Western Washington housing market in "recovery mode"
but some brokers say it's still not at full potential
NWMLS, Kirkland, WA, August 6, 2014. More sellers listed their homes for sale during July compared to a year ago, but brokers with Northwest Multiple Listing Service say inventory remains "well below" what is considered to be a balanced market. Last month's pending sales rose slightly from a year ago while prices system-wide increased nearly 6.3 percent.
"Some agents and firms are beginning to feel the summer doldrums, while others are experiencing a definite increase in activity," observed Diedre Haines, regional managing broker-Snohomish County for Coldwell Banker Bain. Haines, a director with Northwest MLS, described price increases as "healthy, not exorbitant," adding, "Thankfully we are not seeing signs of a bubble and instead are seeing realistic appreciation." Nevertheless, she suggested sellers who overprice their properties can face disappointing consequences.
Inventory improved from 12 months ago, rising from 25,272 active listings to 26,813 for a 6.1 percent increase. Snohomish County notched the biggest gain with the selection there expanding by 27 percent.
Months of inventory (the ratio of active listings and closed sales) stood at 3.4 months at the end of July, a modest improvement from June's figure of 3.35 months. In King County, there is less than two months of supply, with the Ballard/Green Lake and North Seattle neighborhoods having only about one month.
Matt Deasy, general manager at Windermere Real Estate/East in Bellevue, said King County's slowly improving supply should reduce "the frenzy pace we experienced in the spring," although he was quick to point out that highly desired neighborhoods remain frenzied. Deasy noted inventory in King County is up 35 percent since April, rising from 4,511 active listings to 6,082 at the end of July.
MLS members added 11,437 new listings system-wide during July, up from the year-ago total of 10,860. Single family homes accounted for 88 percent of the new listings.
"Inventory levels are still the main concern in many areas," remarked MLS director George Moorhead, designated broker and owner of Bentley Properties in Bothell. He said buyers complain "there just isn't enough to look at, then when something great does come up there are multiple offers." Unlike many previous years, Moorhead said "this year, we have seen weeks of aggressive activity."
Mike Gain, CEO and president of Berkshire Hathaway HomeServices Northwest Real Estate, also commented on supply. "Although the housing inventory locally is up slightly, we just don't have enough of the right inventory in the right neighborhoods to satisfy the demand. Our inventory today in King County is under 1.9 months' supply," he lamented, noting that's well below the normal level of 5-to-6 months. "The lack of supply leads to multiple offers and many properties selling for above their list prices."
An uptick in housing construction appears to be easing some of the shortages.
"Developer and builder confidence in the Seattle market has been steady with real estate developers shifting away from building apartments and moving to condos," observed John Deely, principal managing broker at Coldwell Banker Bain in Seattle. As an example, he mentioned new ground breakings announced in July that will add significantly to the nearly 500 units currently under construction.
MLS director Dick Beeson said open house traffic is "seasonably strong," but it's still considered a seller's market in many areas. He also commented on trends for reviewing offers. "Brokers are allowing new-on-the-market properties to 'age' at least one weekend before reviewing offers," he noted. "This tends to frustrate buyers, but sellers like the energy this can bring to their side if the equation," said Beeson, principal managing broker at RE/MAX Professionals in Tacoma.
Northwest MLS members reported 9,615 pending sales (mutually accepted offers) during July, just slightly more than the year-ago figure of 9,565 for a 0.5 percent gain. Despite the modest increase, about half the counties - including those in the Central Puget Sound region - had fewer year-over-year sales.
Brokers point to the quality of some properties and unrealistic pricing as factors that are hindering sales.
Both buyers and brokers shy away from listings that are overpriced, of poor quality or bank owned auction listings, explained Haines. "Sellers should be advised that overpriced listings will not garner offers," she emphasized. Buyers will walk away from them and in many cases simply wait for the price to be reduced rather than make a low offer, according to Haines. Overpriced listings stigmatize the property, often driving the sale price below the market value, she cautioned.
Haines, who has worked as a real estate professional for more than 30 years, said a property's condition and appearance are also very important key elements. "Properties that are well priced, in good condition, staged for the best presentation, and of course in key locations are still receiving multiple offers," she commented.
Homes and condos that sold during July had a median price of $300,000. That's up 6.25 percent from twelve months ago when the median sales price was $282,363, and up slightly from June's figure of $299,335.
Residential properties in King County sold for a median price of $425,000, an increase of more than 6.5 percent compared to a year ago. About 80 percent of last month's sales in King County were single family homes. They sold for a median price of $468,000, an increase of 7.8 percent from the same month a year ago. The median price for condos that sold in King County during July was $250,000. That reflects a jump of 8.2 percent from the year-ago selling price of $231,000.
Deely said rising prices are bringing more sellers into the market. Open house traffic is strong in Seattle's central core neighborhood with more than 100 people typically viewing homes each weekend day, he reported. Deely, who is also a director with Northwest MLS, said relocating buyers employed in the technology sector "dominate the current transfers looking at homes in the core Seattle markets."
MLS director Frank Wilson, branch managing broker at John L. Scott in Poulsbo, said activity in Kitsap County, as measured by open house traffic and transactions, has slowed somewhat as families focus on vacations and summertime activities. "Although the number of transactions is down slightly when compared to last July, the real story in Kitsap is that there are fewer listings available than a year ago." Home prices in that county have begun to creep up "taking far longer to turn upwards than some other parts of our state," he noted. He believes the market "is still not at full potential," due in part to buyers who went through a foreclosure or short sale and are now renting.
The median price for homes that sold in Kitsap County last month was $252,250, an increase of nearly 8.3 percent compared to July 2013. Bainbridge Island was the most active MLS area in Kitsap, which Wilson said "makes sense as it is the doorway to Kitsap and the first place buyers look when they can't find what they need on the Seattle side."
Wilson said buyers need to be prepared to compete in today's market where inventory is low and loan underwriters are being strict about loan approvals. "Buyers need to provide all papers and documents requested by the lender quickly and completely, and be approved for their loan before looking," he suggested. He also urged house-hunters to avoid buying big ticket items during their search process as it could affect purchasing power.
Gain suggested now is a good time for renters to consider buying. "In many markets, like ours in and around Seattle, Tacoma and Bellevue, it actually costs more to rent a home than to purchase one," he stated.
Looking ahead, brokers are upbeat:
"A growing economy, job growth, pent up demand, competitive mortgage rates, affordable home prices and low unemployment will keep housing moving on an upward trajectory," predicts Gain.
Haines also cited rising consumer confidence, favorable interest rates and job growth as positives for the housing market. "We are beginning to see an increase in new licensees and many of them are experiencing a very good start in their new career. This is another sign of a healthier market," she remarked, adding, "Now if we can just find the inventory balance that we all long for!"
Beeson expects a slightly better fall and winter than last year. "Market resiliency is strong."
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.
Click here for Statistical Summary by Counties: Market Activity Summary - July 2014, and 4-County Puget Sound Region Pending Sales