Home sales, prices still rising in Western Washington despite lean inventory and increasing mortgage rates

Posted by Matthew Lahti on Thursday, August 8th, 2013 at 10:36pm

Northwest MLS NWMLS LogoNWMLS, Kirkland, WA, August 6, 2013 – Rising interest rates, rising prices and rising consumer confidence are creating a "positive cyclone of home sales activity," according to members of the Northwest Multiple Listing Service. A robust job market around the Greater Seattle area is also spurring sales.

Member-brokers reported 9,565 pending sales during July for an increase of more than 13.6 percent from a year ago – the highest year-over-year gain since January. Last month's mutually accepted offers across 21 counties also marked a slight improvement on June's total of 9,484 pending sales.

Northwest MLS director John Deely, the principal managing broker at Coldwell Banker Bain in Seattle, said multiple offers are being reported in all price ranges "with properly priced new listings, and we're still seeing a surprising number of all cash buyers." He also noted many transactions are conditioned on the closing of a pending sale as move-up sellers enter the market to buy a new property.

The number of closed sales and the prices on those transactions both rose by double digits compared to a year ago. Members recorded 7,772 completed transactions area-wide to outgain the year-ago volume by 27.5 percent. The median price of those closed sales, which included single family homes and condominiums, was $282,363. That's up 10.8 percent from the year-ago figure of $254,900.

"We experienced a mini power surge of sales activity that was touched off by a sudden raise of interest rates during the month of May," observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Scott attributes part of the surging activity to buyers who rushed forward to purchase a home before rates climb higher. He also reported more sellers are listing their homes "due to the realization that the next home they purchase will be at a higher interest rate." As these sellers become buyers, they're contributing to the "positive cyclone of sales activity," Scott stated.

MLS members added 10,860 new listings to inventory during July to boost the system-wide selection to 25,272 active listings. That is only about 5.5 percent fewer listings than a year ago when inventory stood at 26,747 active listings.

Despite improving inventory overall, supplies remained low, particularly around job centers. Area-wide there is about 2.6 months of supply, which indicates a seller's market. (In a normal market, a healthy supply level favoring neither buyers nor sellers is around 6 months, according to industry analysts.)

Three counties have less than three months of supply. At the current pace of sales in King County, it would take just 1.5 months to sell the current supply. In Snohomish there is only 1.6 months of supply and in Thurston County the existing supply would be exhausted in about 2.9 months.

Deely said some sellers are testing the waters with aggressive pricing, but they are experiencing longer market times.

MLS director Frank Wilson, representing Kitsap County where there is 3.3 months of supply, expects the seller's market will continue for at least the next few months. He noted 16 percent more homes in Kitsap County went under contract than the same month a year ago, crediting some of that uptick to the sense of urgency that buyers are feeling because of recent jumps in interest rates.

The average fixed rate on a 30-year mortgage was 4.37 percent last week, up from January's rate of 3.41, according to Freddie Mac.

Buyers should be aware of interest rates now and lock in a rate, stressed Wilson, the Kitsap District manager and branch managing broker at John L. Scott Real Estate Poulsbo – Kingston. "There is nothing more disappointing than having your offer accepted on a home, then have an interest rate jump disqualify you from the purchase," he remarked, adding, "If you want to gamble go to Las Vegas; if you want to buy a home lock the rate."

Brokers believe robust private sector job growth should have a positive impact on sales momentum. "Builders will have to keep up with the influx of families moving to the area for employment in order to sustain our growing need for housing," remarked Mike Grady, president and COO of Coldwell Banker Bain in Bellevue.

Buyers searching for single family homes may have an easier time than those seeking condominiums.

Northwest MLS figures show the inventory for single family homes is down 4.6 percent from a year ago, while the selection of condo listings has declined about 13.2 percent. Prices on single family homes that closed during July were up about 9.9 percent from a year ago. Condo prices jumped more than 16.8 percent.

Prices for single family homes (excluding condominiums) in King County continue to climb, with last month's completed transactions commanding a median sales price of $434,000. That figure reflects an increase of 15.7 percent from a year ago when the median price was $375,250.

Since January, the median sales price for a single family home in King County has risen by $84,000, but the escalation hasn't seemed to crimp activity. Through July, closed sales of single family homes sold with the county have outgained year-ago totals by nearly 17.9 percent. "This is one of the busiest summer markets I have observed in my 30 plus year real estate career," Deely commented.

Although some economists expect weaker U.S. economic growth for the remaining months of 2013 and moderating home price increases, brokers say investors are active participants in the local housing market.

"It's a perfect time to be an investor in Kitsap," said Wilson. "Home price have not yet started to rise substantially and the rental vacancy rate continues to drop as more homeowners become renters due to short sales or foreclosure."

Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.

Statistical summary follows.

Statistical Summary by Counties: Market Activity Summary – July 2013

Single 
Family
Homes 
+ Condos
LISTINGS PENDING
SALES
CLOSED SALES MONTHS
SUPPLY
New
Listings
Total 
Active
# Pending
Sales
#
Closings
Avg.
Price
Median
Price
 

King

4,051

5,728

3,788

3,293

$466,755

$398,888

1.51

Snohomish

1,578

2,359

1,470

1,141

$308,471

$291,000

1.60

Pierce

1,605

3,495

1,541

1,198

$243,623

$220,000

2.27

Kitsap

515

1,542

465

385

$287,209

$232,950

3.32

Mason

177

849

115

66

$199,365

$177,000

7.38

Skagit

262

855

214

170

$258,452

$230,250

4.00

Grays Hrbor

195

868

134

86

$142,313

$142,500

6.48

Lewis

157

744

101

79

$138,525

$146,500

7.37

Cowlitz

162

512

117

113

$187,489

$168,000

4.38

Grant

118

592

95

66

$177,192

$154,953

6.23

Thurston

486

1,268

441

340

$240,469

$228,500

2.88

San Juan

56

444

39

19

$491,142

$400,000

11.38

Island

242

899

206

152

$297,795

$250,000

4.36

Kittitas

120

503

79

62

$224,272

$198,500

6.37

Jefferson

107

535

72

43

$289,201

$244,500

7.43

Okanogan

69

503

36

36

$224,699

$166,000

13.97

Whatcom

511

1,641

365

323

$280,667

$252,000

4.50

Clark

75

190

60

41

$237,244

$215,000

3.17

Pacific

81

488

49

32

$118,981

$104,950

9.96

Ferry

10

70

4

2

$157,500

$157,500

17.50

Clallam

112

487

78

58

$187,559

$169,483

6.24

Others

171

700

96

67

$241,263

$215,600

7.29

MLS TOTAL

10,860

25,272

9,565

7,772

$348,291

$282,363

2.64

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000 3706 4778 5903 5116 5490 5079 4928 5432 4569 4675 4126 3166
2001 4334 5056 5722 5399 5631 5568 5434 5544 4040 4387 4155 3430
2002 4293 4735 5569 5436 6131 5212 5525 6215 5394 5777 4966 4153
2003 4746 5290 6889 6837 7148 7202 7673 7135 6698 6552 4904 4454
2004 4521 6284 8073 7910 7888 8186 7583 7464 6984 6761 6228 5195

2005

5426 6833 8801 8420 8610 8896 8207 8784 7561 7157 6188 4837

2006

5275 6032 8174 7651 8411 8094 7121 7692 6216 6403 5292 4346

2007

4869 6239 7192 6974 7311 6876 6371 5580 4153 4447 3896 2975
2008 3291 4167 4520 4624 4526 4765 4580 4584 4445 3346 2841 2432
2009 3250 3407 4262 5372 5498 5963 5551 5764 5825 5702 3829 3440
2010 4381 5211 6821 7368 4058 4239 4306 4520 4350 4376 3938 3474
2011 4272 4767 6049 5732 5963 5868 5657 5944 5299 5384 4814 4197
2012 4921 6069 7386 7015 7295 6733 6489 6341 5871 6453 5188 4181
2013 5548 6095 7400 7462 7743 7374 7264          

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