Brokers report "high velocity" market, but with hope for homebuyers
KIRKLAND, Washington (Feb. 6, 2017) - Western Washington's "high velocity" market continued during January with the number of pending sales (7,745) outgaining the number of new listings (6,507), according to new figures from Northwest Multiple Listing Service.
"Properties are moving through the market at an unusually fast pace," remarked John Deely, chairman of the board at Northwest MLS and the principal managing broker at Coldwell Banker Bain. "Although we have a high number of new listings, they are moving into a pending or sold status within the typical 30-day reporting period. This phenomenon causes a low active listing count," he added.
Brokers added 6,507 new listings to inventory last month (163 fewer than during the same period a year ago), while year-over-year pending sales jumped by 492 transactions for a gain of about 6.8 percent. New listing volume was the highest monthly total since October when members added 7,591 properties.
At month-end, there were 9,752 active listings in the MLS service area, which encompasses 23 counties. That total was 2,605 fewer than the year-ago volume of 12,357, a decline of 21 percent. Only three counties (Ferry, Jefferson and Kitsap) reported improvements in the number of active listings compared to the same month last year.
Measured by months of inventory, the selection is at historic lows in many counties. At month end, there was just under 1.7 months of supply system-wide, which compares to the year-ago figure of about 2.5 months of supply. Both King and Snohomish counties have less than one month of supply.
"If home buyers were hoping that January would start to bring more balance to the housing market, they're going to be sorely disappointed. The number of homes for sale remains at record lows, and the growth in pending sales tells us that sellers are still firmly in the driver's seat," said OB Jacobi, president of Windermere Real Estate.
MLS director George Moorhead echoed Jacobi, pointing to five years ago when buyers could choose from 5,378 listings of single family homes in King County versus last month's selection of 1,569 listings. "The real question is whether there will be relief in the near future, and the unfortunate answer is no," said Moorhead, the designated broker at Bentley Properties, citing the combination of new jobs, a shortage of new homes, and a reluctance of sellers to list their home for fear of not being able to find their next one.
Commenting on "typical seasonal and beginning of the year adjustments," one company president said he is encouraged by new listing activity. "There is no indication that the annualized trend of shrinking active inventory will reverse itself anytime soon, but we're seeing momentary bubbles of increased inventory for buyers currently in the market" noted Mike Grady, president and COO of Coldwell Banker Bain.
"List it and they will come" is the new mantra as new listings come on the market, commented J. Lennox Scott, chairman and CEO of John L. Scott. Despite having more sales than new listings over the past few months, Scott said there is hope for homebuyers. "As the days start getting longer the future will look brighter for the backlog of buyers waiting to find a home." Describing February as the bridge month between winter and spring markets, Scott expects to start seeing an increase in the number of new listings.
"Buyers who are properly positioned to make quick decisions, and who have the proper negotiation tactics and guidance are finding success in this high velocity market," Deely reported.
Not surprisingly given the imbalance in supply and demand, prices continue to rise. Last month's median price for the 5,874 completed sales of single family homes and condominiums was $327,175, up 9 percent from the year ago figure of $300,000. There were 889 more closed sales in January than for the same month a year ago for a 17.8 percent increase.
Single family home prices (excluding condos) increased 9 percent, rising from $309,950 to $338,000. The median price for single family homes that sold in King County last month was $525,000, up more than 6.9 percent from the year-ago sales price of $490,970. Several outlying counties reported double-digit gains.
"The softening of single family home prices in King County over the last few months, combined with the relatively large price increase in Snohomish County (8.2 percent) suggests buyers are migrating north in order to find more affordable housing," said Jacobi.
Brokers in Pierce and Kitsap counties also reported price hikes larger than King County's. The median price of a single family home in Pierce County jumped nearly 11.6 percent from a year ago while the year-over-year price in Kitsap was up 9.4 percent.
Condo prices rose 5.5 percent in January compared to a year ago, increasing from $255,750 to $289,900. King County condo prices surged more than 9.8 percent, from $282,250 to $310,000.
"For buyers, it is a good news/bad news scenario in Kitsap County," reported MLS director Frank Wilson. "More houses came on the market last month than a year ago, but pending sales surpassed that number to keep the market tight. Brokers navigated these challenges and buyers endured, "but the tightness will likely be magnified during 2017," said Wilson, the branch managing broker at John L. Scott in Poulsbo.
Wilson said open house traffic has "started off with a bang" as more buyers have decided now is the time to buy, believing that prices will only continue to rise." He expects escalation clauses, multiple offer situations and backup offers to "be the norm during the first quarter. The hierarchy of purchasers: cash, conventional loan, VA loan, and FHA financing will continue to be the pecking order," he stated.
"We're seeing the frenzy change to a fanatical desire to own a home as buyers scramble to beat increasing interest rates," reported Moorhead. He expects the Feds to increase rates two more times between now and April, "and that will only increase buyers' aggressive tactics to secure a home," he suggested.
Moorhead also noted sellers are able to "get away with putting homes on the market in conditions that historically would be rejected by buyers." Now, however, Moorhead said buyers are willing to turn a blind eye to repairs and future maintenance.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of nearly 2,100 member offices includes more than 25,000 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)