KIRKLAND, Washington (July 8, 2019) – Inventory, pending sales and prices all increased during June compared to a year ago, according to the latest report from Northwest Multiple Listing Service. The same report, which covers 23 counties in Washington state, shows year-over-year drops area-wide in both the volume of new listings and closed sales.
“Clearly we now see that the market is moderating – that is we’re definitely moving from a ‘hyper-market’ to one where a correction is underway compared to last year,” remarked Mike Grady, president and COO of Coldwell Banker Bain. “While it’s the best time to buy that we’ve seen in some time, and buyers are getting some relief, it is still a seller’s market,” he added, noting some buyers are experiencing multiple offer situations, or considering inspection waivers, or are even forced to consider markets outside King County for affordability.
Three Northwest MLS directors from Pierce and Kitsap counties suggest their counties are attracting some of the frustrated buyers from King County.
“The darling of the Puget Sound real estate market is Tacoma/Pierce County,” stated Dick Beeson, principal managing broker at RE/MAX Northwest Realtors in Gig Harbor, pointing to low inventory and appreciating values. “The secret is out about Pierce County,” agreed Mike Larson, the president at ALLEN Realtors in Lakewood. “You can buy twice the house for about half the price. You just have to be willing to deal with the traffic if you work north or south of here,” he proclaimed.
“The Kitsap market continues to be robust and is maintaining its velocity in sales,” added Frank C. Leach, broker/owner at RE/MAX Platinum Services in Silverdale. He believes Kitsap County will continue to be strong given its economic foundation together with its affordability factor and quick access to Seattle, but noted it is constrained by available inventory (currently at 1.4 months of supply).
MLS figures show the median price for single family homes and condos that sold last month in King County was $637,675. In Pierce County it was $372,500, about 58 percent of the King County price, and in Kitsap County it was $387,000, about 60 percent of the sales price in King County.
System-wide prices increased more than 3.5 percent from a year ago, from $425,000 to $440,000, although four counties registered declines, including Douglas, Ferry, Jefferson, and King. June’s median price was unchanged from May.
At midyear, the overall median price was $424,517, which compares to $405,000 for the first six months of 2018, an increase of 4.82 percent.
“As long as interest rates stay low and people seek value outside of King and Snohomish counties, house prices should continue their upward momentum,” stated James Young, director of the Washington Center for Real Estate Research (WCRER) at the University of Washington.
House hunters had a broader selection to consider as inventory at month end totaled 16,800 active listings, about 9.5 percent larger than at the same time a year ago. Brokers added 11,977 new listings during the month, a drop from both a year ago when they added, 13,153 new listings, and from May, when they added 14,689 new listings.
About half the counties reported gains in inventory, led by King County where the selection grew nearly 32 percent from a year ago.
“June listing inventory in King County exceeded the levels posted for this month over the past six years,” said John Deely, principal managing broker at Coldwell Banker Bain. “Currently, we are approaching 2012 listing inventory levels,” he noted.
Northwest MLS figures for King County show there were 5,931 active listings at the end June, the highest for that month since 2012 when the selection totaled 6,500 listings.
“Every summer, we see the highest level of new listings and homes going under contract. After the surge of new listings in May, areas close to the job centers saw listings return to the normal seasonal pattern in June,” commented J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
The Northwest MLS report indicates there is 1.76 months of inventory area-wide (matching May), with eight counties having less than two months of supply.
OB Jacobi, president of Windermere Real Estate, commented on a “considerable rise” in the number of listings priced above $1.5 million in King County. “This could be because of the changes to the Washington State Real Estate Excise Tax (REET) that take effect in 2020, which will significantly impact the tax burden of sellers whose homes sell for more than $1.5 million. I suspect we’ll see even more owners of higher priced homes trying to sell in the coming months in order to avoid the hike in taxes they’ll have to pay starting next January,” he stated.
The new tax measure changes the REET rate from a flat 1.28 percent of the selling price to a graduated rate for real property sales, with exceptions for timberland and agricultural land.
Commenting on the latest report from Northwest MLS, WCRER’s Young said “The perfect storm of low interest rates and falling inventory continues along the I-5 corridor, with double-digit house price increases also continuing.”
Beeson says the “new normal” inventory levels of 2-to-3 months of supply, rather than the traditional 4-to-6 months, makes Puget Sound different than most of the rest of the nation. In Puget Sound, homes sell twice as quickly as a traditional ‘normal’ market,” he stated, but acknowledged, “It feels kinda like things have slowed down. Folks are taking deeper breaths.”
Several brokers commented that buyers are becoming more deliberate in their searches and offers.
“Market savvy buyers are taking advantage of premium location and value pricing due to increased inventory. Price reductions are more commonplace as sellers align their expectations with today’s market,” according to Deely. He said demand remains strong, but “buyers are methodical in their search, and taking more time to jump into an offer.” Also, he noted there have been fewer multiple offers and fewer all-cash buyers in the mix when a listing has several buyers lined up to compete.
Buyers are more “tuned-in” than ever before, Beeson remarked, adding, “Buyers today have educated themselves on the vagaries of the home buying process and are better prepared to meet sellers on firmer ground. They are attentive, vigilant, and discerning toward the marketplace, knowing what they want in a home – and they are willing to wait longer to get it.”
Leach concurred. “Buyers are being very careful about what they buy and at what price,” he stated.
Commenting on King County’s numbers for new listings and new pending sales, Dean Rebhuhn said multiple offers are still occurring in the median price range, noting the 1.9 percent dip in year-over-year prices. “Buyers are seeing higher home availability while taking advantage of low interest rates.” Rebhuhn, the owner of Village Homes and Properties in Woodinville, believes those factors, coupled with summer weather and job creation will “continue to create a very active market for buyers and sellers.”
Scott also expects a “quick-action market” for many buyers when new listings come on the market, especially with interest rates in the upper threes. Looking to the months ahead, Scott anticipates strong sales activity close to job centers, while the surrounding area will experience intense, “frenzy-level sales activity” in the more affordable to mid-price ranges.
Larson believes “the big three” – interest rates, the economy, and consumer confidence – all point to a strong summer for the housing market, while contrasting King and Pierce counties. “For years, King County has been a bit like a top fuel dragster – high performing, thrilling, but maybe a bit temperamental. It got the headlines and values skyrocketed, but now it’s experiencing a bit of a hangover. Pierce County’s market is more like a diesel truck – steady, consistent, and less prone to dramatic market changes.”
Larson also offered advice for passive and first-time house hunters. “Every buyer, particularly at the entry level, needs to understand they can’t simply dip their toe in the water when competing for a home. They need to do a belly flop. They need to put their best foot forward right out of the gate.” He also urged buyers to work with a Realtor who understands the market and who can guide them through the process.
Several representatives from Northwest MLS also suggested sellers need to learn the “new normal” as Beeson calls it. “If you overprice your home or fail to get it in good condition for selling, it will cost you time and money in the end, he stated, adding, “Seller’s can’t afford to be tuned out to what the market is saying.”
For sellers in Kitsap County, broker Frank Wilson says pricing is becoming more important. “Our county is starting to feel some of the changes King County has experienced. List price has to more accurately reflect what the home will sell for in today’s market,” explained Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo. Although Wilson reported multiple offer situations and good traffic at open houses, he emphasized sellers “can no longer chance shooting for the moon, pricewise, or they risk getting stuck on the launch pad.”
Condo activity was mixed during June with year-over-year declines in the number of new listings added to inventory, as well as in the volume of pending and closed sales. Total inventory grew more than 41 percent, although at month-end there was only about 1.9 months of supply. Prices overall were nearly unchanged from a year ago. The median price for June’s sales was $367,000, up about a percentage point from a year ago when the median price was $363,500.
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.
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KIRKLAND, Washington (June 6, 2019) – The housing market in western Washington may not be as hot as it was last spring, but it is heating up, suggested one industry leader in commenting on the latest statistics from Northwest Multiple Listing Service.
Matt Deasy, president of Windermere Real Estate/East, Inc. said his analysis of single family home sales in King County reveals 7 out of 10 properties that sold during May had 15 or fewer days on the market. He also noted more than half the listings (55 percent) in the county sold for at or above list price, the highest ratio since July 2018.
Northwest MLS figures show last month’s 12,006 pending sales across its 23 county service area nearly matched the year-ago total of 12,168 mutually accepted offers. Nine counties notched increases.
Two other indicators of activity – the volume of new listings, and the number of closed sales – both showed slight gains from a year ago. MLS member brokers added 14,689 new listings to inventory during May, up 165 units from twelve months ago. Year-over-year (YOY) closed sales rose about 1.6 percent (from 9,011 in May 2018 to last month’s total of 9,153).
Several representatives of Northwest Multiple Listing Service commented on increasing activity:
- “The housing market definitely got busier in May with brokers reporting an uptick in showings, open house traffic, and offers.”- OB Jacobi, Windermere Real Estate Co.
- “We are swinging into our summer market at a little faster clip than last year, and have a few more houses for buyers to choose from.”- Frank Wilson, John L. Scott, Inc.
- “The spring real estate market remains very good for both buyers and sellers.”- Dean Rebhuhn, Village Homes and Properties.
- “Buyers rejoiced at lower interest rates in May.”- J. Lennox Scott, John L. Scott, Inc.
In addition to favorable financing, Scott said, “Increased inventory and continued job growth built on April’s momentum, translating to strong results in May.” While inventory has increased in many areas, Scott noted there are still severe shortages of listings in some price ranges.
Inventory improved 24.5 percent from a year ago, with brokers adding 14,689 new listings to outpace the 12,006 pending sales. The MLS report for May shows 16,133 active listings at month end, up from the year-ago total of 12,956. King County recorded the largest gain in total inventory, at more than 62 percent, but supply remained below 2 months in that and several other counties.
System-wide there was 1.76 months of supply at the end of May, well below the 4-to-6 months that experts say indicate a balanced market. “While our inventory has grown a little, we’re still well within the definition of a seller’s market,” said Frank Wilson, a broker in Kitsap County where there is only 1.46 months of supply.
An analysis of NWMLS inventory at the end of May underscores Scott’s point. It shows only 13.8 percent of the listings of single family homes in King County have asking prices under $600,000. That compares to 25.6 percent in Snohomish County, 31.2 percent in Pierce County and 35.3 percent in Kitsap County.
Comparing May’s prices by housing types and geographic areas shows wide variation. Prices for single family homes (up 5.2 percent) outperformed condos (up nearly 1.4 percent). System-wide, sales of single family homes and condos that closed during May increased nearly 4.8 percent YOY, and rose more than 3.5 percent from April. A county-by-county comparison shows price changes ranged from a year-over-year drop of more than 20 percent (in Okanogan County) to a jump of more than 52 percent (in Pacific County).
Single family homes:
Home prices for single family homes (excluding condominiums) are up 5.2 percent system-wide, rising from the year ago figure of $429,500 to last month’s figure of $451,800.
King County prices for single family homes show a 3.6 percent decline from a year ago, but are at the highest level since June when the median price was $715,000. Snohomish nearly matched last June’s figure of $510,000, the highest for the year. A review of figures for the past five years shows both Kitsap and Pierce counties reached new highs (at $385,000 and $370,000, respectively) for last month’s median prices for sales of single family homes.
Three other counties (in addition to King) reported year-over-year drops in median prices on single family homes, led by Okanogan County where selling prices plunged more than 20 percent. Also reporting declines were San Juan County (-0.51 percent) and Snohomish County (-0.01 percent).
Condo prices also rose, but at a smaller rate, as inventory continued to build (up nearly 65 percent). Area-wide prices increased about 1.4 percent from a year ago. Pierce County prices surged 18 percent, while condo prices in King County were mostly flat (up 0.7 percent). Only six counties reported year-over-year price declines.
Prices overall (single family homes and condominiums):
Prices overall, including single family homes and condos are up $20,000 (nearly 4.8 percent) from a year ago, increasing from $420,000 to $440,000. In King County, the median sales price was $645,000, down less than a percent (-0.77) from a year ago. Snohomish County also reported a fractional drop, declining from $478,615 to $476,025 (down 0.54 percent).
“Home prices in the Seattle metro area are still lower than they were a year ago, but only marginally,” remarked Jacobi, but added, “Thanks to the pretty significant drop in interest rates last month, we can expect to see home prices trending higher through the end of the year, but at a far more moderate pace than the last several years.”
Rebhuhn agreed, crediting lower interest rates, lower median prices, and new jobs as driving factors in South King County, Pierce County and Tacoma. “We look for a very active summer market,” he remarked.
James Young, director of the Washington Center for Real Estate Research at the University of Washington, also attributed strong activity along the I-5 corridor and outer urban centers to low interest rates. Also noteworthy, he suggested, was Douglas County where YOY prices surged more than 24 percent. “Cowlitz, Thurston, and Lewis counties continue to outperform,” he added.
Young said interest rates could drop further as 10-year yields continue to fall. “Given the search for value among those sellers trading down along with first-time buyers in all urban areas across the state, prices should continue to rise throughout the peak season,” he stated.
“The data for May extends the same phenomenon we’ve been part of for nearly five years,” said Mike Grady, president and COO of Coldwell Banker Bain. “Recall that just one year ago the headlines were asking, ‘Has the hot market ended?’ as inventory increased from 3-to-5 days to 1.8 months between May and August. Now, one year later, while we see many more listings are available, accepted offers are keeping pace and inventory remains relatively stable at 1.7-to-2 months.”
“A balanced market should have about a 6-month supply,” explained WCRER’s Young, noting the national month’s supply figure is at about 4 months. “Except for a few small counties, every county in the NWMLS area has a month’s supply of 4 or less. Except for Skagit County, with 2.2 months of supply, every county along the I-5 corridor has less than 2 months.”
Wilson, the Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo, emphasized “the numbers are all relative, relative to a ‘normal’ market which we are not in.” Noting the current inventory of 644 homes and condos is higher than last year when there were 519 active listings at this time, “it is half of what might be considered a balanced market here in Kitsap County.”
What people read about the Puget Sound market “is not reflective of our micro market” Wilson continued, noting one “huge difference” is the amount of vacant land that is available. “We have seen a bump in vacant land listings,” he reported, adding, “For those looking to build a home, there are a lot of opportunities in this area, though be prepared for a lengthy process to get a home plan approved and built here in Kitsap.”
“We’re in the midst of the four best months in the year for buyer activity,” Scott emphasized. “I recommend sellers ensure their home’s appearance, marketing strategy and broker associate relationship are all in tip-top shape,” he added.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of around 2,200 member offices includes more than 29,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in the state.