Housing market “warming” as brokers report multiple offers in some areas
KIRKLAND, Wash. (May 5, 2011) – Home sellers around Washington state are starting to a see something that had all but vanished in recent months: multiple offers.
Several directors of Northwest Multiple Listing Service noted they are encountering more bidding wars in certain neighborhoods and price ranges, even though the latest figures show fewer sales and lower prices than a year ago. Shrinking inventory is spurring activity, with some brokers reporting a “shortage of good listings” and “signs of normality.”
Northwest MLS members reported 7,154 pending sales during April, a 24 percent drop from a year ago when buyers were scrambling to take advantage of a federal tax credit that expired April 30, 2010.
Going back two years, pending sales rose by a modest 3.4 percent; when compared to the same month in 2008, last month‟s pending sales (mutually accepted offers) jumped 15.2 percent.
“With healthy sales activity over the last several months, a shortage of homes coming on the market and low foreclosure activity, the stage has been set for a multiple offer market,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
Scott believes buyer confidence around job centers is back, noting one office had multiple offer situations on 82 percent of recent transactions in North Seattle. A managing broker at a John L. Scott office South King County reported several multiple offers on homes priced under $350,000. Scott said the manager indicated buyers who still want to bargain on price and ask for closing costs are losing out. “We believe the bottom of the market is here in the under $350,000 price range.”
Other Northwest MLS directors in King County, along with representatives from Whatcom and Kitsap counties, also commented on the uptick in multiple offers.
“Because of the lack of inventory in many areas we have seen a large increase in multiple offers on homes that are properly priced.” (Darin Stenvers, John L. Scott, Inc., Bellingham)
“There is a severe shortage of good listings in the close-in Seattle neighborhoods that is causing many multiple offers and the first signs of price increases on homes under $500,000 and also on desirable higher priced homes.” (Mike Skahen, Lake & Company, Seattle)
Brokers and sellers in Kitsap County are beginning to see multiple offer situations, especially for homes priced $200,000 to $350,000 (Frank Wilson, John L. Scott Real Estate, Poulsbo)
The new report from Northwest Multiple Listing Service shows members in the 21 counties it serves added 10,083 new listings during April, down 20 percent from the same month a year ago. Through the first four months of 2011, nearly 11,000 fewer new listings have been added to inventory when compared to the cumulative total for the same period a year ago (34,855 versus 45,590), a drop of 23.5 percent.
Total inventory is down nearly 13 percent from a year ago. At month end, the multiple listing service inventory encompassed 34,862 active listings, including the new additions during April. A year ago, brokers represented 39,999 active listings of single family homes and condominiums (combined).
“We just had three offers on two new listings, one in North Seattle at $320,000, and the other in Ballard at $429 000,” said MLS director Mike Skahen of Lake & Co. He cited a local blogger who reported a meager 1.1 month supply of homes in the Green Lake/Ravenna area, the lowest in four years.
“While buyers remain cautious, they are ready to pounce on attractive, well priced homes and the open house traffic is very heavy,” Skahen remarked. He credits the hiring at Amazon and general improvement in the Seattle economy with the boost, adding “a good recovery is under way.”
Joe Spencer, president and COO of John L. Scott Real Estate agreed with Skahen, saying the market is “showing signs of normality after three years of decline.” The reduction in new inventory is creating more balance between supply and demand, putting buyers and sellers on equal footing when negotiating a sale. “This is very positive news and should add to the trend toward price stabilization in many areas,” Spencer stated.
Kitsap may be one such stabilizing area. Northwest MLS director Frank Wilson described it as being in an “interesting place, market wise.” Common perception is that it‟s a bad market, he said, but the reality is at some price points it‟s a robust market. Brokers and sellers are beginning to see multiple offer situations, and tools that have not been used in a while, such as escalation clauses, are returning, according to Wilson, the branch managing broker at John L. Scott‟s Poulsbo office. Fewer buyers are making low-ball offers and sellers are being more proactive about pricing their homes to be competitive in today‟s environment. “Both buyers and sellers are beginning to get the message of today‟s market, which is „be realistic‟.”
Brokers reported 4,581 closed sales during the month, of which 3,994 were single family homes. That‟s a drop of about 12.6 percent from the year-ago figure of 5,243 closings.
The median price on the 4,581 completed sales for April was $237,000, a decline of 9.2 percent from the year-ago median price of $261,000. In King County, prices are down about 4.6 percent, from $340,000 to $324,500. The dips reflect a significant number of foreclosed homes and short sales that are in the mix.
NWMLS director OB Jacobi, president of Windermere Real Estate, said an analysis by Windermere shows distressed properties accounted for about 35 percent of home sales in King County in April, up from 21 percent a year ago. Bank owned properties account for much of the growth, according to Windermere‟s research. “The good news is that while there is significant bank-owned inventory, it looks like the banks are starting to work their way through it.” he observed.
Jacobi said his company‟s analysis shows the median price of bank-owned homes that sold in King County in April was 49 percent lower than the median price of non-distressed homes. Short sales prices were 23 percent lower.
While distressed properties may skew some statistics, Jacobi said they can present great opportunities for buyers looking for bargains. For example, a broker with his company sold a nice 5-bedroom bank-owned home in the Greenwood neighborhood last month for $315,000. (A quick search of the Northwest MLS inventory shows the median asking price for a non-bank-owned 5-bedroom home in Seattle is $635,000.)
Stenvers, of John L. Scott‟s Bellingham office, believes several indicators show the housing industry is recovering on its own. Acknowledging it is a slow process, he said he expects it will continue for the balance of 2011 and into 2012.
Many of today‟s buyers are not seeking loans that stretch their budgets as in the past, prompting banks and the secondary market to regain confidence, and eventually loosen their credit guidelines and roll out new loan programs, Stenvers suggested. He expects buyers will have to look at making their first offer their best offer, even on bank-owned homes. “The days of lowball offers will soon fade and short sales losses will tighten.” As prices stabilize and inventories drop, Stenvers said many buyers will “feel the chance at home ownership at bargain prices slipping from their grip.”
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-serviceMLS in the Northwest. Its membership includes more than 22,000 real estate brokers. The organization,based in Kirkland, Wash., currently serves 21 counties in Washington state.