Rising home prices and depleted inventory are again the major topics of the Northwest Multiple Listing Service(NWMLS) January 2016 press release. During the month of December, the median home price in King County sprung up to surpass pre-recession levels, ringing in the New Year at $508,000. OB Jacobi, president of Windermere Real Estate, said the following about this noteworthy news, “If December told us one thing, it’s that home prices have clearly recovered in King County. Last month the median price for single family homes broke the pre-recession record of $481,000 that was set in July 2007.” That is almost a 15.5% gain from November to December.
Industry leaders noted that the drop in pending sales was chiefly due to our housing market’s depleted inventory. The inventory level for the 23-county region the NWMLS serves dropped to an average of 1.8 months’ worth of supply. King County saw its inventory drop to less than a month’s supply. Brokers saw more movement of buyers who were interested in homes in urban areas expanding their searches to adjacent suburban locations, which may have more inventory and lower prices.
Closed sales ended on a strong note, with a total of 88,831 closed transactions MLS-wide for 2015 (14.3% gain year-over-year), and gave the New Year a robust foundation to build on. Home sales in 2016 are expected to continue at this harried pace, until more sellers decide to list their homes. Buyers may experience increased stress if interest rates start to rise as anticipated and may end up settling on a home to lock in their desired mortgage rate. The good news is that industry experts do not see a housing bubble on the horizon, due to stricter lending standards. And current home prices, along with a rising interest rate, may motivate more homeowners to enter the housing market to capitalize on our strong economy and the numerous eager buyers looking to make a purchase.
Below are excerpts from the January 2016 NWMLS press release. To read it in its entirety, please click here.
Home prices have “clearly recovered” in King County and a few other areas served by Northwest Multiple Listing Service. Many member-brokers say prices are likely to keep rising as a backlog of buyers competes for depleted inventory.
Those were among reactions from brokers upon reviewing the December statistics from the MLS. The latest report shows the year ended on a mostly positive note with pending sales, closed sales and prices all showing year-over-year increases. Not surprisingly, listing activity dropped, in part because some sellers are balking at listing their home for fear of not finding a replacement.
Selling prices for single family homes and condominiums that sold across the Northwest MLS 23-county service area surged 8.6 percent from a year ago, rising from $290,000 to $315,000. The price of a single family home (excluding condos) that sold in King County during December jumped nearly 15.5 percent, from $440,000 to $508,000, prompting OB Jacobi, president of Windermere Real Estate to comment, “If December told us one thing, it’s that home prices have clearly recovered in King County. Last month the median price for single family homes broke the pre-recession record of $481,000 that was set in July 2007.”
MLS figures show active listings in King County were down 39 percent (about 1,400 fewer properties) from 12 months ago. Area-wide, inventory was off 29 percent from a year ago, plunging from 17,659 active listings to 12,522. That total includes 4,041 new listings the MLS brokers added during December, which was down from 4,367 the members added during the same month a year ago.
Inventory levels fell well below the threshold many industry experts use to gauge a balanced market. Area-wide there was just under 1.8 months of supply, with four-to-six months generally considered to be a “balanced” level. In King County, inventory dropped to less than one month (0.84). It was slightly better in the adjacent counties, with Snohomish at 1.13 months and Pierce at 1.76 months. Kitsap County also reported less than two months of supply. Only five of the 23 counties in the MLS report had more than six months of supply.
Pending sales system-wide, which totaled 5,970 during December, clearly outpaced the brokers’ ability to replenish inventory. The sales volume was up 3 percent from a year ago when members reported 5,794 mutually accepted offers. Measured another way, last month’s pending sales outnumbered new listings by a wide margin – a differential of 1,929 units.
[It’s] expect[ed] 2016 may be “very stressful” for some buyers, citing low inventory, increasing prices, rising interest rates, plus a growing pipeline of qualified buyers as sources of house-hunter anxiety. Other factors could also come into play to squeeze inventory…. They include buyers whose credit has been repaired after foreclosures or short sales, investors who see real estate as an alternative to the stock market, escalating rents that prompt renters to consider home ownership, and buyers from outside the U.S.
… both long-time homeowners and new homebuyers are feeling the impact of rising prices and interest rates. One consequence … is decreased buying power. … the diminished power coupled with rising prices will push buyers who are on the fence to make their move…
Some brokers say rising prices are more worrisome than upticks in interest rates.
Noting differences in the tri-county area where pending sales declined by 9.2 percent in King County but increased by double digits in both Snohomish and Pierce counties, Jacobi thinks price hikes in King County are “clearly pricing many buyers out and into the adjacent areas.”
MLS figures show wide differences in prices within the four counties in Central Puget Sound region. Pierce County had the lowest median price for December’s sales at $249,950, while King County had the highest at $450,000. Homes and condos that sold in Kitsap County last month had a median price of $266,500; in Snohomish County the median sales price was $335,500.
The median price on December’s sales increased 8.6 percent area-wide compared to a year ago. Ten counties reported double-digit gains; four counties had year-over-year decreases in median sales prices.
Condo prices increased about 6.7 percent, from $239,000 to $255,000. In King County, which accounted for about 55 percent of the sales, the median sales price was $279,975. That’s up about 7.7 percent from a year ago.
Despite rising prices in most areas, closed sales ended the year on a strong note. Brokers reported 7,091 closings during December, outgaining the total of 6,284 for the same month a year ago (an increase of 12.8 percent). For the year, Northwest MLS members logged 88,831 closed sales, up from 2014’s total of 77,276 for a 14.3 percent gain.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of nearly 2,100 member offices includes more than 25,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.