Home Sales Shrink
Buyers Take a Timeout Due to Inventory shortages
Northwest Multiple Listing Service brokers reported 507 fewer pending sales during February than the same month in 2013, but members believe the 6.5 percent decline isn't due to a shortage of buyers. "If we just had enough homes to sell we would easily be outpacing last year's pending numbers," said Mike Gain, CEO and president of Berkshire Hathaway HomeServices Northwest Real Estate. "Locally, we are literally starving for inventory," he added.
MLS members reported 7,247 mutually accepted offers on single family homes and condominiums last month, which compares to 7,754 pending sales for the same month last year. Twelve of the 21 counties in the Northwest MLS service area reported drops, including King County where sales were off 10.4 percent. Within King County, the sharpest drops occurred in the southeast segment (down more than 23 percent) and on the Eastside (down more than 16 percent).
Another industry leader pointed not only to a "severe shortage of homes for sale" in the most sought-after price ranges, but also to the fan frenzy surrounding the Seahawks as a factor in the setback of sales. "The Seahawks' run to the Super Bowl affected sales," reported J. Lennox Scott. Since the Super Bowl Championship game, he said listing activity has picked up, resulting in brisk sales activity for the new, but still limited inventory.
MLS brokers added 7,234 new listings to inventory last month, down from February 2013 when 7,497 properties were listed. The additions, which include single family homes and condos, brought February's number of total active listings system-wide to 19,273 for a 6.4 percent improvement from a year ago.
Shortages of listings persist in several areas. In Kitsap County, for example, both selection and the number of pending sales fell by nearly 3 percent from a year ago. Northwest MLS director Frank Wilson said even though houses are not coming on the market quite as fast, he expects the pace to pick up. "As we swing into our spring market, more listings will be added," he stated, but predicts the improvement in listings will be "tempered by an increase in buyers, too."
Wilson, the branch managing broker at John L. Scott, Inc. in Poulsbo, reported buyers are still very active "because they are sure interest rates will be higher tomorrow than they are today." He described today's market as normal "where the relationship of inventory to buyers is balanced, appreciation is manageable, and there is sanity in the market place." This does not mean it cannot "get crazed at times," he added.
The smaller selection is resulting in bidding wars for well-priced homes in some neighborhoods. Multiple offer situations are common in local markets with less than four months of inventory, according to Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma and a member of the Northwest MLS board of directors. He noted traffic has been "very good" at open houses. "These are harbingers of a medium- to fast-paced spring and summer selling seasons," he suggested.
Beeson also believes inventory gains in the tri-county area are a healthy sign for a more balanced market.
Another MLS director, George Moorhead of Bentley Properties in Bothell, is not alarmed by the scaled back sales. "Lower pending sales are not uncommon" after the holidays, he explained. He believes interest rates will "truly be the deciding factor" on the market's direction. "If rates go up significantly, buyers back off, and when buyers back off, home prices soften," he explained.
Moorhead said the message to potential buyers is "get your financials updated with your lender and be ready to lock in terms." For sellers on the fence, he recommends "stepping forward," saying "interest rates will rise this year."
Statistics from Northwest MLS show supplies, as measured by months of inventory, improved slightly from a year ago, rising from 4.3 months to almost 4.6 months. The tightest selection is in King County, with less than 2.6 months of supply, and Snohomish County, with 3.2 months.
MLS figures show the volume of closed sales was about the same as a year ago. Members reported 4,196 completed transactions during February, nearly matching the year-ago total of 4,205 closings.
Prices on last month's closed sales rose about 6.3 percent from a year ago and 3.1 percent from January, but the gains were not system wide. Nine counties reported year-over-year increases. Area-wide the median price was $263,000; a year ago it was $247,500.
For single family homes (excluding condos), the median price was $270,000, for a gain of nearly 5.9 percent from the year-ago price of $255,000. Prices in King, Pierce and Snohomish counties shot up more than 11 percent from a year ago. Homes in King County had a median selling price of $405,400.
Condo prices surged more than 17 percent. The median selling price on 608 sales that closed during February was $215,500. Twelve months ago the median price was $184,000.
Commenting on "intense multiple offer market conditions" in several communities within Seattle, one broker advised buyers to not give up. "There are several communities nearby or just outside the immediate in-city markets that have good value listings that deserve closer attention," stated Gary O'Leyar, designated broker/owner of Prudential Signature Properties. "My advice to frustrated buyers is to broaden their search parameters and look beyond Seattle's 'white hot' zones and you'll find some great properties at good prices," he added.
With increasing equity, many current homeowners are expected to come into the market. "This is the year of the move-up seller," declared MLS director John Deely. He believes many people who currently own a home will move into a "nicer home, a bigger home, or a home in a different part of town."
People who didn't have enough equity in their house, or didn't have enough confidence in the economy didn't move the past few years," said Deely, the principal managing broker at Coldwell Banker Bain in Seattle. "We're going to see these people start to come to the market this spring. This is going to be a phenomenal year - not just an average year - a phenomenal year," he remarked.
Mike Gain, a past chairman of the MLS board, agreed now is "a perfect time for move up sellers and buyers." He said normalcy is finally returning to residential real estate, and the Seattle area continues to be an attractive destination for relocating families and investors. "Homeownership is still very important to most people," he noted, citing various research. "With rents continuing to rise, it makes buying a home today a very smart decision."
"We are on a clear and healthy path of recovery and home values are expected to continue to rise," Gain commented. With inventory at "dangerously low levels" and a high percentage of sales experiencing multiple offers, "we clearly have way more ready, willing and able buyers and not enough sellers," he continued, adding, "Anyone who is even considering selling a home should do it now. We have plenty of buyers who are just waiting to find the right home to purchase."
Buyers and sellers alike would benefit by asking their real estate broker what they need to do to be successful in today's market, according to Frank Wilson, who is also the Kitsap district manager at John L. Scott. "Buyers should expect and be prepared to compete with other buyers, and sellers should expect to list their homes at or close to market value," he explained.
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.
Statistical Summary by Counties: Market Activity Summary - February 2014
|CLOSED SALES||*MONTHS of INVENTORY|
|# Pending |
|This Month||Same |
4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)
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