KIRKLAND, Washington (July 6, 2020) – Historically low interest rates and lifestyle changes are fueling housing activity around Washington state, according to Dean Rebhuhn, president of Village Homes and Properties in Woodinville. Commenting on just-released June statistics from Northwest Multiple Listing Service, he and other brokers say multiple offers are common “especially in the median price range.”
Brokers in the 23 counties that are part of Northwest MLS point to a shortage of homes as a key factor in the bidding wars. At the end of June, there was only 1.16 months of supply system-wide, which is the second lowest level in the past decade. (The lowest mark, at 1.12 months, was in December 2017.)
Not surprisingly, the supply/demand imbalance is causing prices to ratchet up. Median prices for last month’s 8,312 closed sales of single family homes and condos increased nearly 5.7% compared to a year ago, rising from $440,000 to $465,000. A comparison to May shows an increase of more than 3.3%.
In the four-county central Puget Sound area, year-over-year prices rose even more. Of these counties, King County had the smallest increase at nearly 5.9% (rising from $637,675 to $675,000). Pierce County prices jumped nearly 8.2%, from $372,500 to $403,000. Prices were up nearly 6.7% in Snohomish County and more than 7.7% in Kitsap County.
“Multiple offers are back with a vengeance as buyers are handicapped by having only about half the inventory of a year ago,” noted Dick Beeson, managing broker at RE/MAX Northwest in Tacoma-Gig Harbor. “The refrain, ‘Sorry to tell you, but the seller has accepted another offer,’ is heard with regularity,” he stated, adding, “If a buyer finds a home they like, it’s likely 20 other people will be vying for it, and the battle is on.”
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, noticed a major increase in sales activity intensity, which measures the percentage of homes that sell within the first 30 days of going on the market. “It’s almost as if the cupboards were bare in the more affordable to mid-price ranges where the majority of sales take place,” he remarked.
“What a difference a month makes,” exclaimed Matthew Gardner, chief economist at Windermere Real Estate. “What is abundantly clear is that the COVID-19 induced slowing in housing activity that we saw in May was not enough to freeze the Seattle housing market for very long,” he added.
Gardner described the month-over-month gains in pending sales, closed sales, and prices as “very significant” and indicators of a housing market that is “very robust.”
The new report from Northwest MLS shows last month’s volume of pending sales surged 15% from May (increasing from 10,389 to 11,916); closed sales jumped more than 39% (from 5,957 to 8,312), and month-over-month prices rose more than 3.3% (from $449,850 to $465,000).
Year-over-year comparisons show pending sales increased nearly 3%, closed sales dropped about 12.3% and prices increased 5.7%.
James Young, director of the Washington Center for Real Estate Research, noted the shortage of inventory is resulting in higher prices and rising demand “in places that are more rural and popular with older people trading down.” He named Jefferson County (Port Townsend), Kittitas County (Suncadia), and Chelan County (Wenatchee and Chelan) as examples. NWMLS figures show all three areas had some of the steepest price gains coupled with rapidly shrinking supply.
“Extraordinarily low month’s supply indicates that prices may have more room to move in areas popular with people trading down or seeking more space but still close to Seattle,” suggested Young. “Mason County and Thurston County come to mind, but interestingly, several Central Washington counties had strong year-over-year price growth including Kittitas (30%), Chelan (22%) and Grant (9.4%).”
Young also noted the pre-pandemic migration patterns to outer suburbs or more rural areas appear to have accelerated now that lockdowns have eased.
Some MLS representatives who commented on June’s numbers were encouraged by listing activity. NWMLS members added 10,709 new listings last month, lagging a year ago when brokers added 11,977 new listings, but improving on May’s total by 838 listings (up 3.5%).
“In many areas we are seeing new listings making a comeback, which is a welcomed sight for buyers encountering stiff competition,” stated Scott. “As the economy continues to open up at a steady pace, we anticipate more sellers will choose to list their homes,” he added.
Gardner called the number of homes for sale “perilously low,” but said, “The month-over-month jump in new listings was encouraging but it did not help overall inventory levels as they all sold too quickly!”
The MLS report shows pending sales totaled 11,916 to outgain the 10,709 new listings. At month end, there were 9,670 active listings in the MLS database, well below a year ago when the selection included 16,680 homes and condos for a drop of 42%. June’s total also declined from May when there were 10,357 active listings.
“No wonder the number of closed sales is down – there’s hardly anything to buy,” proclaimed Beeson.
Mike Grady, president and COO of Coldwell Banker Bain, said agents are reporting a lot of interest in outlying areas such as Bellingham, Bainbridge Island, Eastern Washington, Bend, Oregon and other destinations with recreational amenities that appeal to buyers who are able to work from home or take early retirement. As inventory diminishes in those areas, Grady is hoping this trend may open up additional inventory in the Puget Sound region.
Grady also commented on the industry’s increased use of technology during “stay-at-home” directives. “Virtual transactions are becoming more common,” he stated, citing the experience of a broker at their Issaquah office. She recently handled two transactions 100% virtually with the buyers purchasing their homes without ever personally stepping inside, according to Grady.
Rebhuhn also reported rising interest in moving to suburban neighborhoods and to Central and Eastern Washington. “The reasons are more space, lower prices, and lower taxes. They have found they can accomplish most of their work and business from home.”
“If we were not amid a pandemic and the restrictions on showings and public open houses, it seems like just another summer real estate market,” said Gary O’Leyar, designated broker/owner at Berkshire Hathaway HomeServices Signature Properties in Seattle. “We continue to see price appreciation over last year as well as the all too common shortages of inventory. Buyers are wisely taking advantage of record low interest rates. Potential sellers might take note: If you have given any thought about selling, this may well be a particularly good time to do so!”
In a recent report, Housing Wire, a news portal for mortgage and housing professionals, indicated last week’s average rate for a 30-year fixed mortgage, at 3.07%, was the lowest in a Freddie Mac data series that goes back to 1971. Its Housing Recovery Index shows Seattle is among markets showing the greatest recovery.
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 (www.nwmls.com) 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.