Double-digit was the “it” phrase from the Northwest Multiple Listing Service’s October press release. Our regional housing market experienced “a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago.” Industry consensus indicates these market trends are not sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. New rules for mortgage closings and projected seasonal 4th quarter slowing of listings, which would lower inventory levels further, may create a market slow down into 2016. Real estate industry leaders continue to recommend buyers get all their ducks in a row before beginning their home searches. Having their finances in order, getting pre-approved for a mortgage, line up professionals to provide inspections and home owners insurance ahead of time — all of this prep work will help buyers be more successful when facing multiple offer situations, which are so commonplace in our local housing market.
Below are excerpts of this month’s press release. To read the NWMLS October press release in its entirety, please click here.
Scarce inventory, new rules for mortgage closings and affordability concerns will likely slow home sales around Western Washington during the remaining months of 2015 and into early 2016, according to spokespersons from Northwest Multiple Listing Service.
The latest statistics from the MLS show a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago, prompting one industry leader to say the trends aren’t sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. “We’re on the cusp of a housing market slowdown,” he predicts.
[The TILA RESPA Integrated Disclosure rule, also knows as TRID(1), for banking and closing disclosure requirements, will lengthen closing timeframes. In turn, there may be a slowdown in closed transactions due to this new timeframe for moving from the agreement to purchase a home until it closes. It’s suggested that] Layoffs and the possibility of higher interest rates result in unpredictability for both buyers and sellers…
Despite an expected slowdown, closed sales through the first nine months of this year are running 16.6 percent ahead of the same period a year ago, with median prices up 9.2 percent.
The MLS report for September shows pending sales continue to outnumber new listings, resulting in inventory declines in most of the 23 counties in its service area. That imbalance leads to rising prices.
Northwest MLS members reported 9,574 pending sales (mutually accepted offers) in September for a 7.9 percent increase from the year-ago figure of 8,875. Compared to August, pending sales fell 9.7 percent.
Closed sales jumped 17.5 percent, with year-over-year sales rising from 7,020 finished transactions to 8,245. Twenty of the 23 counties reported double-digit gains from a year ago.
Prices showed more variation. Area-wide, the median price on last month’s closed sales of single family homes and condos was $312,000. That’s up nearly 9.5 percent from the year-ago figure of $285,000, but down slightly from August.
Compared to the system-wide gain, prices rose at more modest rates in three of the four counties in the Puget Sound region, with Pierce County being the exception. Year-over-year prices there jumped 11 percent. Prices in Kitsap County were up only 4 percent from a year ago; in King County the gain was about 4.8 percent and in Snohomish County it was about 7.5 percent.
Single family home prices across the 23 counties in the MLS report rose nearly 7.6 percent from a year ago, from $297,500 to $320,000. Single family homes in King County commanded the highest median price at $490,250, up 6.6 percent from the year-ago figure of $460,000, but down from June’s high of $500,000.
The condo market remained hot with both sales and prices up by double digits. Members reported 1,183 closed sales during September for a gain of nearly 30 percent from a year ago. Prices on last month’s sales jumped 13 percent, from $230,000 to $260,000.
Dwindling inventory continues to be a drag on activity, but some brokers believe new construction activity is encouraging… new housing starts could help boost inventory in many markets during the coming months. For now, new listings are drawing “quick action” when they come on the market…
MLS members added 8,772 new listings during September, down slightly from the year ago total of 8,878. At month end, there were 19,724 active listings in the database, down 23.3 percent from the same time a year ago when inventory totaled 25,717 properties.
For September, the MLS reported 2.39 months of supply system-wide, about the same as the figure for August. The shortages were most acute in King County, with about 1.4 months of supply, and Snohomish County, with about 1.9 months of supply. Industry experts use a range of four-to-six months as an indicator of a balanced market.
[Kitsap County] Prices… rose 4 percent from a year ago. … good traffic [has been reported] at open houses in Kitsap County, quick acting buyers when a new listing appears, many multiple offer situations, and an increase in investor interest.
[Due to the seasonal trend of fewer homes coming to market during the 4th quarter, our region may continue to face a shortage of inventory as we move toward Spring 2016.]… serious buyers need to be prepared to take immediate action when they find a home they like. [Buyers should be prepared to consult with a lender, find an inspector, investigate home insurance options and have their finances in order to be able to present strong offers.]
Brokers say opportunities still exist for buyers who have missed out on homes during multiple offer situations.
Some buyers who are weary of bidding wars are looking in areas where multiple offers are less common… [buyers who take a second look at homes with an extended market time are negotiating much better terms without competition…Considering a home where you will have to invest some sweat equity is also another option to avoid competing in a multiple offer situation.]
[It’s] suggested inventory shortages could be eased if expired listings are re-listed. Not every home sells once it’s listed… analysis shows more than 2,600 listings have expired in the tri-county area so far this year…
Even though they’ll face longer commutes, … buyers who are feeling squeezed by the lack of inventory are extending their search areas farther than before in hopes of finding a home at an affordable price. These buyers hope to sell the home in the outlying area within five years and purchase another home closer in…
…statistics strongly indicate buyers must be strategic in the current market in order to be successful. [This may include selling a home prior to buying, preparing to live in a temporary housing situation during the search for a new home.] Buyers without a home to sell may be better positioned to have their offer accepted… [and may want to expand their search efforts to include contingent listings to find a home to purchase.]
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.
(1) TRID is the TILA RESPA Integrated Disclosure rule that became effective 10/3/15. New forms are required for any transaction involving a mortgage.