Momentum building as home buyers respond to lower prices, favorable financing
KIRKLAND, Wash. (June 6, 2011) – Northwest Multiple Listing Service members reported a 43 percent increase in pending sales of single family homes and condominiums during May compared to the same month a year ago. Sellers accepted offers from 7,509 buyers last month, up from the year-ago total of 5,242 pending sales.
Year-to-date pending sales are slightly under the total for the first five months of 2010 when sales were boosted by a federal tax credit. Through May 2010, Northwest MLS members had reported 35,454 mutually accepted offers; this year’s total for five months is 33,612 (down about 5.5 percent).
We’re seeing a definite shift in the market – especially in the areas closer to Seattle and Bellevue,” remarked OB Jacobi, president of Windermere Real Estate and a member of the Northwest MLS board of directors. “Homes that are priced aggressively are seeing a lot of competition and we’re even getting reports of some homes selling before buyers can act,” he stated.
Members reported 5,015 closed sales during May, about 5 percent fewer than the year-ago total of 5,290 completed transactions. For the first five months of this year, a total of 20,473 transactions have closed, which compares to 21,861 for the same five months of 2010 (down about 6.8 percent).
For the four-county Puget Sound region (King, Kitsap, Pierce and Snohomish counties), pending sales through five months are at 97.6 percent of year-ago levels, while closed sales are at 95.6 percent of year- to-date totals for 2010.
Northwest MLS reports both pending sales (mutually accepted offers) as a barometer of the most recent sales activity, and closed sales (completed transactions).
Matt Deasy, the general manager of Windermere Real Estate/East, considers the small differences between year-to-date figures for 2011 and the “tax incentive fueled market” of 2010 to be “good news.”
Mike Grady, president and COO of Coldwell Banker Bain, was also upbeat in his comments about the current market. “The substantial jump in pending home sales reported today won’t be surprising to the brokers working in the core urban markets of Seattle and West Bellevue,” observed Grady. He also noted the increasingly strong demand for homes and falling inventory “is making for a very competitive market in those areas, with multiple offers on the best properties becoming more common.”
“Low interest rates, low down payment requirements, and lower adjusted prices are attracting buyers into the market,” reported J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “We are seeing healthy sales activity close to the job centers of Seattle and Bellevue, creating a low inventory of homes for sale,” he noted.
Members added 10,293 new listings to inventory during May, about 900 more than the same month a year ago for a 9.7 percent increase. Despite those additions, the selection is smaller than 12 months ago. At month end, there were 36,261 active listings of single family homes and condos in the MLS system. That’s about 5,400 fewer than a year ago when inventory totaled 41,690 listings, a shrinkage of 13 percent.
“On King County’s Eastside, we are seeing a decrease in the number of listings that are short sales or bank-owned properties,” said Kathy Estey, managing broker of John L. Scott Bellevue Main. “Inventory of quality homes in median price ranges is low and we see multiple offers in most price ranges, including homes in the higher prices ranges. Some of the old, stale inventory has sold. However, the majority of homes are still selling for less than full price.”
Jacobi said a recent review of Windermere’s sales data shows that 40 percent of homes in the median price range are selling at list price and many of these buyers are paying cash. “With that being said, the market is still very price sensitive, so sellers need to continue to be realistic about the value of their home,” he stated.
The median price for last month’s sales system-wide was $239,999, about 11 percent less than a year ago when it was $269,950. Brokers attribute much of that price decline to the fairly high ratio (estimated at 30-40 percent in many markets) of foreclosed homes and short sales that are being sold at deep discounts.
In King County, prices slipped 8.4 percent, from $346,000 a year ago to $316,750 for last month’s closed sales of single family homes and condominiums. For single family homes only (excluding condominiums), the median selling price was $345,000, down about 9 percent from the May 2010 figure of $379,000.
Grady is encouraged by the momentum. “The last few years, home sales haven’t sustained much momentum without government support,” he noted, adding, “This year, however, the momentum is continuing to build naturally, as we would normally expect in the spring and summer months. Remember, by this time last year we had already experienced all of the benefit of the homebuyer tax credit, and sales began to wane after that credit had expired. We see an entirely different dynamic this year.”
It’s obvious not all local markets are improving equally, Grady acknowledged, suggesting, “It’s also obvious that the basic market forces of low supply and high demand are beginning to shift buyer or seller attitudes in many neighborhoods. That’s good news for sellers, and perhaps a cautionary message to buyers as well.”