KIRKLAND, Wash. (Mar. 4, 2009) – Home buyers appear to be in a "mental filibuster," according to one real estate executive upon seeing the latest figures from Northwest Multiple Listing Service. The report on February activity for 19 counties across Washington shows slight gains in pending sales and selling prices from January, but brokers say many would-be buyers remain on the sidelines, paralyzed by the uncertain economy.

"I believe these results are reflective of what might be called a "mental filibuster" for potential home buyers -- they are struggling between the desire to buy a home and the uncertainty of what might come next in the way of government stimulus, tax credits or lower mortgage rates," observed Ron Sparks, a real estate broker in western Washingron State. Agents are reporting "tremendous activity" at open houses, with the last few weekends generating the best activity in several months. Despite the high interest, what's stopping buyers, according to Sparks, is weak consumer confidence.

"Buyers don't yet understand what the stimulus package means to them," said NWMLS director Kathy Estey. "Good houses at good prices that are affordable are getting attention," she remarked, noting her office had four multiple offer situations the last week of February for homes priced under the median cost. "Open house activity is up and attendees are serious," Estey reported.

Northwest MLS brokers reported 4,559 pending sales during February for a 4.7 percent improvement over January. That total, which includes single family homes and condominiums, was the highest volume since September 2008 when MLS members notched 5,982 pending sales. Last month's pending sales total (offers made and accepted, but not yet closed) was down about 18 percent from twelve months ago.

Price changes were mixed across the counties in the Northwest MLS service area. The median price for last month's completed sales of single family homes and condos combined was $278,000, up slightly (1.8 percent) from January, but lagging the year-ago area-wide median price of $316,950 (down about 12.3 percent). Ten counties reported increases in median prices for last month's sales when compared with January.

For single family homes only (excluding condos), the median selling price was $283,000, up about 2.5 percent from January. Condo prices dipped slightly from January, dropping from $250,000 to $248,250.

Inventory levels are shrinking in many counties in the NWMLS system. Broker-members added 9,421 new listings to inventory, down more than 22 percent from a year ago when they added 12,104 new listings to the database.

At the end of February, MLS members reported representing 39,299 active listings (32,811 single family homes plus 6,488 condominiums). That's down 10.5 percent from the year-ago total of 43,927 active listings. All but three counties (Grant, Jefferson and San Juan) reported drops in total inventory.

"What we need most is a continued reduction in inventory coupled with a huge reduction in foreclosed and short sale properties on the market," said NWMLS director Dick Beeson. "It could take some time to absorb so many of these types of properties," Beeson, a Realtor since 1979, acknowledged.

Beeson also reported a noticeable increase in open house activity in Pierce County, attributing part of the surge to more transferees moving into the area who are looking to buy rather than rent. "Home values are finally at a point where affordability has returned and the market is slowly beginning to respond to the $8,000 tax credit for first-time buyers," he observed. That incentive "could make a huge difference in the final quarters of the year," Beeson suggests. 

Ron Sparks also commented on housing affordability, saying it's at its best in decades. "This certainly appears to be a once in a generation home buying opportunity, but it's also coupled with a once in a generation economy," he stated. The question for all potential home buyers is not whether the current economic troubles, or the unique housing opportunities they now possess, will end, Sparks suggested, adding, "Rather, they might ask where they will be living once they do."

Lawrence Yun, chief economist for the National Association of REALTORS, who was in Bellevue last week to keynote a Realtor meeting, said he expects buyers will respond to much improved affordability conditions and to the $8,000 first-time buyer tax credit. In a statement accompanying NAR's latest report on pending sales of existing homes, Yun said, "Conditions have been aligning very favorably for home buyers with the exception of consumer confidence. But I am hopeful that sales will turn around by late spring and early summer because history suggests that home sales can rise even in times of job losses when housing affordability rises."

Yun cautioned it will take a while for the stimulus to show in housing data. From the time a buyer starts looking for a home until it is reported as a closed sale, it can take as long as five months, including time for the search, closing the transaction and reporting the data. "This means improvement from the economic stimulus isn't likely to show as closed home sales before summer, although we may see an earlier lift from lower mortgage interest rates," he said.

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Statistical Summary by Counties: Market Activity Summary for February 2009

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)