Demand for Puget Sound area homes “still incredibly strong,”
but brokers report frenzy is easing in some neighborhoods
Figures show steady sales, increasing prices and general improvement in inventory, which is prompting a declaration of “What these numbers tell us loud and clear is that buyer demand in the Puget Sound region is still incredibly strong.”
The housing market tends to experience some slowing during August, but rising inventory levels and sustained buyer demand fueled “higher than expected home sales and another month of strong appreciation.”
The latest figures from Northwest MLS show pending sales (mutually accepted offers) during August increased 8.7 percent from a year ago. Brokers in the 21 counties served by the MLS reported 9,065 pending sales system-wide. That’s a drop of 500 units from July, but an increase of 727 transactions compared to a year ago (August 2012). In the four-county Puget Sound region (King, Kitsap, Pierce, and Snohomish), the total of 6,916 pending sales was the highest volume for August since 2006 when members notched 7,692 sales.
Prices also reflected an upward trajectory. The area-wide median price for last month’s completed sales of single family homes and condominiums was $283,000, which compares to the year ago figure of $250,000 for a gain of 13.2 percent. Only two other months this year have had higher year-over-year increases: March (14.9 percent) and May (13.4 percent). Since January, prices have jumped 18.3 percent.
Prices on single family homes (excluding condos) that sold during August increased from $263,495 to $294,000 for a gain of 11.6 percent.
King County median prices for August ($392,500, including single family homes and condos) are at 92.4 percent of the peak price of $425,000, set in July 2007. This surge is due in part to a shortage of homes for sale during the past 2 years.
We have seen 22 straight months of strong-surge sales activity. Job growth, pent up demand by local home buyers, residential investors, incoming transferees, a strong local economy and historically low interest rates have led the way during this recovery phase of the residential housing market.
Prices in Kitsap County have not spiked as much as some other areas during this recovery period. For sales in that county that closed during August, prices rose slightly more than 3 percent compared to a year ago. Recovery should be a long-term return to normalcy, and it seems that there is a bit more sanity in Kitsap.
Despite moderate price gains in Kitsap County, buyers were active, with year-over-year pending sales jumping 19.7 percent.
Inventory is showing signs of stabilizing in many Western Washington areas, with members adding nearly 1,800 more new listings to the MLS database during August compared to the same month a year ago. With that 21 percent increase in new listings, the total number of active listings at month end (26,433) was almost on par with a year ago when the selection encompassed 26,506 homes for sale.
Some key indicators are trending lower or slower as the market adjusts to a “new normal.” It should be noted that it would be hard to continue the near record-setting pace of the last few months.
While the overall market remains vibrant and active, we don’t appear to have the frantic ‘must have this home because there may not be another’ mentality among buyers. The increase in both inventory — a near return to 2012 levels — and the sharp increase in interest rates have been the most influential factors in an end-of-the-summer market adjustment.
Inventory shortages are still common in many parts of King County. MLS figures show of 22 of the 29 map areas it tracks in King County had fewer listings at the end of August than at the same time a year ago.
Measured by months of supply, King County, with only 1.7 months of supply, is well below the 4-to-6-month level that many analysts use as an indicator of healthy levels or a balanced market. The selection is also squeezed in Snohomish County, where there is 1.8 months of supply. System-wide, the figure is at 2.9 months.
Many industry-watchers predicted rising interest rates would slow down the market. Well, it has not, despite jumps in prices and interest rates, homes are still more affordable than they have been in decades. Buyers are on “heightened alert” because of the recent upward movement in interest rates. Interest rates aren’t expected to stay as low as they are today and prices in our area are expected to continue to rise. For anyone who is thinking of buying, now is the time!
The current market is “the strongest in four or five years,” with signs of stability that should continue into 2014. “If a buyer finds the home of their dreams, they should make their first offer their best offer or risk losing that home”
Sellers should still be concerned about overpricing their homes. Some markets may handle some overpricing, while others will not. While sales are brisk, many sellers are not getting the full listing price. Price reductions and/or financing contributions may be needed to assist buyers.
The condominium market is rebounding in some areas, offering a good alternative for renters who are seeking good housing at affordable prices. Although the inventory is still below year-ago levels (down 4.8 percent), there is a good selection with great pricing options. Buyers can purchase with a down payment that is in line with landlord demands for upfront rent and large deposits, and have a more affordable monthly payment.
Pending sales of condos area-wide rose about 6.3 percent during August. Closed sales jumped more than 17.4 percent, with prices surging 26.7 percent.
The National Association of Realtors® (NAR) reported the national median existing home price increased at an annual rate of 12.2 percent – the biggest yearly price increase since Q4 of 2005.