January 27, 2020
Eager home buyers were plentiful in December but their choices were meager
Tacoma, Washington (January 6, 2020) – “The buyers are out there and are showing up at open houses and making multiple offers on new listings,” was how one industry leader summarized December’s housing activity involving members of the Northwest Multiple Listing Service.
Frank Hawkins, President of Hawkins Poe Inc, also said the severe shortage of inventory – “much lower
than in years past” – will lead to continued buyer frustration and escalating home values. He noted one of his Brokers made a price adjustment on one of her listings the day after Christmas and it quickly drew multiple showings and multiple offers at or above the new listed price. The property had be on the market at a listing price that was known to be above the market value and the property was not in the best condition, so it lingered on the market until the list price was brought into the real value range and then Boom.
Newly-released figures from Northwest MLS show inventory at the end of December was down 31% from the same month a year ago, with only 8,469 active listings compared to the year-ago total of 12,275. The figures include single family homes and condominiums across the 23 counties in the MLS service
Last month marked the sixth straight month of declining inventory, noted James Young, director of the Washington Center for Real Estate Research. MLS figures show inventory peaked in June when the database had 16,680 active listings ̶ about twice as many as December. Inventory for single family homes and condos (combined) was down by more than 30% in seven counties: Thurston (-54%), Pierce (-38.9%), King (-38.8%), Snohomish (-35.6%), Mason (-32%), Kitsap
(-30.6%), and Skagit (-30.5%). System-wide there is only about 1.2 months of supply.
The inventory of single family homes (excluding condos) is especially tight in several counties, notably Thurston (-54%), King (-41.4%), Pierce (-40%), Snohomish (-36.1%), and Kitsap (-34.3%). “This market is unlike any market I’ve seen in the South Sound over the past 40 years. Too many buyers chasing too few properties,” remarked Hawkins.
For the entire NWMLS, December’s volume of active listings included 3,777 new listings added during the month, but during the same timeframe, 5,943 sellers accepted offers on their properties. That number of pending sales was up about 4.7% from twelve months ago.
(news release: December activity) January 6, 2020
• “December 2019 proved to be better in just about every single category than December of 2018 – this notwithstanding weather that was not as mild as 2018, and weather typically has an impact on sales.” ~
• “Historically low interest rates and strong job growth continue to drive the Puget Sound housing market, which is already sizzling as we begin the new decade. In the more affordable and mid-price ranges, many
areas are seeing frenzied sales activity with multiple offers on most properties.”
• “Home sales continued to be strong through December, fueled by low interest rates and new job creation. Hot spot locations continue to experience multiple offers on properly priced inventory.” ~
• “December was one of the most active in recent years with an unusual number of ready, willing, and able buyers in the Seattle market. These buyers were competing for little inventory as the year ended.” ~
• “December was a bit of an anomaly in the Pierce and Kitsap Counties. Although appreciation has slowed considerably from the 14% or so annual appreciation increases that we experienced during the market frenzy years, inventory continues to get tighter. We experienced very high demand for housing.”
For the four-county Puget Sound region (encompassing King, Kitsap, Pierce and Snohomish counties), the median sales price for December’s closed sales was $495,000, up 10% from the year-ago figure of $449,950.
In King County, which had the highest volume of sales and the highest prices, the median sales price for last month’s closed sales was $615,000. That was an increase of about 3% from a year ago. Prices in King County peaked in May at $645,000.
Pierce Counties average sold price for the year when compared to 2018 is up 8.5 percent year over year from $371,440 in 2018 to $402,917 in 2019. Total inventory is at the lowest level recorded. December of 2018 the residential inventory was at 1,728 compared to 2019, a mere 1,056 properties are available.
Some brokers expect the pressure on prices to ease during the first quarter of the year if inventory improves. We generally see increased new inventory in the 1st quarter, which should result in a better selection of homes, Buyers should be ready to supply sellers with prequalification letters including satisfaction of major underwriting elements.
“I feel comfortable there should be some relief as we head into warmer dryer weather and more sellers choose to put their home on the market, but I worry it’s possible the trend of fewer resale listings than usual from the upper end of the market and there is an extreme shortage of unsold inventory priced up to
$1 million, that market is particularly hot. It shows no sign of slowing down anytime soon with recent job growth announcements and an extreme pressure with Buyers moving down and out of King County."
Brokers in several counties outside of King County also commented on inventory shortages and the velocity of sales.
(news release: December activity) January 6, 2020
Hawkins commented, Kitsap, Mason, Pierce and Jefferson counties continue to have constrained inventory, and “the market remains very competitive in all price categories.” NWMLS figures show December’s inventory in those four counties declined more than 35% from the selection of a year ago, while prices jumped 10.4%. Collectively, there is less than a month’s supply (0.94 months) in these South Sound counties.
Our Property management department has the no vacancy sign up with multiple applications on every available unit, rentals are very tight with new apartments rented as soon as they are finished. Builders are “chasing the market” with most of their inventory being sold before they are finished.
Looking ahead, brokers expect brisk activity. Clients often ask for me to read the tea leaves or peer into the ‘crystal ball’ for a direction the real estate market, is heading. Hawkins’ response, “follow the employment numbers,” State Employment Security Department reports showing the unemployment rate in King County for November 2019 was 2.3%, the lowest rate for any month measured since January 2016 and the highest employment rate since November 2017.
“The saving grace in this market is interest rates. With interest rate at or below historic lows, housing is more affordable today than since 2016. The only sound reason for waiting to buy real estate in this market now would be finding the suitable home versus anticipating the market to get any less challenging for buyers in the very near future,” said Hawkins.