Brokers seeing “simple economic recipe for a softening housing market”
- Active Listing Inventory Surges 47%
- Median Home Price in King County DROPPED 1.6% In June From May
- New Listings Outgain Sales
- Fewer Multiple Offers Reported
- Price Reductions Hit The Housing Market as Sellers Sense Buyers Pulling Back
KIRKLAND, Washington (July 5, 2018) – Home buyers around many parts of Washington state had
more choices and less competition during June, prompting some industry leaders to comment on “a
feeling of change in the market.”
“Inventory is up and demand has dropped,” reported Robert Wasser, an officer with the board of directors
at Northwest Multiple Listing Service. That combination is “a pretty simple economic recipe for a
softening market,” he added in commenting on the latest MLS statistics.
Figures for June show a 5.2 percent improvement in the number of active listings system-wide, coupled
with drops in the volume of pending sales (down 8.4 percent) and closed sales (down .07 percent)
compared with a year ago. Despite the shift of some indicators favoring buyers, prices area-wide
continued to rise, increasing more than 10 percent from twelve months ago.
“There was a feeling of change in the market this June and the numbers supported that feeling,” remarked
John Deely, principal managing broker at Coldwell Banker Bain. He noted many brokers also reported an
increase in properties going past their offer review date, more price reductions, and an increase in reverse
prospecting (a tool that allows the listing broker to view a list of brokers with potential buyers for that
listing). “We’re also experiencing a decrease in multiple offers and the number of buyers participating in
multiple offers,” added Deely.
Northwest MLS brokers added 13,153 new listings to inventory during June, a drop from both a year ago
when they added 13,658, and from May when 14,524 new listings were added. With new listings
outgaining sales, total inventory as measured by active listings and months of supply improved.
At month end, Northwest MLS reported 15,234 active listings and 1.5 months of supply. Inventory of
single family homes and condos reached its highest level since October. The supply of active listings in
King County surged 47 percent from a year ago, boosting the months of supply to just under 1.3 months –
the highest level since September 2016 when there was 1.37 months of supply.
“Although still a quick response market, with more new listings coming on the market during the summer
months, we experienced dispersed buyer energy due to the greater availability and selection,” stated J.
Lennox Scott, chairman and CEO of John L. Scott Real Estate. He estimates sales activity is off 15-to-20
percent for each new listing’s first 30 days on the market. “Now through October will be the best time of
year for homebuyers,” he remarked.
“Sellers are becoming more active in the market as they sense buyers pulling back,” suggested George
Moorhead, designated broker and owner at Bentley Properties. Improving supply, a marked increase in
expired or cancelled listings, and market times almost doubling are factors he mentioned when describing
the market as “more than just lackluster” with summer showing no sign of improvement.
Windermere president OB Jacobi also saw the second straight month with a “pretty significant rise in the
number of homes for sale across the Western Washington region” as encouraging. “This is great news for
home buyers because not only does it mean more selection, but also less competition.”
Commenting on the steady improvement of supply with more choices for buyers, Mike Grady
emphasized “We still remain far below a balanced market of 3-to-5 months of inventory.” The imbalance
is reflected by rising prices, up more than 10 percent in King County and nearly 15.5 percent in
Snohomish County, he noted. “As long as we are creating 100,000-plus net new jobs annually in the
Pacific Northwest and building fewer than 30,000 new single family homes, these trends will continue,”
suggested Grady, the president and COO of Coldwell Banker Bain.
Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate in
Poulsbo said the market there has slowed “but not to the degree that Seattle has. There are fewer listings
coming on the market, to a large degree because potential sellers cannot find a home to buy.”
MLS figures show inventory in Kitsap County is down more than 20 percent from a year ago and pending
sales declined 5 percent. Wilson said some potential sellers are opting to stay in their current house and
remodel citing rising prices and limited selection as reasons for their decision.
“This market is reaching westward to Jefferson and Clallam counties,” Wilson reported, noting Port
Ludlow, Port Townsend and Port Angeles are all feeling a bump in value and shrinking inventory.
Jefferson County inventory dropped 32.2 percent year-over-year while prices surged 29.8 percent. The
supply in Clallam County shrunk nearly 30 percent, with prices jumping 10.4 percent.
Twenty of the 23 counties covered by the Northwest MLS report had double-digit increases in median
sales prices. Grant, Kitsap, and Skagit counties were the exceptions, each with gains under 6 percent.
Of the 29 map areas the MLS tracks within King County, six areas, including Queen Anne/Magnolia and
most sub-areas of the Eastside, reported median prices topping $1 million for sales of single family homes
and condos that closed during June.
Despite the overall gains, buyers might be cheered by one notable figure: The median sales price of a
single family home (excluding condos) in King County fell from May, at $726,275, to June, a $715,000,
for a drop of nearly 1.6 percent. That May-to-June decline hasn’t happened since pre-recession, noted
MLS director Wasser, owner/broker at Prospera Real Estate in Seattle.
“While home prices are still trending above average rates, the pace is moderately slowing as the housing
market becomes less frenetic,” Jacobi stated, adding, “We have a ways to go before we approach anything
close to a balanced market, but we’re certainly trending in the right direction.”
The softening was evident in the four-county Puget Sound region where pending sales (mutually accepted
offers) were down nearly 11 percent from a year ago. Last month’s 8,052 mutually accepted offers in
King, Kitsap, Pierce and Snohomish counties was the lowest total for June since 2014.
Wasser agreed. “It’s still a seller’s market out there, but I’m seeing signs of a more balanced market on
the horizon,” he stated.
While year-over-year prices rose in all counties, compared to May they were flat in some areas, including
King County where the median price of $650,000 was unchanged. The overall median of $425,000 for
June’s closed sales was only $5,000 higher than the previous month.
Buyers who want to live in King County still face hefty prices for existing inventory. Deely said his
analysis of active listings of single family homes revealed more than a third of the choices for single
family homes has asking prices of more than $1 million. And, he added, there are fewer than 80 listings
(only about 2 percent) are priced below the US national median sales price of $313,000.
Escalating prices and depleted inventory in desired neighborhoods are top concerns Moorhead hears from
buyers, but “they have another challenge on the list: rising interest rates.” The hikes ─ with more
expected ─ are pushing buyers into a lower price point, or forcing them to come up with a larger down
payment, he added.
Grady also commented on rising mortgage rates, resulting in some buyers being priced out of mortgage
qualification. He also suggested the slowdown in pending sales has an international angle. “There have
been slightly fewer sales to international buyers as China continues to make taking cash out of China
more difficult,” he stated.
Home builders continue to be challenged. Wilson noted builders are “struggling to ramp up production to
meet demand” with local regulations and processes being inhibitors.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service
MLS in the Northwest. Its membership of more than 2,200 member offices includes more than 29,000
real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in the
“Information and statistics derived from Northwest Multiple Listing Service.”
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