Brokers say all parties in housing transactions need to recalibrate during shifting market

KIRKLAND, Washington (August 4, 2022) – New statistics from Northwest Multiple Listing Service confirm reports of a shifting housing market, prompting one industry leader to suggest “all parties involved in a transaction today have to recalibrate.”

“Today’s buyers have their cups finally overflowing with options as residential inventory grows to about two months of supply,” said Dick Beeson, managing broker at RE/MAX Northwest Realtors in Gig Harbor. The MLS report summarizing July statistics show 2.01 months of inventory system wide.

Inventory of single family homes and condominiums across the 26 counties served by Northwest MLS has not exceeded two months since January 2019 when there was 2.3 months of supply.

Commenting on the “many moving parts” of the market and the need to recalibrate, Beeson said sellers “are starting to see that overpricing just ain’t in the cards right now.” He also noted buyers still have to compete with other would-be homeowners, and depending on the property, some sellers are receiving offers over their asking price. “Buyer and seller expectations have changed. It feels like things are starting to normalize a little,” Beeson remarked.

Active listings have nearly doubled from a year ago, jumping from 7,948 offerings of single family homes and condos to 15,381 (up 93.5%). The addition of 11,805 new listings during the month contributed to the boost. Compared to June, the selection expanded by 1,976 listings (up 14.7%).

Evidence of slower activity appears in the sales figures. Pending sales retreated about 24% from a year ago, dropping from 11,567 to 8,775 mutually accepted offers. The NWMLS report shows a nearly 30% year-over-year decrease in closed sales (declining from 10,919 closings to 7,645).

Despite fewer sales, prices still rose, but at a slower rate. The median price on last month’s closed sales of single family homes and condos increased 6.1% from a year ago, rising from $589,000 to $625,000. For single family homes only (excluding condos), prices jumped about 6.6% and condo prices gained more than 8.6%.

In the four-county Puget Sound region, price changes ranged from a gain of about 2.7% in King County (from $789,000 to $810,000) to a jump of nearly 12.7% in Pierce County (from $501,500 to $565,000). Kitsap prices rose 5.4% while prices in Snohomish County increased 9.3%.

“Buyer opportunities have returned to the Puget Sound market, including increased availability and selection of properties, as well as fewer multiple offer/premium pricing situations,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

A check of Northwest MLS statistics illustrates Scott’s point. Sellers in half the 26 counties accepted full price or above asking price offers. Based on the sales price to list price ratio, sellers of homes in Thurston County received 103.1% of their listing price to top the list. The other 12 counties where homes sold at or above the list price were Chelan, Clark, Cowlitz, Franklin, King, Kitsap, Mason, Pierce, San Juan, Skagit, Snohomish, and Whatcom. 

The market balance is favoring buyers, reported Dean Rebhuhn, owner at Village Homes and Properties in Woodinville. “After experiencing multiple offers, shrinking inventory, or not being able to include inspection or financing contingencies with their offers, buyers now have choices,” he explained.

Noting King County had about seven weeks of inventory at the end of July (1.86 months) – about double May’s supply (0.83 months) – Rebhuhn described sales as “very good,” but said savvy sellers are making certain their homes are “priced right to win the sale. Overpriced listings have missed the market.”

Lennox Scott reported some buyers around Puget Sound are experiencing “buyer gridlock,” meaning they are seeking to sell their current home before getting under contract for their next property. “Home sale contingencies are a useful tool for homeowners in similar situations during this time.”

Northwest MLS director Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale, said Kitsap County continues to be a hot market, with homes in the $400,000-to-$700,000 price range drawing multiple offers. “Open house traffic is increasing, and we continue to see an influx of buyers from the greater Puget Sound region and from out of state who are moving to take advantage of Kitsap’s quality of life and diverse work force.”

Like nearly every county in the Northwest MLS service area, Kitsap had fewer pending sales than a year ago (483 versus 580 for a drop of 16.7%), but compared to June, brokers reported 27 more pending sales (up 5.9%). Year-over-year prices on closed sales in Kitsap rose 5.4%, from $507,500 to $535,000.

Leach also noted marketing times continue to be brisk, saying most sellers receive offers within 15 days, although he expects that to increase as inventory grows. Buyer concessions on resale homes are also on the rise, according to Leach. Builders are building “at a monumental rate” while trying to adjust to increases in mortgage rates. “We are seeing builders moving their price points down and providing incentives to buyers in closing costs and buydowns to help borrowers obtain lower interest rates.”

John Deely, executive vice president of Coldwell Bank Bain, said, “We are coming off the fevered pitch of a market that had tremendous velocity over the last few years. With listings starting to build again we are seeing a bit of a natural slowdown, yet still very much a sellers’ market.”

Industry experts consider less than four months of inventory to be a “seller’s market.” Deely noted every county in the NWMLS report except San Juan and Columbia had less than four months. All four counties in the Puget Sound region had less than 1.9 months of supply.

The good news, according to Deely, is “not only is there more inventory for buyers to view, but sellers who were on the fence about placing their home on the market, mainly because they had nowhere to go, are now seeing potential.”

Commenting on the slowing rate of price increases, Deely noted “we are not seeing median prices drop significantly. Slight seasonal decreases from May to July are typical for this time of year after the spring market, with this year further impacted in July by a heat wave and spike in travel.”

Only two counties, Ferry and Island, reported a year-over-year drop in median prices, according to the MLS report. Nine counties experienced single-digit appreciation in July compared to 12 months ago, with the remaining 15 having double-digit gains.

The latest Northwest MLS report mirrors some of the findings from the National Association of REALTORS® and its Confidence Index for June. (Figures for July are not yet available.) NAR’s data showed the average number of offers per property dipped to three from a previous high of five. Median days on the market for homes nationwide was 14, a record low. Nearly a third (30%) of buyers waived inspection and appraisal contingencies, which NAR said has held fairly steady since the start of the pandemic.

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, NWMLS is the largest full-service MLS in the Northwest. While based in Kirkland, Washington, its service area spans 23 counties and it operates 20 local service centers.

NWMLS July 2022 Real Estate Market Report from NWMLS on Vimeo.

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