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August 2014

No Summer Slowdown Expected

Brokers Report Brisk Activity

By NWREporter

August 2014

NWMLS, KIRKLAND, WA, July 3, 2014 - Listing activity perked up during June, but strong job growth in the Seattle/King County region has brokers predicting brisk sales with competitive bidding throughout the summer.

Figures just released by Northwest Multiple Listing Service for June activity show gains from a year ago on several key indicators, including inventory, pending sales, closed sales, and prices:

  • Brokers added 735 more new listings during June than during the same month a year ago, an increase of 6.8 percent;
  • Inventory (total active listings) rose 7.5 percent compared to twelve months ago;
  • Pending sales (mutually accepted offers) are up about 4.5 percent year-over-year;
  • Closed sales rose 3.3 percent from a year ago;
  • Prices for sales of single family homes and condominiums climbed 6.9 percent from same period last year, reaching the highest level since August 2008.

"We are still suffering from low inventory in parts of Snohomish County, and we're still seeing multiple offers on the majority of new listings," reported Diedre Haines, regional managing broker in Snohomish County for Coldwell Banker Bain and a director with Northwest MLS. She described the market as "strange," adding, "We are not feeling or sensing the onset of a typical summer slowdown."

Even though figures for Snohomish County show sizable gains in the number of listings in many areas, Haines said good quality listings in the most desirable areas are "greatly needed as buyers, sellers, and agents all long for a more balanced market." New listings that are of high quality and priced correctly are attracting multiple offers, she reported.

Supply, as measured by the ratio between listings and sales, remains tight across many of the 21 counties in the Northwest MLS system. King County shows only 1.8 months of inventory, with Snohomish slightly better with about 2.8 months of supply. Area-wide, there is 3.35 months of inventory. Many industry experts consider 4-to-6 months to be the barometer for a balanced market.

Northwest MLS chairman Darin Stenvers said "not all sellers are feeling movement in their markets," noting in some northern parts of the state the summer selling season got a late start. In Whatcom County, where his office is located, inventory rose about 4.5 percent in June compared to a year ago, while pending sales jumped 17 percent. Prices are up more than 9 percent in that county.

Stenvers, the office managing broker at John L. Scott in Bellingham, said buyers would be "well advised" to monitor interest rates, since they have a tendency to move up as summer winds down. "This is a very good time for real estate investing with confidence and value," he stated.

New home starts and a higher demand for employees will help keep the outlook optimistic, Stenvers believes - a view shared by other brokers.

John Deely, principal managing broker at Coldwell Banker Bain in Seattle, expects the brisk market to continue into fall, citing low interest rates, increasing prices and inventory, and high demand as drivers of the positive activity.

"Brokers in the Seattle market are keeping busy as multiple offers and cash buyers dominate new, well priced listings in most markets," commented Deely, a director with Northwest MLS. The market for homes priced at $1 million and up around Seattle is experiencing pending sales volume at levels not seen since 2007, according to his analysis.

Haines also commented on all-cash activity, saying investors paying all cash or with very large down payments are "still major players."

Deely has also noticed a "marked increase in the number of contingent offers being written and accepted."  He spoke of one listing that drew four offers, with two of them contingent on the sale of the buyer's home, and the other two cash. The seller elected to accept one of the contingent offers because of more favorable terms, as well as because the buyers already lived in the neighborhood and the seller was confident that neighbor's home would sell quickly due to activity in the surrounding area.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, shares the optimism. Pointing to recent reports on the addition of 14,400 jobs in the tri-county area (more than any two month period since the beginning of 2007), he expects a "red hot summer selling season."  Scott also credits lower interest rates with fueling what he described as a "mini power surge of sales."

"Close to the job centers we have a severe shortage of homes for sale," Scott said, adding "Above the one million dollar price point we are also experiencing very strong sales activity with a shortage of supply."

Brokers reported 9,909 pending sales during June, outgaining a year ago by 425 transactions for an increase of nearly 4.5 percent. Ten counties reported double-digit increases. Last month's pending sales, although up from 12 months ago, declined compared to May (down about 4.5 percent).

Low appraisals are still a concern as a potential deal-killer on some pending sales, Haines reported. "We are experiencing an increase in low appraisals," she stated, explaining sometimes the difference between the sale price and appraised price can be as little as $1,500. "In most low appraisal situations, the buyers are willing and able to make up the difference by increasing their down payment."

June's closed sales (completed transactions) climbed about 3.3 percent from a year ago. Brokers reported 7,558 closings during June, surpassing May's mark by 371 transactions for a gain of nearly 5.2 percent.

The median price system-wide was just under $300,000 ($299,335), which represents an increase of more than 6.9 percent from a year ago. The last time the median price topped $300,000 for the overall area was August 2008 when it was $302,500.

King County continues to report the highest median price for single family homes and condos (combined) at $410,000. That's up 7 percent from a year ago. For single family homes (excluding condos) the county-wide price jumped more than 6 percent compared to a year ago, rising from $427,500 to $453,500.

Deely said the steady increase in prices appears to be incentivizing otherwise dormant sellers to make their move to buy and sell.

Commenting on the competition between buyers, Stenvers encouraged buyers to take advantage of technology. "Buyers that want fast, accurate data should work with a real estate professional to have a home search set up so results can be emailed directly to them," he suggested. "This will allow them first shot at all the new listings and reduce the chance of missing hot new inventory."

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 - June 2014

Single Fam. Homes + Condos LISTINGS PENDING
SALES
CLOSED SALES *Months of Inventory
New Listings Total Active # Pending Sales # Closings Avg Price Median Price This month Same mo., year ago
King 4,228 5,609 3,953 3,109 $511,181 $410,000 1.80 1.73
Snohomish 1,710 2,764 1,545 1,220 $339,040 $313,375 2.27 1.75
Pierce 1,699 3,815 1,555 1,085 $254,897 $229,950 3.52 2.89
Kitsap 599 1,462 493 409 $312,665 $250,000 3.57 3.85
Mason 206 774 127 82 $179,768 $167,300 9.44 13.38
Skagit 247 823 231 153 $277,771 $230,000 5.38 4.75
Grays Harbor 197 823 103 84 $137,635 $131,900 9.80 12.53
Lewis 161 643 116 66 $155,916 $145,000 9.74 13.60
Cowlitz 172 548 130 79 $182,357 $170,000 6.94 5.10
Grant 126 536 92 84 $178,546 $159,544 6.38 8.55
Thurston 593 1,402 481 355 $248,856 $236,000 3.95 3.54
San Juan 72 434 25 23 $409,946 $329,000 18.87 42.60
Island 210 785 196 142 $308,854 $258,250 5.53 7.11
Kittitas 141 514 86 60 $309,422 $222,450 8.57 7.82
Jefferson 95 440 51 51 $275,159 $230,000 8.63 11.13
Okanogan 97 515 45 24 $233,583 $168,250 21.46 21.55
Whatcom 506 1,617 377 290 $304,840 $270,625 5.58 5.63
Clark 79 166 57 64 $300,118 $234,250 2.59 2.90
Pacific 84 458 57 24 $161,445 $143,500 19.08 18.76
Ferry 16 73 1 4 $163,875 $156,750 18.25 36.50
Clallam 104 445 68 51 $214,421 $210,000 8.73 8.70
Others 199 696 120 99 $263,266 $217,000 7.03 7.89
MLS TOTAL 11,541 25,342 9,909 7,558 $376,397 $299,335 3.35 3.22

* Months of inventory are calculated using active listings divided by closed sales.

4-county Puget Sound Region Pending Sales (SFH + Condo combined)
(totals include King, Snohomish, Pierce & Kitsap counties)

  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000 3706 4778 5903 5116 5490 5079 4928 5432 4569 4675 4126 3166
2001 4334 5056 5722 5399 5631 5568 5434 5544 4040 4387 4155 3430
2002 4293 4735 5569 5436 6131 5212 5525 6215 5394 5777 4966 4153
2003 4746 5290 6889 6837 7148 7202 7673 7135 6698 6552 4904 4454
2004 4521 6284 8073 7910 7888 8186 7583 7464 6984 6761 6228 5195
2005 5426 6833 8801 8420 8610 8896 8207 8784 7561 7157 6188 4837
2006 5275 6032 8174 7651 8411 8094 7121 7692 6216 6403 5292 4346
2007 4869 6239 7192 6974 7311 6876 6371 5580 4153 4447 3896 2975
2008 3291 4167 4520 4624 4526 4765 4580 4584 4445 3346 2841 2432
2009 3250 3407 4262 5372 5498 5963 5551 5764 5825 5702 3829 3440
2010 4381 5211 6821 7368 4058 4239 4306 4520 4350 4376 3938 3474
2011 4272 4767 6049 5732 5963 5868 5657 5944 5299 5384 4814 4197
2012 4921 6069 7386 7015 7295 6733 6489 6341 5871 6453 5188 4181
2013 5548 6095 7400 7462 7743 7374 7264 6916 5951 6222 5083 3957
2014 5406 5587 7099 7325 8055 7546