Despite seasonal slowdown, Northwest MLS brokers report pent-up demand for housing
November statistics from Northwest Multiple Listing Service surprised a few brokers. They point to holidays, inclement weather, and various economic factors for prompting pauses in listing and sales activity. Nonetheless, several industry leaders commented on positive signs, fueled in part by pent-up demand and evidence of easing inflation pressures.
“Determined buyers are purchasing homes, with pent-up demand driving the market,” reported Dean Rebhuhn, owner of Village Homes and Properties in Woodinville. “Sellers who price to the market are attracting showings and receiving good offers,” he added, noting King County experienced an average of 55 sales per day last month, with year-over-year (YOY) median prices in King County up $10,000, rising from $740,000 to $750,000.
Northwest MLS figures show both pending and closed sales fell sharply from a year ago, but median prices system-wide edged up slightly (0.88%), from $570,000 to $575,000. Pending sales (mutually accepted offers) across the 26 counties in the report were down 40% (dropping from 8,571 a year ago to 5,106) while closed sales fell 42% (declining from 8,976 to 5,194). NWMLS figures show brokers closed an average of 173 sales per day across all counties.
The volume of closed sales, at 5,194, was the lowest level since February (5,147) and January (5,085). Compared to January’s median price of $555,000, last month’s buyers paid 3.6% more ($575,000).
“Our traditional seasonal slowdown around the holidays is happening earlier this year, with the alignment of climbing interest rates, economic news, local weather, and a volatile stock market,” stated John Deely, executive vice president of operations at Coldwell Banker Bain. “These conditions make it easier for consumers to place large purchases on hold, though we saw several notable sales in the luxury market over the last month, as real estate is still one of the best investments one can make,” he remarked.
Data from the multiple listing service shows 15.84% of November’s sales topped $1 million, while a year ago 13.96% of sales were at that level.
While some buyers are taking advantage of the expanding inventory as the market swings to their advantage, Deely said others are hesitant. “Some buyers are sitting on the sidelines waiting for interest rates to come down or thinking prices will come down even further.”
Inventory statistics were mixed. Brokers added 4,890 new listings during November, a decline of 24.2% compared to the same month a year ago when they added 6,455 new listings.
At month end, there were 12,245 total active listings, a whopping increase (about 165%) from the selection of a year ago when there were only 4,621 active listings.
Measured by months of inventory, November’s supply, at 2.36 months, was the best since January 2019 when the overall selection reached 2.4 months of inventory.
Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale, commented on Kitsap County’s improving inventory. Northwest MLS figures show there was just under two months of supply (1.95 months), last month whereas a year ago there were only about two weeks of supply (0.57 months).
Leach described the market as “normalizing,” adding, “We have seen an uptick in open houses, with healthy traffic during October and November. We anticipate brisk sales across the holidays and into the new year with inventory building toward the end of December and into January. We’re telling folks to get pre-approved and have all their documents in so if the market does take a swing, they will be ready to seize the opportunity.”
The latest statistics from Northwest MLS show both pending sales and closed sales in Kitsap County fell about 33% year-over-year. Median prices edged up slightly more than 1%, from $500,000 to $505,471.
Northwest MLS director Mike Larson, the managing broker at Compass in Tacoma, also commented on the normalizing market, echoing comments about rates “leveling off a bit, there’s not nearly as much competition, and peak inflation appears to be behind us.” Citing observations in a company newsletter, he agreed it’s good news for buyers “and a hopeful sign that after the holidays and the new year will come a more normal market.”
Fifteen of the 26 counties reported price increases from a year ago, with 11 counties having declines. All four counties in the Puget Sound region experienced modest price gains, ranging from about 1.1% in Kitsap County to 2.9% in Snohomish County.
“The data show we’re in a changed market,” observed Dick Beeson, managing broker at RE/MAX Northwest in Tacoma/Gig Harbor. “High-interest rates, doubled inventory levels, anxious lenders, contracts written with negotiations for repairs, closing costs, and other sundry things – all of these have returned to the market,” he said, adding, “Sellers realize they must actually compete with other sellers to gain a buyer’s attention and an offer.”
Beeson reported some buyers “are having trouble pulling the trigger because their heads are spinning around” in part because there’s twice the inventory to choose from and the ever-changing market. In anticipation of further growth in inventory and rates edging down, he said brokers need to be ready to help buyers make informed decisions.
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, noted both the number of home buyers and the number of new listings are running below pre-pandemic seasonal levels. “There is a shortage of unsold inventory, especially in the more affordable and mid-price ranges where approximately 80% of transactions take place within each market.” He reported a strong level of activity intensity for new listings going under contract within the first 30 days.
“December is traditionally the low point of new listings coming onto the market because of the holiday season,” Scott noted, while pointing to good news for buyers. “Home mortgage interest rates are lower than a month ago!” Noting economists forecast lower interest rates on the horizon as the economy works through lowering inflation, Scott reported, “Homebuyers are currently purchasing at market price with the possibility to refinance when rates decrease. In the meantime, some buyers are purchasing with a five-year or seven-year adjustable-rate mortgage which lowers the interest rate and monthly payment.”
Matthew Gardner, the chief economist at Windermere Real Estate, is among those expecting mortgage rates to drop. “Early in the new year, I expect the Fed to start pulling back from their aggressive policy stance, and this will allow rates to begin slowly stabilizing.” He believes rates will remain above 6% until fall 2023 “when they should dip into the high 5% range. While this is higher than we have become used to, it’s still more than 2% lower than the historic average.”
Meredith Hansen, founder/operating principal at Keller Williams Greater Seattle and a NWMLS director, encouraged hopeful owners to consider purchasing options. “With rents expected to outpace home prices, it may be a good time to take the plunge into home ownership, especially for first-time buyers,” she suggested. “These first-time buyers should look at different opportunities to get their foot in the homeownership door.” Among the options she mentioned are possible rent-to-own opportunities or buying a home that needs work and building equity by “using elbow grease.”
Hansen also recommended would-be buyers tap into resources for prospective homeowners at the Washington State Housing Finance Commission, including its free homebuyer education seminars and down payment and closing costs assistance programs.
Looking ahead, Gardner said he does not expect supply to grow significantly with inventory levels remaining well below their long-term average. “It’s unlikely we’ll see a buyer’s market in 2023, but I do expect a return to a far more balanced one.” He believes the days of sellers “having the upper hand are behind us,” adding they will have to become more realistic “with accurate pricing becoming more important than ever.”
Deely believes the 2023 market “is shaping up to be quite competitive with building inventory and pent-up buyer demand.”
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.