News from NW Multiple Listing Service
FOR IMMEDIATE RELEASE: September 9, 2008

Housing Inventory Leveling Off in Western Washington
Despite Slowdown in Sales

KIRKLAND, Wash. (September 9, 2008) – Inventory showed signs of leveling off around Western Washington, with pending sales comparable to totals during the past four months, according to the latest report from Northwest Multiple Listing Service.

Tighter credit is inhibiting activity, and the forthcoming elimination of nonprofit downpayment assistance programs is creating "more of a problem than many anticipated," according to a veteran broker and NWMLS director. (Beginning October 1, seller-funded downpayment assistance programs are banned under the Housing and Economic Recovery Act of 2008, which President Bush signed on July 30.)

On a brighter note, brokers and lenders suggest the September 7 announcement by the Treasury Department to place Fannie Mae and Freddie Mac under federal control could ease the U.S. mortgage market crisis and help lower mortgage costs.

Locally, the housing market lags year-ago benchmarks, but continues to fare better than most other metro markets around the country. One local industry leader said move-up buyers have "an amazing opportunity" right now.

Northwest MLS members added 11,415 new listings of single family homes and condominiums to inventory last month – the fewest number since December 2007. A year ago (August 2007), brokers reported 14,500 new listings.

At month end, the Northwest MLS database of available properties included 50,772 residences in its 19-county market area, about 4.5 percent more than a year ago when there were 48,585 single family homes and condos offered for sale. On a percentage basis that's the smallest increase since February 2006, when the total number of active listings rose about 2 percent from the previous twelve months.

Pending sales lagged year-ago volumes, but nearly matched the totals for June and July. Brokers reported 6,248 pending sales (offers made and accepted, but not yet closed) for August, which compares to 6,350 pending transactions for July and 6,470 pending sales during June. Compared to 12 months ago when there were 7,751 pending sales, last month's volume declined about 19.4 percent.

With the current inventory and pace of sales, there is an estimated 8.1-month supply of homes system-wide and a 7.4-month supply in the four-county Puget Sound region. Nationally, there is an 11.2-month supply. Six months is considered normal.

Prices also dropped from a year ago, although seven of the 19 counties in the MLS system notched gains from July. The median selling price for sales of single family homes and condominiums (combined) that closed during August was $302,500. That's down about 8 percent from a year ago, when the MLS reported a median sales price of $329,000.

In King County, the median price for single family homes and condos that sold and closed during August was $388,350, about 6.4 percent less than a year ago when the median price was $415,000.

For single family homes (excluding condos) the median price for last month's completed sales was $314,000, about 10 percent less than a year ago when the median price was $349,900. Condo prices are down about 4.8 percent from a year ago, dipping from $260,000 to $247,500.

A comparison to July shows seven counties with price gains. Median selling prices in Clark, Grant, Island, Kitsap, Mason, Okanogan, and San Juan counties rose in August from the previous month.

"I cannot stress enough what an amazing opportunity exists right now for move-up buyers," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. "The price gap between the more affordable price ranges and higher price ranges has narrowed which means these buyers can afford to "price jump" into a new home at a premium value," he added.

NWMLS director Dick Beeson agreed low interest rates and abundant selection makes now a very good time to buy, but acknowledged the new environment for borrowing is hindering some would-be borrowers. There is pent-up demand, he stated, but said, "Buyers are stymied by the lending world's inability to get their collective heads around making loans instead of running scared to the nearest disapproval letter."

Beeson, the broker/owner of Windermere/Commencement Associates in Tacoma, said his market area, which encompasses Pierce County, will suffer from the October 1 ban on seller-funded downpayment assistance. Ending these programs will stall market recovery, he suggests, noting prices are such that the average first-time buyer lacks the resources to meet a 3 percent downpayment and additional 3 percent in closing costs.

Asked about the potential impact of the Boeing strike, Beeson said it could have a ripple effect long-term, but does not expect the market to change "too dramatically" for now.

One local lender expressed optimism about the federal takeover of Fannie Mae and Freddie Mac. "The announcement by the Treasury Department to take control of the GSEs marks a significant turning point in the credit crisis, said Erik Hand, president of Response Mortgage Services (John L. Scott's in-house lender). "Although some are already pointing to this action having the potential to cost the U.S. taxpayer billions, I feel the opposite is true," he commented, adding, "To sit back and watch the GSEs flounder would prolong the credit crisis, placing further pressure on housing, resulting in increased foreclosures, and ultimately damaging the economy much more than what a takeover of the GSEs will cost."

National analysts anticipate improving markets around the country.

Richard F. Gaylord, president of the National Association of REALTORS® (NAR) and a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon. "We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead," he said. "Buyers who've been on the sidelines should take a closer look at what's available to them now in terms of financing and incentives."

Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase. "Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time," he said. "Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns."

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes approximately 31,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties, mostly in western Washington, plus Grant, Kittitas and Okanogan counties in the central part of the state.

Statistical Summary by Counties: Market Activity Summary - August 2008

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

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