Bob’s Bugle Real Estate Newsletter October 2015
October 7, 2015
*NW Washington Housing Market Slowdown Expected – But Prices Still Rising in Many Areas*
Kirkland, WA – Scarce inventory, new rules for mortgage closings and affordability concerns will likely slow home sales around Western Washington during the remaining months of 2015 and into early 2016, according to spokespersons from Northwest Multiple Listing Service.
The latest statistics from the MLS show a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago, prompting one industry leader to say the trends aren’t sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. “We’re on the cusp of a housing market slowdown,” he predicts.
Northwest MLS director Darin Stenvers also expects a slowdown, pointing to new rules for mortgage closings and rising interest rates as culprits.
“With the introduction of the new TRID(1) banking and closing disclosure requirements we will see longer closing timeframes for the foreseeable future. This will lead to a slowdown in closings and thus may slow the market until early or mid-2016,” explained Stenvers, the office managing broker at a real estate brokerage franchise in Bellingham, Washington. Layoffs and the possibility of higher interest rates result in unpredictability for both buyers and sellers, he suggested.
Despite an expected slowdown, closed sales through the first nine months of this year are running 16.6 percent ahead of the same period a year ago, with median prices up 9.2 percent.
The MLS report for September shows pending sales continue to outnumber new listings, resulting in inventory declines in most of the 23 counties in its service area. That imbalance leads to rising prices.
Northwest MLS members reported 9,574 pending sales (mutually accepted offers) in September for a 7.9 percent increase from the year-ago figure of 8,875. Compared to August, pending sales fell 9.7 percent.
Closed sales jumped 17.5 percent, with year-over-year sales rising from 7,020 finished transactions to 8,245. Twenty of the 23 counties reported double-digit gains from a year ago.
Prices showed more variation. Area-wide, the median price on last month’s closed sales of single family homes and condos was $312,000. That’s up nearly 9.5 percent from the year-ago figure of $285,000, but down slightly from August.
Compared to the system-wide gain, prices rose at more modest rates in three of the four counties in the Puget Sound region, with Pierce County being the exception. Year-over-year prices there jumped 11 percent. Prices in Kitsap County were up only 4 percent from a year ago; in King County the gain was about 4.8 percent and in Snohomish County it was about 7.5 percent.
Single family home prices across the 23 counties in the MLS report rose nearly 7.6 percent from a year ago, from $297,500 to $320,000. Single family homes in King County commanded the highest median price at $490,250, up 6.6 percent from the year-ago figure of $460,000, but down from June’s high of $500,000.
The condo market remained hot with both sales and prices up by double digits. Members reported 1,183 closed sales during September for a gain of nearly 30 percent from a year ago. Prices on last month’s sales jumped 13 percent, from $230,000 to $260,000.
Dwindling inventory continues to be a drag on activity, but some brokers believe new construction activity is encouraging. Stenvers said new housing starts could help boost inventory in many markets during the coming months.
MLS members added 8,772 new listings during September, down slightly from the year ago total of 8,878. At month end, there were 19,724 active listings in the database, down 23.3 percent from the same time a year ago when inventory totaled 25,717 properties.
“We’re selling everything before buyers can turn around,” commented Dick Beeson, principal managing broker at a real estate brokerage franchise in Tacoma, WA and a member of the Northwest MLS board of directors. Figures showing the ratio of listings to sales, known as months of supply, tend to support his belief.
For September, the MLS reported 2.39 months of supply system-wide, about the same as the figure for August. The shortages were most acute in King County, with about 1.4 months of supply, and Snohomish County, with about 1.9 months of supply. Industry experts use a range of four-to-six months as an indicator of a balanced market.
“The frenzied market on the Seattle side is taking a toll on Kitsap home prices,” said MLS chairman Frank Wilson, the branch managing broker at a real estate brokerage in Poulsbo, Washington. Prices there rose 4 percent from a year ago. He reported good traffic at open houses in Kitsap County, quick acting buyers when a new listing appears, many multiple offer situations, and an increase in investor interest.
“Since new listings coming to market usually slow during the fourth quarter, we are looking at a severe shortage of inventory heading in to the spring market of 2016,” Wilson remarked. Like others on the MLS board, he said serious buyers need to be prepared to take immediate action when they find a home they like.
“In preparation, buyers need to meet with a lender, find an inspector, check with their insurance agent, and get their financial house in order so they can move aggressively,” Wilson advised.
Brokers say opportunities still exist for buyers who have missed out on homes during multiple offer situations.
Some buyers who are weary of bidding wars are looking in areas where multiple offers are less common, said MLS director George Moorhead. Also, buyers who consider homes that have been on the market more than 120 days are negotiating much better terms without the competition of other buyers,” he reported.
Beeson suggested inventory shortages could be eased if expired listings are re-listed. Not every home sells once it’s listed, he noted. His analysis shows more than 2,600 listings have expired in the tri-county area so far this year. “These are sellers who need coaching on pricing,” he believes.
Even though they’ll face longer commutes, Moorhead said buyers who are feeling squeezed by the lack of inventory are extending their search areas farther than before in hopes of finding a home at an affordable price. These buyers hope to sell the home in the outlying area within five years and purchase another home closer in. “This calculated move hasn’t really been a conversation in the past,” said Moorhead, the designated broker and owner of a real estate brokerage in Bothell, WA.
Bobbie Chipman, principal managing broker at a real estate brokerage in Puyallup, Washington, said statistics strongly indicate buyers must be strategic in the current market in order to be successful. “If buyers have a home to sell in order to purchase, they should consider selling, then prepare to live in temporary housing while looking for the right home to purchase,” she suggested.
Buyers without a home to sell may be better positioned to have their offer accepted, believes Chipman, a member of the Northwest MLS board of directors. “These buyers should look at both active status listings and contingent listings to expand their choices,” she explained.
Bob’s Bugle – Real Estate Newsletter October 2015
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Bob’s Bugle – Real Estate Newsletter October 2015
Statistical Summary by Counties:
Click Here Market Activity Summary for September 2015
4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)
Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 23,000 brokers and agents. The organization, based in Kirkland, currently serves 23 counties in Western and Central Washington.
Bob’s Bugle Real Estate Newsletter September 2015, copyright 2015. 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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