The spring selling rush may already be under way, as some home owners are already throwing their properties on the market to take advantage of rebounding home prices and improved equity.
Paul Reid, a real estate agent in Temecula, Calif., says some sellers are listing properties earlier than usual in anticipation of the spring season.
Sellers are “nervous about what the spring is going to bring,” says Reid. “They don’t know if everybody will list this spring — then you’ll have a big counterbalance toward too much inventory — or if there’ll be a crunch again. They figure they’ll get out ahead of the market, list, sell, and be done with it.”
Inventory shortages persisted last year, when supply was at a 12-year low leading into the spring. The shortages helped boost home prices, but gave home buyers limited choices and sparked bidding wars in many markets. New-home construction is now at a third of its 2006 peak, which likely will keep inventories tight this spring. But, economists say, improved home prices will likely convince more sellers to sell this year, and that should relieve the inventory crunch in many markets.
In the last four months of 2013, year-over-year inventory levels of homes for sale began to climb after 30 straight months of declines, according to the National Association of REALTORS®.
Inventories increased in some of the states with the tightest markets, such as Arizona, California, Georgia, and Florida. In Sacramento, Calif., asking prices rose 11 percent last year, and listings soared 58 percent in December, according to realtor.com®’s housing report. Inventories also rose by 20 percent or more in Minneapolis; Orlando, Fla.; Atlanta; Dayton, Ohio; Oakland, Calif.; and Phoenix.
“Rising inventory is the primary reason that we expect the pace of price gains to drop back,” says Paul Diggle, property economist for Capital Economics Ltd. Prices are expected to rise only 4 percent nationally this year, compared to an 11 percent gain in 2013.
Source: “U.S. Home Sellers Return for Spring as Buyers Get Relief,” Bloomberg (Feb. 7, 2014)
On a local note: Record low inventories persist on English Hill and the Seattle area. If you are considering selling, contact us to take advantage of our current market conditions.
[contact-form-7 id=”6″ title=”Contact form 1″]
January 2014 Market Charts from the Northwest Multiple Listing Service
NWMLS Report: Broker says Western Washington housing market “definitely in full recovery mode”
KIRKLAND, Wash. (Feb. 5, 2014) – Home sales during January may not have been as super as the Seahawks’ performances, but brokers cite several reasons for optimism during 2014. “We are finally going to be looking at the ‘housing crisis’ in the rear view mirror,” said Mike Gain, CEO and president of Berkshire Hathaway HomeServices Northwest Real Estate. “In 2014 we are definitely in full recovery mode,” he added.
Following the usual pause during the holidays, activity picked up during January when members of Northwest Multiple Listing Service reported 7,044 pending sales, about even with the same month a year ago, and a jump of nearly 35 percent from December’s total of 5,224 mutually accepted offers.
Inventory, while improving, continues to be a source of worry.
“Lots of buyers and not enough of the right inventory to satisfy our buyers’ wants and needs,” was how Gain described current conditions. “Following the worst year for inventory I have seen in my 35 years of practicing real estate locally, we are expecting the number of homes for sale to increase in 2014,” Gain added, emphasizing there is pent up demand and “a very active market is anticipated once the number of listings increases.”
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate agreed. “Available inventory remains tight with shortages or low inventory where 90 percent or more of the sales activity is taking place,” he remarked.
Members added 7,342 new listings to inventory during January, improving on the year-ago total of 7,096. With those additions, the selection increased to 19,195 active listings across the 21 counties served by Northwest MLS. That’s up 6.6 percent from the same period a year ago when there were 18,008 listings.
Thirteen counties have more listings than a year ago, but eight counties are reporting declines in total inventory. “We are literally starving for inventory. We need more homes to sell, especially in the most desirable neighborhoods,” Gain stated.
Area-wide there is about 4.5 months of inventory, an amount at the low end of the 4-to-6 month range most analysts deem to be a balanced market. At this time a year ago, there was about 4.2 months of inventory. The tightest supplies are found in King County (less than 2.5 months) and Snohomish County (3.5 months).
One of the counties with fewer listings is Kitsap, where there is about 5.2 months of supply, down from the year-ago figure of 6.6 months.
Northwest MLS director Frank Wilson, the branch managing broker at John L. Scott in Poulsbo, described overall activity in that market as healthy. “Homes are still coming on the market and buyers are still buying them,” he commented, but noted they are starting to see a bit of stratification on prices.
“Homes that are overpriced are sitting on the market a while, but homes that are priced correctly for today’s market may receive multiple offers,” Wilson explained. Countywide prices are down about 9.4 percent from a year ago. His analysis indicates prices on waterfront listings are lagging, and MLS data indicate prices on condos (a small segment of sales) dropped by double digits compared to a year ago.
Overpriced homes are also a concern in Snohomish County. “Even though we have a nearly 40 percent increase in inventory compared to a year ago, many listings are overpriced, and buyers are not interested in making offers on those properties,” reported Diedre Haines, regional managing broker in Snohomish County for Coldwell Banker Bain.
“We are not yet fully recovered from the recession and sellers need to be realistic in expectations of the value of their homes,” said Haines, a member of the Northwest MLS board of directors.
The most desirable listings in Snohomish County are still receiving multiple offers, Haines noted, while acknowledging activity is “not as frenzied as a year ago,” due in part to lingering doubts about the future of Boeing and other factors. She said new developments are drawing strong interest and traffic. “In some locations reservation agreements are being taken for homes not yet built with many of these developments already getting close to selling out,” she reported.
Home prices area-wide increased nearly 6.6 percent from a year ago, but dipped from December. The median price for last month’s closed sales of single family homes and condominiums was $255,055, rising from the year-ago figure of $239,300. ). In King County, where nearly one of every four closings occurred, the median sales price was $364,875. That represents an increase of 15.8 percent from the year-ago price of $315,000.
Single family prices (excluding condos) increased from $249,200 to $264,995 (up more than 6.3 percent).
Condo prices surged 14.8 percent, from $169,000 a year ago to $194,000 for last month’s sales.
“Years 2012 and 2013 were fantastic recovery years,” said Scott. “We have now experienced two years of positive price appreciation after the five years of market correction,” he added.
MLS director George Moorhead said recent fluctuations in interest rates and upticks in online activity are noteworthy. “We have all seen interest rates go up and down, but I have not seen such an immediate response from buyers,” he remarked. Moorhead, the branch manager at Bentley Properties in Bothell, also reported a 30 percent increase in online activity in the past few weeks.
Gain expects the rebound to be fueled in part by “repeat move-up buyers” and first-time purchasers. “The first time buyer will return to the marketplace in 2014. With the economy improving they will finally be able to move out of their parents’ homes and when comparing renting verses buying, many will choose homeownership,” he stated.
Brokers point to recent reports of the state’s unemployment rate dropping to 6.6 percent, the lowest in five years, as a positive thrust for home sales, but also cited factors that could hamper activity.
“There are always issues surrounding real estate that erode confidence in the market,” Wilson commented, citing uncertainty on flood insurance. “Until Congress takes action to continue the flood insurance subsidy, people buying in flood-prone areas may suffer sticker shock when they see the premium for coverage,” he believes.
Among other factors brokers mentioned as threats to activity are:
— “The volatility of the roller coaster stock market, the new financing and appraisal rules imposed by Dodd/Frank, and fatigue being felt by many buyers who were unsuccessful in purchasing last year.” (Diedre Haines)
— Rising interest rates and tighter lending requirements. Short sales are waning as buyers encounter long timelines and uncertainties. (George Moorhead)
Mike Grady, president and COO of Coldwell Banker Bain, expects activity to continue picking up until May. “Inventory levels are pretty much the same as they were a year ago. Now we’ll have to wait and see if the sellers come out,” he remarked.
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 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.
Nation’s Largest Home Builder Seeing Strong Sales – Raising Prices
Homebuilder Says It’s Upbeat Enough to Raise Prices Again
D.R. Horton, the largest U.S. home builder by homes sold, announced that strong sales will allow the company to raise prices for an early start of the spring home-selling season.
The homebuilder announced a 4 percent increase in sales contracts in the first fiscal quarter ending Dec. 31, and a net income of $123.2 million — its highest since 2006.
“In January, and especially in this last week, our sales have been better than expected,” says Donald Tomnitz, D.R. Horton’s chief executive. “I feel that we’re right on the cusp of a strong spring-selling season.”
In November, the builder had said that if sales signaled a slow start to the spring selling season it would try promotions such as free upgrades and assistance with closing to spur sales. But D.R. Horton says that sales are strong enough that it will mostly forgo incentives and raise home prices in some markets.
The average price of D.R. Horton homes under contract last quarter was $275,600, up 10 percent from last year.
The National Association of Home Builders predicts that new-home sales will increase 40 percent in 2014 over 2013. But any steep rise in mortgage rates and aggressive price increases from builders could derail that, housing analysts and economists warn.
The fact that D.R. Horton has “struck an optimistic chord gives us incremental confidence that the spring-selling season is off to a good start,” says Robert C. Wetenhall Jr., managing director of equity research at RBC Capital Markets.
Source: “D.R. Horton Says Strong Sales Allow It To Raise Prices,” The Wall Street Journal (Jan. 28, 2014)
Northwest Multiple Listing Service Annual Report – Recap of 2013 – A strong year for Real Estate!
Northwest MLS brokers report nearly $25.5 billion in sales for 2013, outgaining prior year in both number of homes sold and dollar volume!
KIRKLAND, Wash. (Jan. 22, 2014) – Members of Northwest Multiple Listing Service reported 75,517 closed sales during 2013, surpassing the 2012 volume by around 11,000 transactions for an increase of nearly 17 percent. Measured by dollars, last year’s sales of single family homes and condominiums were valued at nearly $25.5 billion to outgain the previous year by more than $5.5 billion (up 27.4 percent).
Last year’s completed sales included 65,122 single family homes and 10,395 condominiums, as tallied by nearly 21,000 real estate brokers in the 21 counties that make up the Northwest MLS service area. The total units and dollar volume are the best since 2007 when members registered 82,197 sales valued at $32.3 billion.
The area-wide median price for last year’s sales was $270,000, improving on the previous year’s figure of $245,000 (up 10.2 percent). A comparison by county shows median sales prices ranged from $118,750 in Pacific County to $372,000 in King County.
Prices for single family homes (excluding condominiums) also rose 10.2 percent from 2012, increasing from $255,000 to $281,000. Condo prices jumped 15.3 percent, rising from the 2012 figure of $175,200 to last year’s median price of $202,000.
By one measure, buyers who shopped during 2013 had a bigger selection as members added more than 104,000 listings to inventory during the year. That was an improvement over 2012 when members added 91,359 new listings. However, brisk sales meant the total number of active listings, which averaged 21,946 during 2013, fell below the previous year’s average of 24,604.
During 2013, the area-wide supply, as measured by months of inventory, ranged from a low of 1.95 in March to 3.68 in December. Industry watchers tend to use a 4-to-6 month range as an indicator of a balanced market, favoring neither buyers nor sellers. Supply tended to be tightest in King and Snohomish counties.
Further evidence of a housing recovery is reflected in high-end sales. Northwest MLS members reported 1,621 sales of single family homes priced at $1 million or more, up 45.2 percent from the 2012 total of 1,116 such sales. Condos priced at $1 million and up accounted for another 137 sales, about the same number as 2012 (138 sales).
The highest-priced single family home that sold during 2012 by a member of Northwest MLS was a property in Medina that fetched $9.75 million. A penthouse in downtown Seattle that sold for $6.2 million topped the condo list.
Among other highlights in its annual compilation of statistics, Northwest Multiple Listing Service reported:
– Single family homes accounted for 86 percent of last year’s residential sales.
– Nearly half (49 percent) of last year’s single family home sales were 3-bedroom homes. More than three-fourths (77 percent) of condos that sold had 2 bedrooms.
– The median price for a 3-bedroom home that sold in 2013 was $250,000. A comparison by county shows the median price for this size home ranged from $128,000 in Pacific County to $450,000 in San Juan County.
– Of the condo sales, about two-thirds (64.1 percent) were located in King County. Within that county, the Eastside edged out Seattle for the largest share (39.7 percent versus 37 percent).
– Last year’s sales included 8,298 newly built single family homes that sold for a median price of $325,000, and 846 condos that sold for a median price of $350,214.
– A 10-year comparison of median prices of single family homes shows prices peaked in most counties in 2007. In 2013, Grant County selling prices returned to 2007 levels, Okanogan prices were at 96.7 percent of 2007 prices, and King County prices were at 91.2 percent of 2007 prices. Other counties have not yet reached those levels, but most are experiencing steady gains.
– Prices vary widely among school districts. An analysis of some of the largest districts in the MLS market area shows single family homes on Mercer Island have the highest prices, followed by homes in the Bellevue, Issaquah, Lake Washington and Bainbridge school districts.
In addition to summarizing sales and listing activity, Northwest MLS also reported enhancements to several services for its members, including more capacity for displaying photos with each listing, additional fields to describe amenities (including “green” features), added apps for mobile devices, and a revamped member website with expanded functionality.
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 20,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.