Inventory shrinking, sales rising, prices
stabilizing in some Northwest MLS areas
KIRKLAND,
WA, June 4, 2009 – Waiting longer to buy a home
is not likely to pay off, according to Northwest
Multiple Listing Service director Kathy Estey
after reviewing reports summarizing May activity.
Estey pointed to shrinking inventory (about
20 percent fewer listings than a year ago),
double-digit increases in the number of pending
sales (up 17.7 percent from a year ago), solid
open house activity, and signs of stabilizing
prices (eight of the 19 counties in the report
show price gains since January) as indicators
of an improving market.
Northwest
MLS brokers notched 7,160 pending sales during
May. That total out-gained the year-ago tally
by 1,075 transactions (up 17.7 percent) and
improved on April’s total by 242 sales for a
3.5 percent increase. For the four-county Puget
Sound area, pending sales jumped 21.5 percent
from a year ago, rising from 4,526 to 5,498
transactions.
Buyers
had fewer choices during May than at this time
a year ago. At month-end, member-brokers reported
41,318 active listings throughout the NWMLS
service area. A year ago, there were 51,817
active listings. Current inventory includes
11,278 single family homes and condos that brokers
added during May. For the same month a year
ago, brokers added 14,176 new listings to inventory.
Estey,
the managing broker at the Bellevue Downtown
office of John L. Scott Real Estate, said affordable
homes inventory is down to the levels of a normal
market and reaching for a sellers’ market. “Multiple
offers are common in the under $400,000 range
when the home is priced well, shows nicely and
is marketed professionally,” she remarked. “Buyers
who are waiting for prices to come down more
have missed the bottom,” Estey believes.
Close
in markets are the most active, with rural areas
still lagging, but Estey says there is now some
activity where little to none had existed in
the first quarter. She believes prices have
adjusted and completed new construction is still
a very attractive purchase. “Builder inventory
is being absorbed and there are fewer incentives.
In January builders were giving away the farm,
by March it was only half the farm and now they
may just give away a chicken or two in order
to make the deal.”
Prices
are showing signs of stabilizing, according
to NWMLS data. Prices area-wide are down around
10 percent from twelve months ago, but a comparison
to January shows price gains in eight of the
19 counties in the NWMLS report. System-wide,
prices for single family homes and condominiums
that closed last month are up about 2.6 percent
since January.
In King County, prices dipped about 12 percent
from twelve months ago and have declined about
3.5 percent since January, but a closer look
shows considerable variation within sub-areas.
Prices in southeast King County fell 20 percent
from a year ago, but since January are down
only about 2.8 percent in north King County.
Condominium
activity remains slow. Pending sales are down
about 15 percent from a year ago. The median
sales price of $240,000 is about 7.7 percent
lower than a year ago. Condos in King County
sold for a median price of $270,450 last month,
which compares to the year-ago price of $287,925,
a drop of about 6 percent).
Demand
for high-priced homes is also tepid. According
to Estey, there are “amazing opportunities for
buyers with good credit scores and 25 percent
down payment in the $900,000- plus marketplace.”
“What
we’re currently seeing is real estate’s version
of Back to the Future,” said J. Lennox Scott,
chairman and CEO of John L. Scott Real Estate.
He believes the combination of historically
low interest rates, adjusted lower prices, and
the $8,000 tax credit has created advantageous
conditions for buyers that haven’t been seen
in decades. He noted sales in the four-county
area continue to see double digit increases.
“The more affordable markets are seeing a major
boost which is leading to higher sales in the
mid-priced markets and causing some increases
in activity in the upper end,” Scott remarked.
While
cheered by the more vigorous activity, brokers
note short sales and foreclosures continue to
be a drag on the market. Such properties, often
sold at deep discounts, may take extraordinary
time to close once there has been mutual acceptance
of an offer.
NWMLS
director Meribeth Hutchings, broker/owner of
Windermere Real Estate/Lake Stevens Inc., said
her office represents the buyer of a short sale
that has been pending since October. The buyers
who hope to purchase the home in Mukilteo have
been very patient, but are becoming less so
and are ready to move from the small apartment
where they have been living with two large dogs.
“Every time we think we are getting close, the
lender changes what they want,” Hutchings stated.
Another
NWMLS director, Pat Grimm, reported similar
experiences with a short sale. “We just closed
one in Montlake on May 28 -- after the parties
to the transaction reached mutual acceptance
on Feb. 10, said Grimm, the owner/broker at
Windermere Real Estate/Capitol Hill. (NWMLS
defines a short sale as a transaction that does
not produce sufficient funds to cover the existing
monetary encumbrances against the property,
closing costs, real estate commissions, and
other financial requirements of closing.)
Tacoma
broker Dick Beeson of Windermere/Commencement
Associates said he has several agents deeply
involved in handling short sales since Pierce
County is so hard hit. He estimates around 25
percent of all properties for sale are either
bank owned or short sale, and one of every three
pending sales is one or the other.
“Short
sales play a big role in what many buyers are
looking for,” according to Beeson, who also
noted these buyers often fail to realize the
extraordinary length of time it takes to close
a sale – generally twice as long as a conventional
sale. “Many get discouraged after 60 or 90 days
and withdraw from a sale, never having received
notice form the underlying lender what they
are willing to take for the property. Many properties
end up going to foreclosure because of the inefficiency
of the banks in providing answers to offers,”
Beeson commented.
The
recent uptick in pending sales, both locally
and nationally, is a hopeful sign that we’re
putting the worst of the market behind us, suggests
Ron Sparks, managing vice president at Coldwell
Banker Bain.
“As
you would expect in a recovering market, not
all neighborhoods are uniformly performing,
and for home sellers particularly, there are
plenty of challenges that remain.” However,
he observed, “In many neighborhoods where just
a few years ago broad affordability had all
but vanished, lower prices, flexible terms and
very low interest rates are pushing inventory
absorption for single family homes to levels
not seen since 2007.”
Sparks
said multiple offers for the best listed properties
are occurring everywhere, including Pierce and
Snohomish counties. “Improving sales in one
neighborhood helps dwindle inventory, and can
push motivated buyers to search for homes in
other neighborhoods. This process typically
occurs before prices start to stabilize,” he
explained.
Has
that stabilization begun? “As my old Magic 8-Ball
used to tell me: signs point to yes,” according
to Sparks, who noted eight counties served by
the NWMLS have seen price increases since January.
“The sales volume in my Bellevue office is now
roughly 10 times what it was in February, with
expanded sales in almost every price category.
Overall inventory levels have dropped substantially
as well. Does this mean the optimal time for
home buyers to take full advantage of favorable
market conditions has passed? I’d probably defer
that to the Magic 8 ball also…“Ask again later.”
Recent
fluctuations in mortgage rates have brokers
and buyers alike wondering if rates will escalate
as inflation worries return.
“While
rates now are wonderfully low, waiting has cost
buyers. Loans recently available for 4.75% are
now 5.25%,” according to broker Kathy Estey.
On a $400,000 loan, that means the monthly payment
rises from around $2,128 to about $2,253 – and
increase of nearly $125. She believes it would
be wise to act now for the best selection in
the affordable homes. “Who knows if we will
see rates of 5% or below again anytime soon,”
she wonders.
Commenting
on a recent report from the National Association
of Realtors showing a third consecutive month
of improving pending sales, Lawrence Yun, NAR
chief economist, said buyers are responding
to very favorable market conditions. “Housing
affordability conditions have been at historic
highs, but now the $8,000 first-time buyer tax
credit is beginning to impact the market,” he
said. “Since first-time buyers must finalize
their purchase by November 30 to get the credit,
we expect greater activity in the months ahead,
and that should spark more sales by repeat buyers.”
Northwest
Multiple Listing Service is the largest full-service
MLS in the Northwest. Based in Kirkland and
owned by its member brokers, it currently encompasses
nearly 2,100 companies with more than 26,000
sales associates. Together, they serve 19 counties,
mostly in western Washington, plus Grant, Kittitas
and Okanogan counties in the central part of
the state.
Click
on the Neighborhoods listed below to obtain
real estate market information including:
-
Recent Sales Activity
- Appreciation
Rates
- Demographic
Information
- Community
Information
NOTE:
For up-to-date personalized market information,
please contact
me.
Northeast
Seattle
West Seattle
|
