October 11, 2006
*September Housing Activity in Western Washington Brings Few Surprises*
KIRKLAND, Wash. (Oct. 6, 2006) – September brought few surprises in housing activity for members of the Northwest Multiple Listing Service: inventory and prices were up, while pending sales dropped compared to the record-setting pace of 2005.
Prices area-wide for closed sales of single family homes and condominiums rose 9.4 percent compared to twelve months ago – the first single-digit increase in 24 months. Of the 17 counties covered in the NWMLS report, six of the areas (including King County) reported single-digit price increases. Nine counties still had double-digit gains.
For single family homes (excluding condominiums) that closed during September, the median sales price system-wide was $325,950, up 10.5 percent from a year ago. In King County, prices rose 11.5 percent, from $381,250 a year to $425,000 for September’s sales.
“Let’s just say that the reports of the looming real estate crash have been greatly exaggerated,” commented NWMLS director Mike Larson, a broker in Tacoma. “We all knew that the almost ridiculous growth we’ve experienced couldn’t be sustained and that the market would eventually soften a bit,” he said, noting, “The well-priced homes are still moving and the overpriced homes are not.”
Not unexpectedly, inventory grew last month, with every county reporting a buildup of active listings.
Brokers added 12,656 new listings to inventory during September, nearly matching the year-ago volume when they reported 12,929 new listings. Last month’s additions included 10,697 single family homes and 1,959 condominiums to boost the total inventory to 34,443 listings. That’s up more than 41 percent from the selection of a year ago.
The growing inventory is giving buyers a “much better chance to selectively and judiciously make buying decisions without the frenzied attitude of the last four years,” according to Dick Beeson, broker/owner at Windermere Real Estate in Tacoma. But there’s a flip side for sellers, said Beeson, who is also member of the NWMLS board of directors. “Sellers are getting frustrated by longer marketing times with some now offering more buyer incentives than they would have previously offered,” he noted.
“The Puget Sound region is now in the midst of a transitional market in which we’re seeing far more equilibrium between buyers and sellers than we did earlier in the year,” said NWMLS director Joe Spencer.
Pending sales fell about 18.5 percent from a year ago, with every county reporting fewer transactions. NWMLS members notched 8,160 pending sales (offers made and accepted, but not yet closed) during September, which compares to a year-ago total of 10,014 pending sales. Through nine months this year, pending sales are down 8.6 percent from the same period a year ago.
Beeson believes the drop in pending sales is due in part to indecision by buyers and reluctance by sellers to adjust prices to reflect reduced demand. “Buyers are more patient now than they have been previously,” he remarked.
To get top dollar in a slowing market, sellers not only have to price their home appropriately, they must also “take care of all the little chores” of getting their home ready to showcase,” emphasized Realtor Terry Miller, an associate broker in Seattle. She cited the example of a newly listed home in Richmond Beach with an asking price of $650,000 that drew a full-price offer within five days.
Miller said the owners even went beyond her recommendations for preparing the home to sell by arranging a pre-inspection and replacing the roof, knowing it was nearing the end of its life cycle. Those steps definitely gave them an edge in getting the quick, full-price sale, Miller believes.
NWMLS director Mike Skahen also stressed the importance of realistic pricing. “Buyers are more selective and pricing is very important,” he remarked. Skahen, a broker/owner in Seattle, said he and his sales associates are seeing “more normal activity” for new listings in recent weeks, along with a “very noticeable increase” in buyer activity. A dip in interest rates and temperatures may account for some of that increase, he suggested.
“We continue to have very strong demand for homes in close-in neighborhoods with good street appeal and charm,” Skahen commented. A good example, he said, is a 2-bedroom, 1.5-bath Phinney Ridge home built in 1914 that he described as being in average condition and in a nice setting. Although listed at $499,000 it drew 11 offers, eventually selling for around $600,000. “Demand for these types of homes is as intense as ever,” he reported.
Elsewhere, there are signs of moderating demand, reflecting more supply and possibly the start of a seasonal cool down.
Pierce County has nearly five months of inventory compared to just over three months for King and Snohomish counties, Larson noted. (Nationally, it’s averaging more than seven months.) “What’s interesting,” he remarked, “is that despite that higher supply, values in Pierce County still increased almost 13 percent compared to last year — more than both King and Snohomish counties.”
Larson acknowledged being “a bit concerned” about Pierce County’s condo market, “particularly downtown, where they seem to be going up everywhere.” With more than four months of supply (about twice that in King and Snohomish counties), he wonders if demand exists to sustain all those units, particularly considering “many of the unbuilt units aren’t even part of the data yet.”
“Agents realize they must do a better job of convincing sellers, and themselves, of the realities of the marketplace,” Beeson stated, adding, “Things have changed, and it’s now edging toward a buyer’s market. Sellers can’t remain frozen in time, place or price when it comes to selling their homes.”
Beeson believes the market will self correct during the coming months. “Sellers who don’t have a serious motivation to sell will tire of the longer marketing times and will probably withdraw from the market, thus reducing inventory,” he commented. He expects prices will continue to increase “but more slowly” and, if interest rates remain low, next year will see a “harmonizing of supply and demand.”
One caveat Beeson cited, is if population continues to increase. “This could cause demand to remain above supply, especially if land use issues in King, Snohomish and Pierce counties are not resolved and development is brought to a halt,” he remarked.
“While the market has slowed down somewhat, we’re not experiencing the same dramatic effects of other areas like California and the Northeast,” said Joe Spencer. “Because the media have focused so much on those areas, many local buyers/sellers are in a holding pattern, waiting to see what the Puget Sound market will bear in the coming months. We’re somewhat protected in the Pacific Northwest because the key economic indicators are in alignment to support and sustain a healthy housing market” he added.
This information is from the Northwest Multiple Listing Service which is the largest full-service MLS in the Northwest. Based in Kirkland and owned by its member brokers, it currently encompasses more than 2,000 companies with approximately 27,000 sales associates. Together, they serve 17 counties, mostly in western Washington, plus Grant, Kittitas and Okanogan counties in the central part of the state. NWMLS recently added service to Clark County with the opening of an office in Vancouver.
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Bob’s Bugle Real Estate Newsletter October 2006
STATISTICAL SUMMARY BY COUNTIES
Market Activity Summary for September 2006
|September 2006 Single Fam. Homes + Condos|
|Total Active||# Pending Sales||# Closings||Avg. Price||Median Price|
4-COUNTY PUGET SOUND REGION PENDING SALES
(SFH + Condo combined)
(totals include King, Snohomish, Pierce & Kitsap counties)
INVENTORY – MONTHS SUPPLY (4-county Puget Sound region)
Res + Condo (combined)
Bob’s Bugle Real Estate Newsletter October 2006, copyright 2006. All material contained herein is owned and protected. Any attempts to reproduce this information without the express written consent from the owner will be prosecuted.
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