Western Washington Housing Market “Alive” and “Kicking” Despite the Economic Disruptions Stemming From the Coronavirus Pandemic

Posted by Cary W Porter on Tuesday, June 9th, 2020 at 10:40am

 

Despite the economic downturn and disruptions stemming from the coronavirus pandemic, Northwest MLS member-brokers reported impressive improvement from April to May on some key indicators. The volume of new listings, including single family homes and condominiums, rose 29.2% and pending sales jumped more than 44% systemwide. “The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” said Joel Kan, an MBA economist.

  • Mortgage applications to purchase a home rose 5% for the week and were a stunning 18% higher than a year ago, according to the Mortgage Bankers Association.
  • As the coronavirus outbreak was surging six weeks ago, applications by homebuyers were down 35% annually.
  • The average rate on the 30-year fixed mortgage hit another record low, 3.37%

KIRKLAND, Washington (June 5, 2020) – “The market has proved to be very resilient,” remarked Northwest Multiple Listing Service director Mike Larson upon reviewing the statistical report for May. “Buyers in Pierce County stepped on the gas last month after a brief, but significant, tap of the brakes in April,” added Larson, the president and designated broker at ALLEN Realtors in Lakewood.

Not surprisingly, year-over-year comparisons showed sharp declines. The number of new listings fell nearly 33%, total active listings plummeted nearly 36%, pending sales declined 13.5%, and closed sales dropped about 35%. Prices remained in positive territory, rising about 2.3% from a year ago.

“The resiliency of the market is amazing,” remarked Dean Rebhuhn, owner of Village Homes and Properties in Woodinville. “I didn’t think I would miss open houses until they could not happen,” he said, referring to limitations on in-person interactions. “The pandemic may be causing buyers to move farther out, wanting to get some space and a useable yard.” Amenities such as parks and trails are also important in current homebuying decisions, he added. 

Brokers and homebuyers alike seem to be adjusting to restrictions imposed on the real estate industry because of the coronavirus pandemic. 

 “The local real estate market is hot, but it looks different than it traditionally does,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “The constraint on available inventory makes it feel like we’re running out of homes to sell.” 

Brokers added 9,871 new listings to the MLS database during May, which compares to 14,689 for the same period a year ago. At month-end the selection included 10,357 active listings; that volume was 5,766 fewer than the year ago total of 16,133.

 The Housing Market Is Uniquely Positioned to Help the Economy Recover

Stated another way, at the end of May there was 1.74 months of supply across the 23 counties served by Northwest MLS. Inventory levels ranged from 1.1 months of supply in Thurston County to more than 8 months in San Juan County. Within the four-county Puget Sound region, supply ranged from 1.2 months in Pierce County to 1.74 months in King County.

Scott said buyers are “eagerly waiting for each home to come on the market with increased focus on homes in the more affordable and mid-price ranges.” -more-  

 

 “Anything under $1 million is selling quickly, and most new listings coming to market are going pending in just a few days,” stated Mike Grady, president and COO at Coldwell Banker Bain. Multiple offers seem to be in play on homes in median price ranges. “We don’t think we’ll see a balancing of the market in the short term until more sellers decide to list their homes and until new construction accelerates to meet demand.” He noted activity was showing steady improvement in each passing week and month. “The stories I hear continue to be filled with improving outlooks and activity so we’re cautiously optimistic about what summer will bring.”

Larson agreed, saying “Multiple offers and waived inspections are common as we head into the prime selling season. Underwriting requirements have tightened a bit, but rates are still very low.”

Commenting on Gov. Jay Inslee’s “Stay Home, Stay Healthy” order in effect since March and the more recent “Safe Start Proclamation,” Northwest MLS director John Deely said the challenge was met with new processes and tools to help comply with social distancing and other protocols. “Brokers jumped in with both feet to produce and use a new live streamed open house feature released by the MLS in late April,” added Deely, the principal managing broker at Coldwell Banker Bain in Seattle. “Buyers could also use virtual tours to view homes, recorded virtual tours, videos, 3-D tours, drone photos and interactive floor plans,” he added. 

Appointments to show properties under the limitations of a broker and one or two others (depending on the county where the property is located) “were booked solid from dawn to dusk in many areas,” according to Deely. “Multiple offers and a competitive environment prevailed through the month of May. We found many sellers accelerated their plans to sell upon hearing the forecast for an extended “stay home” order. Many buyers were impacted by layoffs or furlough and had to put their home purchase plans on hold for now.”

The NWMLS report shows 10,389 pending sales during May, improving on April’s total of 7,207 (up 44%), but down about 13.5% from the year-ago total of 12,006.

NWMLS director Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale, said sales are brisk in the $350,000 and below range, and sales of $1 million and up are gaining. “The tempo of the market seems to be very hot, with buyers trying to take advantage of lower interest rates, and both lenders and real estate agents scrambling to meet demand.” 

Leach believes this is “likely one of the best markets we have ever seen both in interest rates and affordability. People who are betting there will be a bubble burst are going to miss the market.”

 NWMLS members completed 5,957 transactions during May, a slight improvement from April’s total of 5,866. When compared to a year ago, however, the number of closed sales, at 9,153, marked a decline of about 35%.

The Evolution of Human Interaction and the Home Buying/Selling Process

The median price on last month’s closed sales was $449,950 across the NWMLS coverage area. That compares to the year-ago figure of $440,000 an increase of about 2.3%. 

Five of the 23 counties in the report had year-over-year price drops: Ferry (-30%), King (-2.8%), Kittitas (-2.95%), Pacific (-12.8%), and San Juan (-17.8%). The biggest increases were in Okanogan County (30.3%) and Grays Harbor County (15.7%).

“I don’t think anyone should be surprised that home prices in King County took a ‘breather’ in May,” said Matthew Gardner, chief economist at Windermere Real Estate. “Clearly COVID-19 was the cause for this drop, but I’m confident this is a temporary situation that will be reversed as King County starts to reopen, and fresher inventory comes to market.” The robust increase in listings between April and May combined with pervasively low mortgage rates “tells me prices will resume their upward trend in the coming months,” he added. 

June 5, 2020 Leach said when Kitsap County moved into Phase 2 of the governor’s reopening plan, the Kitsap Department of Community Development processed over 400 permits, which he believes “is just the tip of the iceberg as builders rush to meet consumer demand. Builders are now seeing folks who commuted to work looking to purchase homes with an extra den or office as they anticipate the “work from home” aspect is here to stay.”

Grady also commented on the slight price drop in King County, saying he believes it’s a reflection of reduced activity in the luxury home market ($2+ million), which disproportionately impacts over price averages. “This may be a reflection of a ‘wait and see’ attitude or just the uncertain times we’re in.”

 Northwest MLS statistics for King County show a correlation of declining sales in the luxury market and the impact of COVID-19:

 

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