Brokers say home buyers are back, but they're choosy
Posted November 5, 2014
KIRKLAND, Washington (Nov. 5, 2014) - Home buyers are back, and they're savvy and selective, according to officials who commented on the latest statistics from Northwest Multiple Listing Service. For sellers, that means pricing a home correctly at the start is vital, said industry veteran Kathy Estey, a member of the MLS board of directors.
The new report summarizing October activity shows year-over-year gains in new listings, pending sales, closed sales and prices.
Northwest MLS members reported 8,643 pending sales last month, which is up nearly 6.9 percent from twelve months ago when members reported 8,086 mutually accepted offers. Most of the increases are from sales of single family homes, which rose more than 7.8 percent while condo activity was flat with less than a 1 percent rise in sales.
"New listings that are coming on the market are receiving a substantially higher than normal sales activity," remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He said a backlog of buyers and shortage of homes across the most popular price segments are fueling a strong seller's market.
"Sellers who are thinking of putting their homes on the market are well advised to do so now," suggested Estey, the branch managing broker for the John L. Scott Bellevue Main office. Although the pace of sales has slowed somewhat since June, she said demand is steady, with about half of all new listings selling in the first 30 days.
Brokers are scrambling to keep inventory replenished as last month's pending sales of single family homes and condominiums (8,643) outpaced the number of new listings (8,102).
A comparison of total inventory shows a drop of nearly 3.7 percent from a year ago. At month end there were 23,501 active listings across 21 counties in the MLS database. That's nearly 900 fewer listings than the year-ago total of 24,391.
Inventory at the end of October, as measured by months of supply, stood at 3.24 months, a slight drop from the previous month's figure of 3.7 months. In King County there is less than two months of supply, well below the four-to-six month level that many industry analysts use as a gauge of a balanced market.
Not all counties experienced declining inventories. Five counties served by Northwest MLS reported gains in the number of active listings: Cowlitz, Grant, Ferry, Pierce, and Snohomish.
As the selection expands, buyers who have been on the sidelines are being lured back into the market, according to MLS director John Deely, principal managing broker at Coldwell Banker Bain in Seattle.
Deely noted sellers whose properties were languishing on the market are now seeing brisk activity and even multiple offers after adjusting their prices. "This activity indicates there is still strong buyer demand and that buyers are watching the inventory closely," he added.
"Watching some markets around the Puget Sound is like watching a championship tennis match, first a buyers' market, then a sellers' market," remarked George Moorhead, a board member for the multiple listing service. "As these shifts become more of a blend, as they have the last 18 months, we will see good balance and stability in our market with healthy growth and competition," stated Moorhead, the designated broker and owner of Bentley Properties/America's Home Caretakers in Bothell.
Another positive indicator during October was a healthy increase in closings. MLS members reported 7,257 closed sales during the month, a 7.5 percent gain from a year ago.
Prices on those sales were up 7 percent, rising from an area-wide median price of $271,000 to $290,000. Four counties reported double-digit price hikes, led by San Juan County, where prices jumped 18.4 percent, and Snohomish County, with a 17.4 percent year-over-year gain.
Despite only a slight improvement in the number of condo sales from a year ago, the median price system-wide surged more than 14 percent, rising from $200,000 to $228,500.
"It has never been more important to properly price properties," advised Deely. Despite recent news about easing of mortgage standards, he reported an increase in low appraisals, which can delay or jeopardize a transaction.
MLS director Dick Beeson agreed. "The main thing sellers are realizing is that buyers have lots of data to base a sound offer on and there is no "fluff" available when pricing their home for sale," he explained. Also, he emphasized, "Buyers are realizing they better take advantage of these incredible interest rates before they are gone, which could be after Jan. 1st."
Beeson, the principal managing broker at RE/MAX Professionals in Tacoma, said even with attractive rates, some new home buyers are "struggling with the noose of student debt" as they try to meet underwriting standards currently imposed by lenders. There's no easy way out of the student debt, but he expects lending standards will improve.
Also crimping activity is the practice of a delayed seller's review of offers. "Interestingly, new listings without the delayed review restrictions are often not selling immediately, but in a few days or within a week there are suddenly multiple offers," Estey reported. "Many buyers are just not willing to compete, so they wait to see what happens with a new listing, then ultimately end up in competition."
Diedre Haines, another MLS director, said seasonal factors are starting to affect activity. "We are seeing the beginning signs of the post-election, year-end, holiday slowdowns," she remarked, but described them as "modest" compared to past history. "First time and second time move-up buyers are still in abundance, but they're taking their time in making decisions and offers," according to Haines, the regional managing broker for Snohomish County at Coldwell Banker Bain.
Commenting on anticipated increases in interest rates, Haines said they are not expected to be dramatic. "The recent changes in FHFA's easing of standards for mortgage qualifications will give the buyers' ability to buy a major boost in the coming year," she predicts. She also expects the relaxed qualifications will spur an increase in activity during the first quarter of 2015 and continuing throughout the year.
Northwest MLS brokers also commented on distressed sales and upticks in remodeling and new construction.
REO (bank-owned) inventory levels have continued to fall, according to an analysis by Moorhead, who also found a slight increase in foreclosure filings, "but nothing alarming for the local economy."
Haines reports more buyers, "first time and otherwise," are completing major renovations on their purchases before moving into that property. She said the most common improvements are kitchen and bathroom updates or makeovers, along with patios, decks and garage extensions.
"With the promise of increases in new construction by local builders, a positive economic forecast for the region, and more homeowners surfacing from being "under water" and now able to sell due to increase in appreciation, 2015 is gearing up to be as active if not more so than 2014," Haines stated.
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 23 counties in Washington state.
Statistical Summary by Counties: Market Activity Summary - October 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|
* 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)