KIRKLAND, Washington (December 5, 2019) – Brokers with Northwest Multiple Listing Service reported “plenty of buyers” competing for sparse inventory during November, which ended with a 7% year-over-year increase in pending sales. The volume of mutually accepted offers rose even more (9.2%) in the tri-county Puget Sound region consisting of King, Pierce and Snohomish counties, with Snohomish leading that list with a jump of about 12%.
Median sales prices also jumped compared to both a year ago and to October. For November’s 7,216 closed sales (which were up 5.5% from a year ago), the area-wide sales price was $434,900, a gain of about 10% from the same month a year ago. Compared to October, last month’s price on sales of single family homes and condos (combined) jumped 3.5%.
King County’s median price of $612,000 led all other counties, but prices there edged up just over a percentage point compared to a year ago.
“Just when I thought we had started a ‘new normal’ that equalized things a bit for buyers, we’ve had a ‘November Surprise,'” said Mike Grady, president and COO of Coldwell Banker Bain. “Perhaps it’s an aberration, but perhaps not,” he suggested.
November’s 7% increase in pending sales was the highest year-over-year gain for November since 2016. In 2017, the YOY figure was a modest 1.6%, while last year’s comparison showed a drop of more than 10%
Brokers could not replenish inventory to keep pace with demand.
“New listings added to inventory retreated nearly 15%,” Grady noted. MLS members added 5,437 new listings system-wide, far fewer than a year ago when they added 6,399 residential properties to the MLS market area that covers 23 counties. The imbalance between new listings and pending sales resulted in supply falling to 1.58 months, the lowest system-wide level since last December.
“Pending sales, along with other indices I watch, including the number of surrendered out-of-state driver’s licenses, construction crane activity, and the 11 million square feet of office space under construction that is already 90% leased, bolsters the idea we may be seeing our region’s economy strengthening – and we weren’t in a lull,” proclaimed Grady.
Northwest MLS director John Deely also commented on last month’s pace of activity. “Motivated buyers jumped into the market to capitalize on motivated sellers with both groups looking to complete their real estate goals by year’s end,” he reported. “The upper end market saw an influx of cash buyers looking to grab trophy properties, notably buyers and investors from California looking to diversify their real estate holdings,” added Deely, principal managing broker at Coldwell Banker Bain’s Lake Union Office in Seattle.
Brokers reported 11,366 total active listings at month end, down more than 28 percent from twelve months ago when there were 15,830 active listings. November’s selection was down about 21 percent from October.
“The housing market is virtually sold out in the more affordable and mid-price ranges where 75 percent of sales activity occurs in each market area,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. With December typically marking a low point for new listings coming on the market, and the lower level of unsold inventory, Scott said “the pressure is on despite the winter chill.” This pressure is sending prices higher in the more affordable and mid-price ranges, according to Scott, who does not expect any easing until spring when new listings begin to increase.
James Young, director of the Washington Center for Real Estate Research, commented on price rebounds in Pierce County. “Some parts of this county only recently reached price levels higher than 2007. Now they are rapidly catching up with other areas. It continues to be one of the hottest markets in the U.S.”
“While much of the U.S. has seen declines in pending sales, not so in Puget Sound,” declared Dick Beeson, a member of the Northwest MLS board of directors. He points to the year-over-year gain in pending sales in the tri-county area (up more than 9%) and the sharp drop in active listings (down more than 34%), describing it as a perfect storm. “Sellers won’t come on the market because they think they can get more in the future or they have nowhere to go, and buyers, who have tried to avoid bidding wars, often mistakenly think they can sit back and pick and choose, looking for bargains.”
Beeson, the principal managing broker at RE/MAX Northwest in Gig Harbor, said the news for buyers is, if there’s a bargain out there, others will find it too, and they’ll be competing once again. He said some sellers also have unrealistic expectations if they think they need not do improvements before selling. “The news to sellers is buyers are looking for move-in-ready homes. They don’t want to ‘fix it up’ after they move in.”
Commenting on strong activity in Kitsap and Mason counties, Young said it represents a trend toward value and expansion of the “Puget Sound Economic Zone,” rather than a focus solely on Seattle. He also suggested in-migration of people who are cashing out of expensive markets to retire is also at play in these two counties plus Clallam County. “In these relatively good value markets, people trading down are beating out first-time buyers.”
November’s listing and sales numbers continue to illustrate that buyers are driving to affordability for their home purchases, according to Dean Rebhuhn, owner of Village Homes and Properties in Woodinville. “Buyers are going north, south and east to find homes that fit their budgets and lifestyles,” he remarked.
Rebhuhn said in addition to strong sales activity in Snohomish and Pierce counties, Kittitas County continues to experience strong home sales. Pending sales jumped nearly 17% from a year ago as buyers sought affordable prices. Last month’s closed sales in Kittitas County had a median price of $335,000, about 55% of the price in King County ($612,000).
Buyers can also find good values to the west, in Kitsap County, reported Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale and a Northwest MLS director. Like elsewhere, inventory in Kitsap County is tight, with active listings down nearly 29% from a year ago. Both pending sales and closed sales rose slightly, while median prices for single family homes and condos (combined) surged more than 15%, from $330,000 to $380,916.
“Overall, real estate sales remain strong and robust in Kitsap County, with well-priced inventory selling in less than seven days in the price ranges of $350,000 or less,” remarked Leach. “Very favorable interest rates are inspiring renters and first-time homebuyers to enter the marketplace during the winter months, thus buoying sales,” he added. He also noted permits for new single family homes, apartments, and townhomes are on the rise countywide, while condo activity is dormant.
Leach said the military continues to have a strong and growing presence in Kitsap County, which he described as “a great place to grow a family or retire.” Another expected boost to its economy and real estate segment will be the early 2020 opening of Harrison Hospital in Silverdale, and its 2,000 employees.
The latest NWMLS report shows considerable variation in activity among counties and sub-markets. Twelve of the 23 counties in the report had year-over-year drops in the volume of closed sales, but only three counties reported declines in median sales prices. Price changes ranged from a drop of nearly 8% in Pacific County to a gain of 17.4% in Clallam County.
Similarly, the condo segment, accounting for about 13 percent of last month’s activity, had mixed results. Inventory remained tight, with 19.8 fewer new listings added during November than the same month a year ago. The number of total active listings slipped more than 23% compared to a year ago.
Both pending sales and closed sales of condos improved on a year ago. Last month, MLS members reported 1,027 pending sales for a gain of nearly 8.8% from a year ago. Closed sales increased 8.3%, from 806 transactions to 873. Prices were up nearly 4.5%, rising from $335,000 a year ago to $350,000 for November’s completed transactions.
NWMLS brokers tended to shrug off this year’s seasonal slowdown, while cautioning procrastinators.
“As we head into the winter months we’re seeing the normal tapering off of demand, but there are still plenty of buyers in the market so I don’t expect things to slow down too much,” remarked OB Jacobi, president of Windermere Real Estate. “Looking forward, home prices will likely end the year higher than last year, but not by much. Price growth should pick up some steam again in 2020 thanks to low interest rates and continued demand for homes,” he added.
If mortgage rates stay below 4%, while prices rise and inventory remains tight, Grady says “We could see a real estate market in 2020 that is even stronger than 2019 with homes prices increasing again, perhaps even 7% or more.” That’s good news for sellers, he stated, adding, “Buyers should think about taking advantage of these record-setting low interest rates now.”
Leach agrees. “Now is the time to buy or refinance while interest rates remain at all-time lows. Well valued and priced inventory will sell rapidly across the holidays and into the winter season.”
“How can buyers not take advantage of the lowest interest rate environment in decades?” wondered Dick Beeson, adding, “The psychological highs and lows surrounding buying or selling a home today are tremendous. Both buyers and sellers need solid advice from a professional who can filter the noise and help them make intelligent, informed decisions.”