Prices “spiking” as home buyers compete for scarce inventory
NWMLS, Kirkland, WA, April 4, 2013 –
Brokers added 9,332 new listings to the Northwest Multiple Listing
Service database during March, but pending sales topped that number to
further crimp inventory and trigger competitive bidding among buyers who
are flocking to open houses.
“All price ranges are feeling a lift,”
reported Dick Beeson, principal managing broker at RE/MAX Professionals
in Tacoma. Northwest MLS director John Deely echoed that comment: “We
are seeing many homes in Seattle meet and exceed pre-bubble price
levels,” stated Deely, the principal managing broker at Coldwell Banker
Bain in Seattle.
“The recovery continues on a slow and
steady pace in most areas and surging hard in others,” concluded Darin
Stenvers, vice chair of the MLS board.
Northwest MLS figures show
year-over-year prices jumped 14.9 percent for the 21 counties in its
service area. The median price for last month’s closed sales of single
family homes and condominiums (combined) was $258,500, rising from
$225,000 for the same month a year ago. Twelve counties reported
double-digit gains, led by Ferry (up 70.9 percent), San Juan (up 47.3
percent), and Island (up 36.1 percent).
Prices for single family homes increased
14.3 percent, while the median sales price for condos, which accounted
for about 12 percent of sales, surged 19.6 percent. Two-thirds of last
month’s condo sales were in King County; prices there leaped 28.6
percent, increasing from $175,000 to $225,000. The price of a single
family home that sold in King County jumped from $330,000 to $392,000
(up 18.8 percent).
Brokers reported 5,745 closed sales last
month for a 13.9 percent increase from the previous year when they
tallied 5,044 completed transactions.
“The market continues to be incredibly
competitive with at least one in four buyers paying cash,” noted MLS
director OB Jacobi. “For those not paying cash, the average down payment
is between 20 percent and 50 percent,” he added.
Jacobi, the president of Windermere Real
Estate Company in Seattle also reported the vast majority of home sales
right now have multiple offers, and “it’s no longer restricted to the
urban markets — the outlying areas are now experiencing the same thing.”
Brokers say even distressed sellers are receiving multiple offers for their homes.
“As one of my brokers told me, when you
have 12 offers on a short sale, it pushes the price of the home up to
market value. This is clearly reflected in the appreciation we continue
to see in prices across the board,” Jacobi stated.Stenvers, the branch
manager at John L. Scott’s Bellingham office, also noted the impact of
distressed homes (including bank-owned and short sales) on the market.
“They are not going away, but have slowly leveled off, leaving room for a
sustainable return to the ‘normal’ market volume of 2001-2004,” he
reported. “This should help the market to continue its recovery, but
appraisals will remain a looming concern for buyers until comparable
sales can close,” he added.Inventory is depleted area-wide, with only
18,500 active listings in the MLS system at month end. That total is
down by almost 6,400 listings year-over-year for a 25.7 percent drop.
Counties with the largest declines include Clark (down 46 percent),
Snohomish (down 43.8 percent) and King (down 42.4 percent).
System-wide, there is less than a
two-month supply of homes, with the tightest selection in Snohomish
(0.93 months), King (1.03 months), Clark (1.81 months) and Pierce (1.68
months) counties. In general, analysts consider four-to-six months of
supply to be normal.
The upward spike in prices is largely
the result of limited supply. “Whenever we get down to a severe shortage
of homes for sale, we get double-digit home price appreciation,”
observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
Demand continues to outpace supply,
creating high absorption rates, Deely stated, adding “Open houses are
drawing large crowds.” For example, he reported several open houses from
the past weekend experienced traffic exceeding 50 people per day.
“Fortunately, Kitsap is the eddy to
Seattle’s fast-current market,” said Frank Wilson, Kitsap district
manager for John L. Scott Real Estate and a member of the Northwest MLS
board of directors. “Our homes are still selling nicely with a medium
amount of multi offer activity and a ‘normal market’ spring ramp-up,” he
added, with a note of caution about rapid price jumps and low
appraisals.
“Price appreciation is a two-edged
sword. Too much, too fast will land us where we were a few years ago.
Slow and steady appreciation is what we are seeing now and hopefully in
the future. This will allow the average income earner in Kitsap to still
be able to qualify for a home,” Wilson stated. He also noted
“significant investments” being made in that county by businesses such
as Harrison Hospital and Safeway. “Investments like these are not made
unless the businesses are bullish on the future growth of Kitsap
County.”
The South Sound market is responding to
trends elsewhere, according to Dick Beeson, principal managing broker at
RE/MAX Professionals in Tacoma. “Buyers are everywhere and sellers are
strategizing when, how and at what price to come on the market,” he
commented, but said both parties sometimes have unrealistic
expectations. In addition, he said “multiple offers create additional
issues for brokers, buyers, appraisers, and lenders.”
“Many buyers are still clinging to the
idea that they have the upper hand in the real estate market. Well they
do and they don’t,” Beeson remarked. Buyers have the upper hand when
sellers want to list for “absurd prices and refuse to repair serious
flaws in their properties,” he explained.
Thinking that banks and short sale
sellers and their corresponding underlying lenders are easy pickings and
will accept any price is also flawed, according to Beeson, whose
analysis shows about one-fourth of inventory is still made up of
distressed properties. “With banks experiencing considerable pressure
from Congress and the public not to foreclose, more short sales and
fewer foreclosures are anticipated,) he suggested. Rising prices “could
take some properties past the short sale price at which they started.
That’s good for all of us,” he added.
“With sales trending upward and listing
activity trending downward, it’s no surprise inventory seems to be
hitting new lows,” said Mike Grady, president and COO of Coldwell Banker
Bain. “Homeowners and investors appear to be holding out for property
values to increase,” he added.
Pending sales are mirroring the shifts
in market conditions. Volume area-wide was up only 3.9 percent from a
year ago, rising from 9,126 mutually accepted offers to 9,482.
Five counties – Ferry, Grays Harbor,
Island, King, and Snohomish — reported fewer pending sales than a year
ago, likely a consequence of the limited selection.
“The old supply and demand equation is
fully in play,” observed Stenvers. Citing data from the chief economist
for Stewart Title, Stenvers said the pressure on rental markets will
continue to drive buyers back into home ownership for the next 15-24
months, magnifying inventory shortages. He said the northern regions of
the state (encompassing Whatcom, Skagit, San Juan and Island counties)
are experiencing declining inventory and rising sales consistent with a
recovery.
Stenvers also noted most economists
agree it’s not a matter of if interest rates will go up, but only a
question of which quarter of 2013 the rise will occur. “If inventory
stays low and interest rates climb, buyers may feel they missed out on
the bargain they are looking for and sales my slow again by the end of
the year,” he surmised. Nevertheless, he pointed out with home sales
expected to return to 2003-2004 (pre-bubble) levels, and median prices
not yet reaching those same levels, “homeownership is still very
attractive and remains a solid investment.”
__________________________
Copyright © 2013 Northwest Multiple Listing Service
ALL RIGHTS RESERVED
This material may not be copied, published, broadcast, rewritten or redistributed without prior permission.
Posts
