Heavy snowfall ices February housing activity around Western Washington

March 6, 2019

KIRKLAND, Washington (March 6, 2019) – Seattle’s snowiest month in 50 years had an obvious chilling effect on February’s housing activity, agreed officials with Northwest Multiple Listing Service. Statistics for last month show pending sales dropped nearly 14 percent compared to the same month a year ago.

“The winter weather brought the market to a halt,” stated John Deely, principal managing broker at Coldwell Banker Bain. He said last month’s series of snowstorms and frigid temperatures had a negative impact on the typical momentum that builds at the beginning of the year.

“Showing activity dropped more than 41 percent the week of the heaviest snow, and weekend keybox activity was down 80 percent,” Deely reported. “The end of the month picked up as cabin fever weary buyers unleashed themselves on the burgeoning inventory,” he added.

Despite the weather disruptions, brokers added 6,247 new listings to inventory during the month, 1,037 fewer than a year ago. At month end, Northwest MLS members reported 11,275 total active listings, a robust 42.3 percent jump from twelve months ago. Thirteen of the 23 counties served by the MLS reported year-over-year increases in inventory.

Dean Rebhuhn, owner of Village Homes and Properties, described February listings and sales as “very good,” pointing to low interest rates, new jobs, and lifestyle changes as market drivers. “New sales continue to absorb new listings,” he noted.

Northwest MLS figures show about 2.2 months of inventory system-wide, with four counties (Kitsap, Pierce, Snohomish, and Thurston having less than two months of supply. King County was slightly above two months (2.09).

“Snowmageddon notwithstanding, we saw nearly as many homes go pending (6,878) as came on the market (6,247) in February,” noted Mike Grady, president and COO of Coldwell Banker AaBain. “In Snohomish and Pierce counties, the activity was even more impressive for this time of year, with our offices pointing to an uptick in the market.”

It seemed determined buyers were undeterred by nearly inaccessible neighborhoods, based on examples Grady cited.

“A Ballard listing priced at $635,000 went on the market on a Friday and drew a whopping 132 groups previewing it that weekend, yielding 14 offers by Monday. The home sold for 22 percent above listing price,” Grady said. “In Kirkland, we heard about five new listings over $1 million coming on the market during Snowmageddon week two, and all were sold that same week,” prompting him to declare he continues to be bullish on a continued strong market for 2019.

As February temperatures plunged, prices in most counties started heating up, rising from a year ago as well as when compared to January.

Area-wide median prices for the 5,145 sales of single family homes and condos that closed last month were up 5.7 percent from a year ago, rising from $385,000 to $407,000. Compared to January, prices increased 6.6 percent. Single family home prices increased 7.44 percent, while condo prices were nearly flat (up about 1.3 percent).

In King County, brokers reported a price gain of nearly 2.4 percent from a year ago. The median selling price jumped $14,000 from a year ago, from $590,000 to $604,000. The comparison to January shows a price increase of 6.9 percent.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate commented on the return of the multiple-offer market. “While the snow in February created a short distraction, the housing market is back on hot as we head into spring,” he remarked, reporting “Dedicated buyers braved the snow. The market is on track for a strong spring.”

“Between January and February, home prices in the tri-county King/Snohomish/Pierce area rose significantly, ending the month-over-month declines that started last May,” remarked OB Jacobi, president of Windermere Real Estate. He called the increase “pretty unexpected and likely a result of the drop in interest rates we saw in December.” Jacobi believes it’s too early to know if this is the start of a trend, but added “It might suggest that the slowing in prices that began last summer has come to an end.”

James Young, director of the Washington Center for Real Estate Research at the University of Washington, said last month’s weather made it difficult to comment on activity, but detected some patterns on prices. “Similar to previous months, prices are moving upwards the most consistently in exurban areas along the I-5 corridor. Look for prices outside the major urban areas to continue rising as the weather improves and the main selling season arrives.”

Areas outside the main Puget Sound urban regions continue to perform well, Young suggested, in part because older households continue to cash out of more expensive markets and move to the outskirts of the cities to areas that still offer good amenities for retirement and lifestyle.

Prices appear to have bottomed out to around year-ago levels, agreed Matt Deasy. Discussions with buyers who are back in the market suggest they believe prices are no longer going down and some feel like interest rates are on sale. House-hunters also seem to be encouraged by the growing selection, he remarked.

Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott’s Poulsbo office, said the market there has slowed considerably compared to last year when the spring market perked up before the more typical March and April timeframe.

“The reality is we still have low inventory, homes are going under contract faster than they are coming on the market, we are still seeing strong traffic at open houses, and we are still seeing multiple offers on correctly priced homes that are new on the market.” Wilson commented. “Waterfront homes are still at a premium on the Kitsap mainland,” he continued. “As we continue into the spring market, I think we’ll see a bump in buyers who are enjoying the continued low interest rates, although some may still be frustrated with the limited choices.”

Low and stable interest rates are particularly important to those closing larger mortgage loans, Young pointed out. “Buyers also appear to be responding to stable interest rates over the past couple of months, particularly in the higher priced areas of the region,” he commented, noting interest rates for jumbo mortgages (balances over $484,350) decreased to 4.40% from December’s rate of 4.59%.

As the pace of activity picks up, Scott emphasized the importance of buyer preparation to ensure they can secure the home of their choice. “We recommend working with a qualified broker, becoming fully underwritten by a lender, and signing up for text notifications for new listings to find success this spring.”

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.

Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)

Posted on March 14, 2019 at 9:35 pm
Greg Abbott | Posted in Recently Featured |

Homebuyers Resuming Search Amid Improving Inventory, Attractive Terms

KIRKLAND, Washington (February 7, 2019) – Homebuyers around Washington state are making their way back to the market, hoping to take advantage of improving inventory, attractive interest rates, and more approachable sellers, according to officials with Northwest Multiple Listing Service.

Northwest MLS statistics for January show year-over-year improvement in the volume of new listings and total inventory, along with moderating selling prices. Although fewer pending sales (mutually accepted offers) were reported than a year ago (down about 3.3 percent), January was the smallest year-over-year decline since May 2018 when the drop was about 2.7 percent.

Commenting on the MLS statistics summarizing last month’s activity, broker Gary O’Leyar said January’s post-holiday real estate activity doesn’t normally pick up until later in the month, but this year the uptick began early. “January started as a bit of a surprise. Open house activity was very robust, and we saw multiple offers in numerous instances again,” reported O’Leyar, the owner of Berkshire Hathaway HomeServices Signature Properties in Seattle.

Brokers tallied 7,564 pending sales during January, a decline from a year-ago when they recorded 7,820 transactions.

Seven counties had increases in pending sales of single family homes and condos compared with 12 months ago, including King (up nearly 7.5 percent) and Snohomish (up 3.8 percent).

James Young, director of the Washington Center for Real Estate Research at the University of Washington, commented on pending sales. The mixed results, including “healthy growth” in King and Snohomish counties, “corresponds well to upward movement in mortgage applications late in December, a leading indicator for the month to follow,” he noted, adding, “One should expect to see increased sales activity in the coming months throughout the region if mortgage applications continue to stabilize or increase.”

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said buyers “came out of the woodwork” after the holidays, eager to take advantage of better housing conditions. “Areas close to the job centers are seeing improved affordability from spring 2018,” he said, attributing it to lower interest rates, strong job growth, and adjusted pricing.

Scott said buyers are also attracted by expanded inventory resulting from the addition of new listings and a higher number of unsold inventory, although he noted “inventory levels are still considered a shortage.”

Prospective buyers who sat out the second half of 2018 or were pushed to the sidelines during last year’s heated market are finding better buying conditions, agreed Robb Wasser, branch manager at Windermere Real Estate/East. “Interest rates are near a nine month low and buyers have a stronger platform for negotiating, which have helped drive a 9 percent increase in pending sales of single family homes in King County,” Wasser stated.

MLS members added 7,090 new listings of single family homes and condos during January, up from the year-ago figure of 6,805 and nearly doubling December’s total of 3,631. At month end there were 11,687 active listings in the database, up more than 45 percent from the year-ago total of 8,037. Listing inventory more than doubled in both King and Snohomish counties.

Sixteen counties, including all four in the Puget Sound region, reported more inventory than a year ago. Even with sizable gains, supply is still tight at 2.4 months system-wide. (In general, four to six months typically indicates a balanced market.)

“The rise in inventory is largely due to investors who are selling because they believe the market has peaked and they want to unload their properties before interest rates rise too far,” said OB Jacobi, president of Windermere Real Estate.

“New listing inventory in King County is bringing more homebuyers to the market. We are enjoying increased open house traffic, including during the Super Bowl weekend,” remarked Dean Rebhuhn, owner of Village Homes and Properties in Woodinville. He also commented on the early arrival of the spring market, crediting jobs and immigration as factors. “Properly priced homes are selling!” he exclaimed.

Mike Grady, president and COO of Coldwell Banker Bain, expects activity to pick up heading into spring, as is customary. “I have absolutely no concerns about 2019 being a strong year, with prices rising 4-to-6 percent and units up 10-to-12 percent. There is no reason for sellers not to move on with their lives and list their homes,” he remarked.

Northwest MLS figures show an area-wide price gain of just over 5 percent on January’s 4,865 closed sales of single family homes and condos. Only six of the 23 counties in the report had year-over-year price drops. Among them was King County where prices slipped about one percentage point, from $571,250 to $565,000.

Prices on single family homes (excluding condos) rose 5.4 percent from the same month a year ago. In the four-county Puget Sound region, prices increased in Kitsap, Pierce and Snohomish counties, but decreased about 2.9 percent in King County, dropping from $628,388 to $610,000. Prices for single family homes in Kitsap County, where there is only about 1.7 months of supply, surged nearly 14.7 percent when compared to a year ago.

“The minor decline in King County home prices in January doesn’t mean the housing market is tanking; it’s primarily because of the significant increase in the number of homes for sale,” suggested Jacobi. “We may see prices take minor dips periodically in the coming year, but for the most part they are expected to continue rising, just at a far more modest rate than in recent years,” he added.

“Median prices on closed sales continue to remain stable in January with continued strong upward growth in outlying counties,” stated Young. “Pierce, Kitsap, and Thurston counties outpaced King and Snohomish counties in price growth, consistent with the past few months. This trend indicates that many first-time buyers and middle-income families are continuing to look to the outer regions of the area for value. Strong price growth in Lewis and Whatcom counties also support this general trend of outward migration along the I-5 corridor,” he added.

Mike Larson, president/designated broker at ALLEN Realtors in Lakewood (Pierce County) concurred, describing the slowdown in activity during the second half of 2018 as a “much-needed correction.” Sellers in King and Snohomish counties “got caught up in the craziness so many buyers turned to Pierce County for their affordability solution,” something he expects will continue this year.

Condo prices rose slightly, about 1.6 percent, as inventory more than doubled from a year ago. The median price for the 645 condos that closed last month area-wide was $325,000. In King County, where more than half the sales occurred, the median price was $383,500, up slightly from the year-ago figure of $380,000.

Several brokers expressed optimism for a busy spring.

“Buyers are signaling a more aggressive spring market with an uptick in search activity and high application rates with mortgage companies,” said George Moorhead, designated broker at Bentley Properties. He also noted would-be owners are commenting on having more options to consider and “are feeling the real estate market is less volatile.” He also reported sellers are similarly encouraged by having more options, “and not having to race around with the fear of making a housing mistake.”

“We’ve clearly been in a transitioning market, but given the ongoing demand for real estate in the Greater Seattle area, we may have adjusted to a ‘new market reality’ wherein inventory is up and prices have re-aligned, but there is still strong demand for housing. I would expect to see a robust regional real estate market going forward into spring,” stated O’Leyar.

The director of the Washington Center for Real Estate Research was more guarded in his expectations. “Increasing inventory and moderate price growth in urban counties (and growth in outer regions of the Puget Sound) point to several problems relating to how potential homebuyers see things moving forward,” said James Young. He referenced figures from the National Association of Homebuilders National Trends Report indicating a shrinking pool of buyers.

“The picture for first-time buyer affordability in the longer term for the region is not bright for potential homeowners unless changes in the housing supply framework throughout the area are addressed soon.”

Larson also expressed concerns around affordability, “particularly for entry-level buyers as well as move-down buyers who also want to sell. The middle rungs on the housing ladder are slowly disappearing,” he remarked. Options like condos could help fill that void, he suggested, but believes they won’t be built “until the state legislature reforms the condo liability laws.”

Affordability is a “crucial issue” for 72 percent of millennial renters, according to a survey by Apartment List.

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.

Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)

Posted on February 12, 2019 at 8:50 pm
Greg Abbott | Posted in Recently Featured |

Attentive home buyers can find “good values and receptive sellers”

New data from the MLS show inventory in its 23-county market area dipped below two months of supply for the first time since July. A year-over-year comparison of the number of new listings, pending sales, and closed sales show drops overall, while prices rose from the same month a year ago.

Member-brokers added 3,631 new listings of single family homes and condominiums during December (10.4 percent fewer than a year ago), boosting total active listings to 12,275, up from the year-ago volume of 8,553. Pending sales were down about 8.4 percent from twelve months ago (5,677 versus 6,198), and the volume of closed sales dropped nearly 16.6 percent (6,374 versus 7,642).

For 2018, members of Northwest MLS reported completing 92,555 transactions, which compares with 99,345 closed sales during 2017 for a drop of about 6.8 percent. The median price on last year’s closed sales of single family homes and condominiums combined was $402,000, up $32,000 (8.64 percent) from 2017.

Commenting on inventory, declines in closed sales and the drop in month’s supply, MLS director Dick Beeson said, “There’s lots of speculation as to the reasons why. One thing for sure: this situation can make for a deliciously deceptive market for either buyers or sellers.” The veteran Realtor said buyers who are paying attention will find very good values and receptive sellers.

“Timing the interest rate market is beyond the capability of most everyone. Therefore, buyers should act now, act deliberately, act decisively, and act in conjunction with an experienced real estate professional,” advised Beeson, the principal managing broker at RE/MAX Northwest in Gig Harbor.

Brokers said many of last month’s buyers took advantage of the shifting market.

“Buyers in December were reaping the benefits of market-weary sellers who were willing to give up part of their bloated home equity to make a deal and move on,” reported John Deely, principal managing broker at Coldwell Banker Bain.

James Young, director of the Washington Center for Real Estate Research at the University of Washington, noted last month was a very different December from a year ago. “While active listings are up significantly (43.5 percent) from a year ago, interest rates have also gone up by over 80 basis points, meaning the typical mortgage repayment has increased by about 10 percent for those looking to buy. That limits spending power and stops buyers from bidding up for the house they want rather than the house they can afford.”

The 12,275 active listings in the MLS database at year end was down from November when inventory totaled 15,830 properties, and down from 2018’s peak of 19,526 listings at the end of September. Measured another way, there was 1.93 months of supply at the end of December, with four-to-six months typically considered to be a balanced market. A year ago there was only 1.12 months of supply. On a percentage basis, year-over-year inventory has climbed each month since May.

Five counties had less than two months of supply at year end, with Kitsap having the scarcest selection at only 1.48 months of supply. Other counties reporting less than two months of supply were Pierce (1.52), Snohomish (1.53), Thurston (1.58), and King (1.71). Brokers note some of the December shrinkage is seasonal since some sellers take their home off the market during the holidays.

Condo inventory surged, notably in King County which now has more than four times the number of condo listings than 12 months ago.

“We’re continuing to see a balancing of the market, yet it is still seller-leaning, driven by our region’s continued job formation and a lack of inventory,” observed Mike Grady, president and COO of Coldwell Banker Bain. “For all the talk of doom and gloom in real estate” he said his calculations show home values have increased at four times the rate of inflation since December 2014 when the “hot market” began.

Grady pointed to the gap between December’s closed sales (6,374) and the volume of new listings (3,631) to replenish supply. He expects more growth in inventory this year, “but still not to the level of a truly balanced market of five or so months of supply.” Grady also anticipates prices increases, “although not at the rate they have been. So, still a great time for both buyers and sellers to enter the market.”

Other industry leaders also described the market in terms of a transition or recovery.

Lennox Scott, chairman and CEO of John L. Scott Real Estate, said a favorable market is returning for home buyers in Seattle and the Eastside. “Improved affordability, with both lower interest rates and adjusted lower housing prices from the spring of 2018 will lead the way,” he stated, adding “Although unsold inventory of homes for sale is still considered a shortage, the larger number of unsold homes, combined with new listings, will moderate the price increases in the year ahead.”

“Last year was a recovery year,” said George Moorhead, who believes 2019 will mirror it in several ways. “Balancing inventory, moderate appreciation of home values, tempered buyer demand with rising interest rates and reduced tax incentives” are among his expectations. “Buyer affordability in 2019 will be based on perception of good value and mortgage interest rates,” suggested Moorhead, the designated broker and owner of Bentley Properties. “The looming feeling of a hard-hitting recession keeps many would-be homeowners on the sidelines, thinking ‘It is better to watch and wait’ even though economic factors point towards a continued healthy, yet moderate market.”

John Deely called 2018 “the transition year for the traditional Pacific Northwest 10-year market cycle.” The swing from a sellers’ market to a more balanced market was evident by the second quarter of 2018 as the absorption of new and standing inventory slowed due to a decrease in pending sales explained Deely, a member of the Northwest MLS board of directors.

Three factors contributed to the change, according to Deely. He listed accelerated and unsustainable home price growth, rising interest rates, and waning consumer confidence and sentiment as those factors, noting “The market is mimicking the strong recession recovery cycles of 2012 to 2014.”

“The year ended with more of a splutter than a bang as home price growth continued to slow in December,” stated OB Jacobi, president of Windermere Real Estate. “But it’s important to keep things in perspective,” he emphasized, saying 2018 was a very good year for Seattle-area home sales. “The shift we’re experiencing is only bringing us closer to a more balanced market. My crystal ball tells me this trend will continue in the coming year with home prices rising, but at a slower rate of around 5.5 percent.”

Young, from the Center for Real Estate Research, commented on activity moving away from core urban areas to outlying regions where prices are cheaper. Demand is pushing prices higher and shortening market time in several counties, he stated, naming Cowlitz, Lewis and Thurston, which all experienced year-over-year price gains of at least 12.4 percent.

“Regardless of what the news is saying about the Seattle market, at the end of the day, the Kitsap median home price is significantly lower than a home in King County,” said Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo. Northwest MLS data show the median price for homes and condos that sold last month in Kitsap County was $343,000, while in King County it was 74 percent higher ($597,000).

“This will be what keeps our inventory low due to the improved mobility between Colman Dock and Kingston, Bremerton, and eventually Port Orchard,” Wilson remarked. He noted the early success of the fast ferry on the Kingston run is leading to talks about adding more boats.

Wilson said Kitsap brokers report good traffic at open houses and multiple offers on correctly priced homes. “We’ve also seen prices of homes in the north end go up, as well as an increase in new construction in the area,” added Wilson, who is also a director at NWMLS.

Beeson also commented on the importance of pricing. “Sellers who recognize a market shift has occurred will price their homes accordingly and sell in a reasonable amount of time, 30 days or less – not one day.”

Young said buyers are very aware of the changing housing finance environment and are still active in the marketplace even if they are not as aggressive as they have been in the past. Mortgage applications are declining due to short-term uncertainty, he said, even though 30-year fixed rate mortgage interest rates are continuing to fall.

Moorhead echoed that thought. “Buyers are being much more methodical about their purchase with some taking as long as eight months before making their final decision,” he reported.

Jacobi believes 2019 will bring the continued resurgence of first-time buyers, especially millennials as they form new households, get married, and have children. “Although many of them will face significant obstacles to buying due to student debt, lack of down payments, and Seattle’s high-priced housing, this group is likely to buy more homes in 2019 than any other demographic,” Jacobi predicts.

Wilson characterized the seasonally slower December/early January period as “the calm before the storm,” noting the spring market usually brings a surge of buyers that surpass the increase in listings.

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.

Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)

Posted on February 4, 2019 at 5:35 pm
Greg Abbott | Posted in Recently Featured |