Holiday shoppers include homebuyers, but inventory is still a challenge
KIRKLAND, Washington (December 6, 2017) - "Normal seasonal slowdowns" are reported by some real estate leaders with Northwest Multiple Listing Service, but other brokers say this holiday season is still drawing crowds at open houses along with competitive bidding in some neighborhoods.
Both inventory and pending sales dipped to their lowest levels since April, while prices still increased by double-digits in most of the 23 counties served by Northwest MLS.
MLS members reported 8,304 pending sales of single family homes and condos, a slight (1.6 percent) gain over the year-ago figure of 8,173. Last month's mutually accepted offers surpassed the number of new listings (6,098) by 2,206 properties to keep supply tight.
"Until we see a balanced rate of 4-to-5 months of supply, instead of hovering around one month, we're not likely to see much change," remarked George Moorhead, designated broker at Bentley Properties. "However," he added, "since we have seen these low inventory levels since 2013, maybe this is going to be the new normal."
Moorhead, a member of the Northwest MLS board of directors, also said this time of year is actually one of the best times to find a home. "There is less competition and sellers who list their homes at this time are usually motivated to make their move. Some of the best pricing can be attained from December through early February," he indicated.
Buyers seem to be undeterred by winter weather, holiday festivities or other seasonal or - for the most part -- political distractions.
Gary O'Leyar, designated broker/owner of Berkshire Hathaway HomeServices Signature Properties, said December "may well provide an unexpected holiday reprieve for our local, weary real estate shoppers. Combined with the seasonal pace change and real estate industry pundits' consternation over the effect of the federal income tax bill working its way through Congress, buyers could be getting some relief." He urged potential sellers to take note as "This could be the signal they've been waiting for as a good time to sell before the pending tax laws that affect real estate ownership take effect."
For those who are both prepared and patient, OB Jacobi, president of Windermere Real Estate, said the holidays can actually be a great time to buy "because there is usually less competition and sellers are motivated to close out the year with a sale."
More than 8,000 sellers found November to be a good time complete sales. Closed sales rose about 2.5 percent year-over-year, from 7,872 transactions to 8,068. Sales of single family homes (excluding condos) rose about 3.3 percent, but the volume of condos fell about 2.6 percent, likely due to limited selection.
"Open houses this past weekend drew strong traffic," reported Northwest MLS chairman John Deely, principal managing broker at Coldwell Banker Bain. He said more than a hundred groups toured a condo in the Lake Union area.
"The Seattle market is inundated with technology workers, both newly relocated and those that have been renting and are ready to set down roots," Deely noted, adding "Investors both large and small are stepping up their purchasing, signaling strong confidence in the Greater Seattle area."
Strong demand is not confined to Seattle.
"The velocity of market means that every time a new listing is added all eyes focus like a laser beam to see what just happened," said Dick Beeson, principal managing broker at RE/MAX Professionals in Gig Harbor. "If a worthy property comes on the market, buyers know it instantly as the information is streamed through every device known to man. Buyers step up and buy, quickly and efficiently."
Brokers are noticing the buyers include growing numbers of millennials.
"Millennial buyers continue to enter the market but the extremely low inventory is hampering their success rate in finding and securing a purchase," said Diedre Haines, principal managing broker-South Snohomish County at Coldwell Banker Bain in Lynnwood.
Haines said November activity started slow, but definitely picked up later in the month. "Earlier this year I feared signs that a bubble was building, but I no longer see that happening," she stated.
"While we continued to experience more of the same in November related to a lack of inventory, we are seeing more homes sold year-to-date," observed Mike Grady, president and COO of Coldwell Banker Bain. He noted the number of new listings in King County for November increased more than 7 percent compared to last year.
Area-wide, the volume of new listings added during November rose nearly 5.6 percent (from 5,776 to 6,098) compared to the same month a year ago.
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, described sales activity for new listings as "extremely strong." Despite lower overall volumes of new listings and sales, Scott said the majority of new listings are selling within their first 30 days on the market. He calculated November's pending sales of single family homes outgained new listings by nearly 41 percent.
Despite improvements in new listings, brisk sales kept inventory well below year-ago levels. "King County is still experiencing double-digit reductions in inventory compared to this same time last year, but the shortage is even more pronounced in some outlying counties," Grady noted, commenting "We're not just talking about the main commuter counties."
Significant decreases in inventory are found in Thurston (down 31 percent), Mason (down more than 26 percent), and Cowlitz (down more than 39 percent) counties. MLS figures show inventory is down more than 24 percent in Snohomish County and nearly 29 percent in Kitsap County. Across the 23 counties, it's down about 15.9 percent.
Measured by months of supply, there is about 1.4 months of inventory overall. In King County, supply has dwindled to 0.79 months, and only slightly better, at 0.89 months, in Snohomish County.
Home values continue to escalate across the region. The system-wide median price of $379,000 was up 10.8 percent from a year ago, with 15 counties reporting even sharper gains.
In King County the median price for single family homes and condos combined jumped 15.6 percent, from $497,254 to $575,000. For single family homes (excluding condos), the median price was $630,750, up nearly 14.7 percent from last year. Condo prices surged 17.1 percent, due to a combination of depleted inventory (down 28 percent from a year ago) and higher prices for new condos. (In King County, the condo component classified as new construction that sold during November had a median price of $873,490.)
Commenting on prices, Haines emphasized wide variations are found when comparing median sales price within most counties. In Snohomish County, for example, the median price for homes and condos that sold in Mill Creek was $590,000, while in Darrington it was $191,475. Similarly, in King County, the median price for Bellevue homes and condos was $875,000; in Tukwila the sales price was $321,194. Brokers tend to concur prices may moderate in the coming year.
"Can we as an industry sustain this 10-to-15 percent increase in prices again in 2018? I don't think so, but I don't know," remarked Beeson, adding, "I only know that when sellers decide to get serious and sell their home by finally setting the right price or finally improving the condition of their property to justify their price magic happens. Houses sell, people move, lives change forever."
"Prices are expected to see some much needed slowdown in 2018 which will help bring more balance to the market," stated Jacobi, who also believes a housing bubble is unlikely. "Rising home prices on their own don't lead to a bubble; a number of other factors have to come into play."
Moorhead agreed, saying he expects 2018 "will be less glamorous with 6-to-8 percent appreciation, or even a slight flattening of the market for 8-to-12 months." Commenting on modest gains in income, at around 2.5 percent, he remarked "No wonder buyers in the market are so frustrated and willing to make significant concessions to secure their next home. It's like chasing a train where you just cannot catch up and only the fastest can get on."
Brokers tended to agree some of the provisions in the widely anticipated tax reform have "the potential to negatively affect home values nationwide." Haines said a drop in sales is expected if the proposed bill as it stands is passed.
Notwithstanding the uncertainty around tax reform, Scott remains confident: "Market conditions are set for another robust market in the year 2018," he stated.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of more than 2,200 member offices includes more than 26,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in the state.
Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)