Where Is The Housing Inventory AND What's Happening With Local Home Prices?

Posted by Cary W Porter on Tuesday, February 11th, 2020 at 10:23am

Home buyers in Western Washington “hit the ground running” in January
 
Inventory down 33% from last year.
Pending Sales TOP new listings
Inventory at new All-Time lows

KIRKLAND, Washington (February 6, 2020) – “All indicators point to a vigorous spring market,” suggested broker Dean Rebhuhn when reviewing just-released statistics from Northwest Multiple Listing Service. The report covering 23 counties shows pending sales outgained new listings, record-low inventory that’s down 33% from a year ago, and double-digit price increases. 
 
Matthew Gardner, chief economist at Windermere Real Estate, noted home buyers did not take very much time off during the holidays. “They hit the ground running as soon as the new year kicked off.” 
 
Rebhuhn, the owner of Village Homes and Properties in Woodinville, said new jobs, low interest rates, and lifestyle changes continue to drive the market. “Hot spot markets are experiencing multiple offers,” he reported. 
 
Northwest MLS brokers added 6,517 new listings during January, a year-over-year decline of more than 8%. Pending sales (mutually accepted offers) topped new listing activity by 871 units. Brokers reported 7,388 pending sales last month, a 2.3% decline from the same month a year ago.
 
“So now we have a three month trend where we’re seeing pending transactions exceeding new listings added in all major counties in the Puget Sound region,” observed Mike Grady, president and COO of Coldwell Banker Bain. “Inventory continues to decline slowly to barely more than a month’s on hand. Our brokers are reporting it ‘feels like 2017,’ with multiple offers returning and review dates (where sellers identify a date to review all offers) being added to the mix because of the number of offers they are receiving,” he added.

 
At the end of January, the MLS database totaled only 7,791 active listings of single family homes and condos, well-below the year-ago figure of 11,687 (down 33.3%). A check of records dating to 2005 shows the selection is at a new low level, shrinking below the previous low of 7,921 reported for February 2018. In fact, for the 15 year span from 2005-2019 (180 months), inventory has dipped below 10,000 listings during only eight of those months. 
 
Measured by months of supply (the ratio of active listings to closed sales), there was 1.54 months of inventory system-wide at the end of January. The selection was even more meager around Puget Sound, ranging from 1.1 months in Pierce County to about 1.3 months in King County.
 
“The fever in the real estate market is over the lack of inventory and competition from high buyer demand, not the flu,” said NWMLS board member John Deely, principal managing broker at Coldwell Banker Bain.  Looking at the report for single family homes in King County (excluding condos), he noted the number of active listings is down nearly 44% from a year ago, while closed sales rose more than 7.1%. 
 
 
“This positive indicator reflects a continued buyer demand and underpins the new year with buyers competing over the available inventory,” he stated.
 
“A telling sign of the 2020 market is the tremendous open house activity,” added Deely. As examples, he said one central Seattle open house priced in the $1.2 million range drew more than 300 visitors this past weekend, and another listing in northeast Seattle attracted more than 140 groups. “As we move toward the seasonal build-up of inventory, this early high demand and robust consumer confidence should keep last year’s shift toward a buyer’s market in check,” he suggested.
 
Gardner agreed. “Inventory remains tight and, unfortunately, I don’t expect much to change even as we move into the spring months when we typically see a glut of homes come on the market.” He expects a very competitive housing market this year, with home prices rising at above-average rates.
 
Grady echoed Gardner’s expectations. “Year over year, we see double digit median price appreciation increases in Snohomish, Pierce and Kitsap counties, with King nudging back up toward 5% over this time last year. Unless something unexpected happens to affect the local job market, there’s no reason to think now that this trend will decline.” 
 
J. Lennox Scott, chairman and CEO at John L. Scott Real Estate, said the surge of buyers at the start of the year is “more intense than usual.” That, paired with low interest rates and extremely positive job growth, translates to rising prices and “a piping-hot market.”
 
Scott said there is emphasis on each new listing as it comes on the market, with many homes receiving multiple offers, especially in the more affordable to mid-price ranges. He noted the luxury market is also feeling the pressure in Seattle and on the Eastside, with listings virtually sold out in the $1 million to $1.5 million range. 
The Transition to a Balanced Market
While 2020 will continued to bring healthy growth. Early season Bidding Wars will turn to a more stabilized market by late spring. Home value increases will be stabilized, making home buying both more affordable and accessible.

Listing early before a substantial increase in inventory will be key for Sellers.

Late Spring and Summer will mean Price cuts and more option for Buyers. For buyers, the shift will signal more favorable conditions for affordability and negotiating price and contingencies. 

 
Northwest MLS members tallied 5,074 closed sales during January for a 4.3% increase from the year-ago total of 4,865. Median prices jumped 10.7% from a year ago. Last month’s sales of single family homes and condominiums area-wide had a median price of $422,750. That compares to a price of $381,900 for the same month a year ago. 
 
King County, where January’s median selling price was $589,950, reported one of the more modest year-over-year gains at 4.4%. Other counties around Puget Sound reported double-digit increases, ranging from 11.8% in Kitsap County to 15.3% in Mason County.  “January started out with a bang! What was most noticeable is that the Greater Seattle/King County real estate market rebounded quite quickly after the end of the 2019 holiday cycle,” reported industry veteran Gary O’Leyar, pointing to year-over-year drops in inventory in the Puget Sound area and employment statistics. “Fortunately, median prices for King County for January compared to a year ago were more moderate at 4.4%, but the significantly lower inventory resulted in multiple offers last month on many of our listings,” reported O’Leyar, the broker/owner at Berkshire Hathaway HomeServices Signature Properties in Seattle.
In most areas we find that the highest "Closed" sale price year over year are homes closed in April. That means the home is typically listed in March or even late February with a closing date in April. Just one month later can cost a seller 10's of thousands as increased inventory creates more selection, less urgency for buyers and resulting lower prices. 

 
Brokers in Kitsap, Pierce and Snohomish counties also commented on January’s vigorous activity.
 
“The Snohomish County market is off to a brisk start fueled by lower-than-normal inventory levels and attractive interest rates,” stated David Maider, broker/owner at Windermere Real Estate/M2 in Everett. He also said open house traffic has picked up significantly, along with the frequency of multiple offers. “Buyers requiring financing to purchase are well-served to be pre-underwritten prior to submitting an offer as sellers may have a number of buyers to choose from,” he advised. 
 
In Kitsap County, broker and NWMLS director Frank Leach is noticing house hunters from east of there moving west to more affordable communities and taking advantage of easy commutes to South Kitsap, Bremerton, Bainbridge Island and Kingston. “Rentals in Kitsap remain scarce despite new construction of many units in downtown Winslow, downtown Bremerton, and in Port Orchard,” reported Leach, broker/owner of RE/MAX Platinum Services in Silverdale. 
 
Leach also commented on Kitsap’s inventory dropping to historical lows, with prices continuing to escalate, notably in the condominium segment. Prices on completed sales of condos in that county rose a whopping 84%, from $198,000 to $365,000. 
 
“Kitsap buyers continue to be frustrated by the lack of inventory and the bidding process of trying to secure a home,” according to Leach, who is not expecting that frustration to ease. “Traffic at open houses across Kitsap remains brisk with many visitors arriving early to get in,” Leach noted, adding, “While inventory is expected to increase in the spring, the demand is here now.”
 
The market still very much favors sellers, said MLS director Mike Larson, president/designated broker at ALLEN Realtors in Lakewood. “But,” he commented, “they’re not as aggressive as they were a year or two ago. The urge for sellers to turn a quick profit doesn’t seem as great, and the urge for buyers to allow them to turn a quick profit isn’t as great.” Low interest rates have enabled buyers to keep up with rising housing values, he noted.
 
Larson isn’t seeing “buyers falling all over each other to get into their first home. It’s more methodical,” he explained, adding, “It’s crazy, particularly at the entry-level price point, but not out of control crazy. I think both buyers and sellers – and industry professionals – are more reasonable, and smarter, and experienced in how to handle this type of market, and that’s good.” 
 
When asked about the possible impact of the coronavirus outbreak, NWMLS representatives had few comments. Economist Matthew Gardner noted the significant economic relationship between China and Washington state and indicated there could be short-term impacts on tourism, but said, “As far as housing is concerned, it’s premature to suggest this will affect our real estate market.”
 
Northwest Multiple Listing Service is a not-for-profit, member-owned organization that facilitates cooperation among its member real estate firms. With more than 2,300 member firm offices and 30,000 brokers across Washington state.

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