS leaders who commented on the service’s latest report, expectations for the remainder of 2015 ranged from one who predicted “we’re on the cusp of a slowdown,” to others describing activity as “torrid” and saying “sales will continue at a fast pace.”
Newly released statistics show solid gains for several indicators used to track activity, including pending sales, closed sales, and median prices.
For the fifth month this year, pending sales system-wide outpaced the number of new listings added to the inventory. During August, members reported 10,603 mutually accepted transactions and 9,921 new listings. That new listing total for the 23 counties in the MLS service area was the lowest level since February. … low listing inventory continues to impact some sub-markets, including Seattle’s, where multiple offers and escalation clauses are “the rule rather than the exception.”
Like new listings, total inventory also declined. At the end of August, Northwest MLS members reported 20,749 total active listings in its database. That reflects a slight drop from July’s total selection of 21,069, but a 23.3 percent decline from the year-ago inventory when there were 27,060 homes for sale.
Supply, as measured by months of inventory, showed slight improvement in August, inching up to 2.38 months overall. That’s up from July’s figure of 2.24 months. In King and Snohomish counties, supply remained well under two months. Many industry analysts use a range of four-to-six months as an indicator of a balanced market.
Sellers who have [tried to get above market value for their home experiencing a lack of interest from savvy buyers.]… prices, which showed year-over-year gains in most areas… reported mixed outcomes. [More frequent price reduction and the multiple offer/offers over list price have been scenarios seen across the region.] MLS figures show last month’s closed sales of single family homes and condominiums had a median selling price of $315,000 area-wide for a 9.6 percent increase from a year ago. Ten counties reported double-digit gains, including King County where the median price was $450,700. That translates to a 13.2 percent increase from the year-ago figure of $398,000.
The volume of completed sales, numbering 8,718, jumped more than 12 percent from the year-ago total of 7,775 closings. Single family homes accounted for more than 85 percent of the total transactions.
Single family homes in King County sold for a median price of $499,950, just below the figure of $500,000 the MLS reported in June, believed to be an all-time high for the monthly reports. Year-over-year prices for this segment jumped 14.4 percent.
For condos, both the volume of sales and selling prices showed sizable gains from a year ago. The overall number of condo sales rose from 1,026 to 1,248 for a 21.6 percent gain. Condo prices surged 17 percent, rising from $221,000 to $258,750.
In King County, where 60 percent of condo sales occurred, the volume was up nearly 21.7 percent. Median prices increased 19.7 percent from a year ago, rising from $249,950 to $299,250.
“Given the seasonality of real estate and low inventory levels, I think we’re on the cusp of a slowdown in the housing market,” stated OB Jacobi, president of Windermere Real Estate. “The continued double-digit increases in home sales simply cannot be sustained unless we see inventory growth,” he emphasized. That is unlikely, he suggested, “since we’re entering the time of year when fewer people list their homes.
Brokers in Snohomish County were mostly upbeat about the market. [ There are slight slowdowns but not what is typical for this time of year. Economic forecasts remain strong for Snohomish County and more inventory is needed.]
David Maider, owner/broker at Windermere Real Estate in Everett, said the market in Snohomish County “continues at its torrid pace,” bolstering his observation by citing MLS data. The latest numbers show pending sales in that county increased more than 17 percent from a year ago, with closed sales jumping nearly 24 percent.
Maider, a member of the Northwest MLS board of directors, said the primary market drivers include a general lack of supply across all price points (less than two months worth of inventory), historically attractive interest rates, and a very tight rental market. “Multiple offers are commonplace,” he reported, suggesting buyers should be prepared to be decisive and to propose compelling terms to the seller. “This is not a market for sitting on the fence,” he emphasized, adding, “We are seeing a very active market, even in higher price points.”
Northwest MLS brokers continue to remind sellers about the consequences of overpricing and to caution would-be buyers about the pitfalls of overextending themselves. Looser lending criteria is one such pitfall. Buyers, sellers and brokers are expressing some frustration with the fast-paced market. Getting offers accepted, and then getting the transactions to close can be frustrating… Speculation around the direction of interest rates may also be fueling activity, according to some brokers. [However,] some potential purchasers may be retreating to the sidelines in hopes the competition will ease.
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.