KIRKLAND, Washington (December 4, 2015) – Inventory remains “critically low,” but there are fewer house-hunters in the hunt during this holiday season so motivated sellers and buyers are seeing success, according to brokers with Northwest Multiple Listing Service. Its just-released statistics for November show year-over-year gains in pending sales, closed sales, and prices, but a steep decline in inventory.
“The housing market continues to be red-hot on a seasonal basis, but this winter will be even more intense given the dangerously low inventory,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
Compared to a year ago, MLS figures show drops in the number of new listings added to inventory during November (down 4.6 percent) as well in the total number of active listings at month-end (down 26.5 percent).
Twenty-one of the 23 counties served by Northwest MLS reported double-digit declines in their volume of active listings last month compared to the same time period a year ago. For the overall area, there were 15,327 active listings, which compares to the year-ago total of 20,864. Of these totals, 5,268 were new listings added during the month; a year ago, members added 5,521 listings to the selection.
“Buyers are pleasantly surprised to have less competition right now. Many are taking advantage of this by searching diligently for a home,” commented Dick Beeson, the principal managing broker at RE/MAX Professionals in Tacoma. “Sellers who stay in the market during the holidays are often rewarded by less competition as well, thus making their efforts profitable,” added Beeson, a Northwest MLS board member.
MLS members reported 7,511 pending sales during November for a 10 percent increase from a year ago when they notched 6,821 mutually accepted offers. Condo activity was brisk with pending sales jumping more than 21 percent from a year ago. Single family home sales rose about 8.5 percent.
“The rumblings of frustration have evolved to utter exasperation among buyers as inventory levels continue to drop,” reported MLS director George Moorhead, the designated broker at Bentley Properties. Despite their frustration, he said buyers are knowledgeable and “tuned into” the market, with some even factoring in the cost of breaking a lease as part of the cost of purchasing a home in this real estate climate.
Broker Ken Anderson also commented on the tight supply. “Our market is approaching record low absorption rates. We haven’t seen inventory this low in more than a decade,” stated Anderson, the president/owner and designated broker at Coldwell Banker Evergreen Olympic Realty in Olympia.
Anderson said buyers have remained active all year. “Every month this year our market has improved for sellers. It is really a uniquely good time,” he observed.
Scott agreed, noting “there is more pressure on new listings than we had last winter.” A higher percentage of homes is selling within the first 30 days, according to his analysis. “This is setting the stage for a frenzy market in the spring of 2016. Even if interest rates go up slightly, buyer demand and low inventory will push prices up,” he believes.
Commenting on figures showing only nine of the 23 counties served by Northwest MLS have more than six months of supply (a figure some use to indicate a balanced market), MLS director Darin Stenvers said “that trend is not likely to change anytime soon.”
Stenvers, the managing broker at John L. Scott’s Bellingham office, said it is also unlikely “that even a small upward movement in interest rates alone will change our housing market’s future. We expect many buyers will be staying in their homes much longer than in the past,” he stated, “and this is contributing to the shortage of new listings.”
Acute shortages are in evident King and Snohomish counties, both with less than two months of supply.
“The low market inventory continues to be the stress factor for buyer and brokers,” said Kathy Estey, the branch managing broker at John L. Scott, Inc. in Bellevue. She reported multiple offers are continuing on homes that are in top condition and priced competitively. But, she emphasized, “over aggression in pricing is always detrimental to sellers.”
“The Snohomish County market continues to be extremely active,” said David Maider, designated broker/owner at Windermere Real Estate M2 in Everett and a member of the MLS board of directors. “With interest rates maintaining historically low levels and no indication that more property is headed for the market, we expect prices to increase in the first quarter of 2016. Multiple offers are happening on well priced and prepared properties, but not at the frequency that was occurring this past spring and summer,” he reported.
Mike Grady, president/COO of Coldwell Banker Bain | Seal, agreed. “Sales prices and rents will continue to increase next year, making ours a tight market for home buyers.” Commenting on the anticipated hike in interest rates, Grady said he isn’t expecting an increase to slow sales locally. “Adding nearly 65,000 new households to the greater Puget Sound region in the past 12 months reflects not only a great job market but also a growing demand for housing. We expect sales and median home values will continue to rise in 2016.”
Even as prices rise, until supply improves, sellers will remain firmly in the driver’s seat of an “insanely competitive housing market,” commented OB Jacobi, president of Windermere Real Estate.
“I’m still very concerned with the lack of inventory in the Seattle housing market,” Jacobi stated, adding, “Even with the drop in inventory we normally see this time of year, the current levels are critically low. Looking at the data as far back as 1999, we’ve never seen a lack of homes for sale to this degree.”
MLS director John Deely, principal managing broker at Coldwell Banker Bain in Seattle, said the combination of low listing inventory, the seasonal slowdown, and pent-up demand is fueling multiple offers on properties in all price ranges. “Ballard, Queen Anne and Beacon Hill are single family hot spots, with Capitol Hill and Belltown/Downtown leading the condo sales activity,” he reported.
Northwest MLS data show extremely low supplies of both single family homes and condos in the map areas closest to the major job centers. Not surprisingly, prices in most of those areas are escalating.
Prices on homes and condos that closed last month rose nearly 6.6 percent from a year ago, from $289,000 to $308,000. For single family homes, the increase was about 5.7 percent, from $299,000 to $316,000, with seven counties reporting double-digit gains.
In King County, the median price for home sales that closed during November was $499,950, a jump of 13.6 percent from the year-ago figure of $440,000.
Condo prices surged 17.8 percent, rising from $225,000 to $265,000.
Prices can vary widely within counties. For example, within King County, where the MLS tracks 29 map areas, median prices for homes and condos that sold last month ranged a low of $235,000 in the Dash Point/Federal Way area to more than $1 million on Mercer Island.
“Given that the median home price of a single family home in King County is just shy of a half-million dollars, we can assume buyers are choosing to buy further away from Seattle and Bellevue in areas where homes are substantially cheaper,” remarked Jacobi. MLS figures reveal wide variation from county-to county. While the median selling price on last month’s sales in King County was $499,950, it was $350,000 in Snohomish County and even less in both Kitsap ($259,000) and Pierce ($249,900) counties.
Pricing is still as important as ever, cautioned Moorhead, who said in today’s market a home will not sell for less than market value. “Sellers still have to be careful as buyers clearly show their knowledge, which is obvious when a home has been on the market longer than 30 days.”
Commenting on the market in Kitsap County, MLS director Frank Wilson noted prices there are up 15 percent since January, with the median price on single family homes rising from $225,000 (in January) to $259,000 for last month’s sales.
“We are seeing the typical seasonal cycle, including a slight slowdown in open house traffic as we moved toward Thanksgiving,” Wilson reported. He expects a pick-up in activity the week before Christmas and then an earlier than usual spring market – perhaps starting in mid-January.
“As our spring market blooms this year, it will be earlier. Buyers will find fewer choices and what is available will be at a higher price,” Wilson predicts. “Sellers still need to make sure their homes are priced correctly and that it looks good, smells good and feels good – the basics have not changed,” he emphasized.
For now, Wilson said sellers who have their home on the market can expect “condensed traffic,” which he likened to a “good soup broth with every sip full of flavor. Every buyer who looks at a home is serious. They have fewer choices, so sellers will likely see greater success than during other times of the year.”
MLS members reported modest increases in the number of completed transactions from a year ago, 5,999 versus 5,872 for a 2.2 percent gain. Anderson attributes this to a timing factor due to the last day of the month following on a Monday. “We had a huge block of closings on November 30th, but those won’t be reflected until the December numbers.”
Other brokers also commented on seasonal factors.
“With people going to and from work in the dark, the weekends get busier for brokers. The time for showing a property is compressed,” commented Beeson. But, he added, “smart brokers keep working through the winter months knowing that a fool fails to plant a crop in season, and when harvest comes they look but find nothing.”
“Many sellers feel spring or summer are better times to sell, but statistics show December to be an excellent time for sellers to market their homes because there is less competition, rates continue to be favorable and holiday decorations add to the staging of a home,” commented Estey, who also serves as a board member at Northwest MLS.
Buyers may also benefit from slower activity, Estey added. “In the last few weeks we have seen some homes within 20 miles of city centers of Bellevue and Seattle come on the market and not sell immediately. Some buyers have actually been able to negotiate a little with these sellers,” she noted.
Wilson also mentioned the impact of the new TRID rules (a set of documents required during the mortgage process). “Buyers, sellers and brokers need to be patient at the end of the transaction as lenders comply with the new laws. Gone are the days of last minute changes to the terms of the agreement,” he stated.
Deely said the new TRID rules seem to be catching some lenders and closing service providers off guard while they adjust their operations and systems to deal with the new regulations.
Brokers who commented on the latest MLS report tended to express optimism for 2016.
“There are still countless more buyers who are waiting for the right home to come on the market. Savvy sellers will look to market their homes earlier in 2016,” suggested Anderson.
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.