Home buyers seeking affordability are expanding search outside Greater Seattle job centers
KIRKLAND, Washington (September 9, 2019) - Depleted inventory continues to frustrate would-be buyers in Western Washington. Many of these potential homeowners are expanding their search beyond the major job centers in King County, according to market watchers who commented on the latest statistics from Northwest Multiple Listing Service.
The MLS report summarizing August activity shows less than two months of supply system-wide, and only about 1.6 months of supply in the four-county Puget Sound region. The sparse selection is pushing up prices. For last month's sales of single family homes and condos across the 23 counties served by Northwest MLS, prices rose nearly 6.2% compared to a year ago.
"Areas immediately outside the Puget Sound region and along the I-5 corridor continue to see double-digit house price growth," noted James Young, director of the Washington Center for Real Estate Research (WCRER) at the University of Washington. He attributes the increase to high demand in these areas "due to first-time homebuyers who struggle to afford housing in King and Snohomish counties as well as from existing homeowners cashing out of Seattle and King County."
"While August is always a slower time for listings and sales, what is really surprising this year is the decrease in new listings taken, while pending sales increased," observed Mike Grady, president and COO of Coldwell Banker Bain.
A comparison of year-over-year statistics for August shows the volume of new listings dropped nearly 13% system-wide and 18.5% in King County. Last month's total number of new listings (10,488) declined 6.3% from July's volume (11,193).
Brokers reported 10,602 pending sales (mutually accepted offers) during August for a 4.9% increase from a year ago. Pending sales rose nearly 6.6% in the Puget Sound region, led by Snohomish County with a gain of 15.8%. Six counties had double-digit gains while an equal number had declines.
Grady noted June and July were also lackluster this year with regard to listings "when typically they are both still fairly active coming off spring. The pending sales numbers indicate that buyers are indeed out there and willing to purchase, but there are simply not enough homes," he commented, adding, "Everything that is listed is getting sold and fairly quickly."
The volume of total active listings is down more than 10% from a year ago, with only four of the 23 counties in the report showing a year-over-year increase (Chelan, Grays Harbor, San Juan and Whatcom). Fourteen counties had double-digit drops. At month end there were 16,697 active listings in the MLS database, down from the year-ago total of 18,580.
MLS figures show only seven counties have more than three months of supply, with four-to-six months generally considered the volume needed for a balanced market.
Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo, also commented on depleted inventory, but expects improvement. "As we head into the fall market our listing inventory continues to lag last year's numbers, but we should see a bump in activity now that kids are back to school and vacations are over." He noted the supply crunch has led to rising values, with median prices for last month's sales in Kitsap County surging 14.2% from twelve months ago.
Multiple offers are still commonplace with many buyers walking away disappointed, according to Wilson. "Traffic is strong at open houses and our average market time is still very low for correctly priced homes," he added.
"The August numbers offered a few interesting nuggets," stated OB Jacobi, president of Windermere Real Estate. "The Seattle area housing market is still coming off the 'sugar high' that we saw last summer, but homes sales and prices are stabilizing, which is reassuring to both buyers and sellers."
Jacobi also noted buyers are drawn to areas outside King County in search of affordability. "Pierce County is now experiencing what King County did 24 months ago where a surplus of buyers and lack of supply are pushing up home prices. Snohomish County also saw a big bump with a massive 16% increase in pending sales year-over-year. This tells us the secret is clearly out that housing in the counties to the north and south of Seattle is more affordable."
The median price for the single family homes and condos that sold last month in King County was $615,000, slightly higher than the year-ago figure of $610,000. In Snohomish County, last month's median sales price was $470,000, up about 1.8% from the year-ago price of $461,832. The Pierce County price of $369,000 is $246,000 lower than King County. It's up 6.1% from a year ago.
For all counties combined, prices are up nearly 6.2%, rising from the year-ago figure of $405,000 to last month's figure of $429,925. Compared to January's area-wide median price of $381,900, prices are up nearly 12.6%. Brokers reported 9,392 closed transactions during August, a slight 1.12% improvement over the same month a year ago.
Prices for single family homes (excluding condos) rose 6% from a year ago, while condo prices ticked up by only about 2%.
Brokers expect favorable conditions for both buyers and sellers in the coming months.
"As we enter the fall housing market, both interest rates and job growth in Puget Sound are extremely positive," stated J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Saying these are both key indicators of a strong housing market, Scott noted September and October are "historically the best for selection and availability out of the next six months," adding, "With kids back in school and summer vacations over, homeowners who wish to sell their house before the winter season will look to put their home on the market soon. Similarly, buyers can take advantage of the market timing and low interest rates in the next two months to come."
"Low interest rates, strong job creation, and lifestyle changes continue to attract buyers to the market," said Dean Rebhuhn, the owner of Village Homes and Properties in Woodinville. He also reported the move-up market is very active, while acknowledging challenges for first-time home buyers. "A challenge for them is assembling the down payment," he explained. "We are seeing FHA and VA financing being used for low and zero down mortgages. Also, family assistance is a big help." He expects "very good activity" during September and October.
With brokers anticipating solid activity in the next few months, Wilson offered advice for both sellers and buyers. Sellers need to make sure their home goes on the open market in order to be exposed to as many buyers as possible, he emphasized. "To do anything else may be leaving money on the table."
For buyers, Wilson stressed "getting all your ducks in a row. Meet with a lender for pre-approval before looking for homes, be clear as to what you can live with or without in your next home, and if at all possible, use cash or a conventional loan," which he explained are more appealing to sellers in multiple-offer situations.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of around 2,300 member offices includes more than 29,000 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)