Buyer interest remains high and many good values exist for those whose holiday wish list includes a new home, according to brokers with Northwest Multiple Listing Service. A new report from the MLS summarizing November activity shows year-over-year gains in pending sales, closed sales and median prices.
The report encompasses 21 counties, mostly in Western Washington.
“During the holidays we usually see a drop in home buyers, but this year they’re remaining engaged later than usual. Both showings and offers are still going strong,” reported OB Jacobi, president of Windermere Real Estate. He said recent purchasers include people relocating to Seattle as well as international buyers “who aren’t showing any signs of slowing.”
Attractive financing is luring both first-time and move-up buyers.
“The holiday season is in full swing and the most special gift this year is that interest rates have dropped down to touch the upper 3 percent range. Interest rates at this low level are considered unbelievable,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
Northwest MLS figures show pending sales (mutually accepted offers) for November jumped nearly 3 percent from twelve months ago, rising from 6,624 pendings to 6,821. For the four Puget Sound region counties (King, Kitsap, Pierce and Snohomish) the total of 5,220 pending sales marked the highest level for November since 2006 when these counties reported 5,292 sales.
“There may be a chill in the air – but not in the real estate market in Kitsap County,” observed Frank Wilson, branch managing broker at John L. Scott’s office in Poulsbo. He noted the number of new listings added in that county year-to-date (4,963) is nearly equal to the number of listings that have gone under contract (4,864). “This is why we are beginning to see home prices edge up,” suggested Wilson, a member of the Northwest MLS board of directors.
The median price for homes and condos that sold during November in the Northwest MLS service area was $289,000. That reflects an increase of more than 6.6 percent from the year-ago sales price of $271,061. Ten counties experienced double-digit gains, while two had price drops compared to the same month a year ago.
In King County, prices rose 5.2 percent, from $379,202 to $399,000. Nearby counties had sharper increases, led by Kitsap at nearly 11.4 percent. In Pierce County, prices jumped 10.7 percent while in Snohomish County the year-over-year gain was nearly 9 percent.
Compared to October, the overall median price for last month’s sales fell by $1,000, although a county-by-county comparison shows a mix of slight gains and declines.
Brokers seemed upbeat as the year winds down, pointing to good open house traffic, the reentry of small, local builders, and job growth as factors that should bode well for home sales.
“There has been a noticeable increase in market activity during October and November,” commented MLS director George Moorhead. That uptick has helped offset what he described as unexpected slow activity from July to early October that dampened some sellers’ interests.
With brisk activity, supply is tight in many areas served by Northwest MLS. Half the counties have less than six months of supply. Area-wide, there is slightly more than 3.5 months of supply, but in King County it’s about two months; Snohomish has about 2.8 months of supply.
Many industry experts consider six months of supply to be an indicator of a balanced market. As supply dips below that threshold, competition intensifies, and prices are more likely to rise.
Not surprisingly, brokers reported a falloff in the volume of new listings added to inventory from October to November, in part because some sellers opt to focus on holidays rather than home showings.
MLS members added 5,521 new listings last month, which compares to 8,102 during October. November’s figure also trailed the year-ago total of 5,853. As the month ended, buyers still had a choice of 20,864 active listings system-wide, down 5.4 percent from a year ago.
Although some sellers postpone listing their homes during the holidays, brokers say there are advantages that might be overlooked. Open houses tend to attract more serious and motivated buyers is one benefit they mentioned.
“The mood of many sellers is ‘I know when buyers come to see my home they will be serious and not just looky loos or nosey neighbors,'” explained Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. “Broker interest remains high partially because many buyers feel interest rates could rise next year, and they realize now is a good time to take advantage of rates under 4 percent.”
Commenting on the South Sound market, Beeson said 2014 activity is tracking 2013 “almost eerily,” with very little difference in the number of closed sales through 11 months in both Thurston and Pierce counties.
Beeson, a former chairman of the Northwest MLS board, acknowledged the lower seasonally adjusted inventory will cause some buyers to wait until spring. “Others know there are good values to be had now considering the number of vacant homes currently offered for sale and needing to be sold. Most sellers don’t want to go through winter with a vacant home,” Beeson stated. His analysis shows more than half the active residential properties in the tri-county (King, Pierce Snohomish) area are vacant. “For some buyers, opportunity knocks as the weather gets chillier,” he suggested.
MLS director Diedre Haines agreed with Beeson. “December is always a good time to sell,” she said, noting there may be fewer buyers, but those who are out looking are highly motivated, with many wanting to buy before year end. “For buyers, it’s also a good time because competition is limited,” said Haines, Coldwell Banker Bain’s regional managing broker in Snohomish County.
Inventory shortages are a challenge according to Haines, in part because of the distressed component. She estimates about a third of the new inventory is simply not quality or almost unsalable due to poor condition or their status as auction listings and short sales.
“Correct and spot-on pricing of homes for sale remains vitally important,” Haines emphasized. Sites that estimate value may be fun to use and a good starting point, but they can’t replace the role of an experienced professional who knows the neighborhood, the condition of the property and nearby homes, and is able to compare the competition in determining an asking price. “Sellers are encouraged to heed the counsel of their real estate advisors and to trust the market analysis that the agent prepares,” she advised.
Gary O’Leyar, designated broker/owner of Prudential Signature Properties called December “one of the best times of the year for home buyers.” Considering many prospective (competing) buyers are busy with other activities and active sellers are committed to selling, he said there’s less competition for limited, good inventory, making now a great opportunity for would-be homeowners.
Other brokers agreed with O’Leyar’s assessment.
“If sellers are willing to keep their homes on the market through the holiday season, the numbers appear to be in their favor,” Jacobi noted.
In addition to reasons already cited, Frank Wilson noted decorated homes may look “picture book perfect.” In keeping with the spirit of the season, he offered another hint for sellers, suggesting that “it’s okay to leave cookies and milk out for your Realtors, too!”
Looking ahead, the MLS spokespersons expect market recovery momentum will continue into 2015.
“We in Snohomish County are becoming increasingly excited about the return of the small local builders providing good inventory to the 2015 market, plus the relaxed financing guidelines for qualification and costs,” Haines remarked. Citing rosy economic outlooks for the region, she expects there will be more first-time buyers and an increase in move-up buyers in the coming year, but added, “Hopefully as 2015 progresses, we will start to experience a more balanced market,” but admitted it may not be evident before next year’s fourth quarter.
Moorhead, the branch manager at Bentley Properties in Bothell, suggested increased buyer activity means sellers should be making their plans and getting last-minute home improvements done for 2015. “We do not see any red flags on the horizon that should cause any alarms for buyers and sellers.” Moorhead believes interest rates will remain mostly flat, but expects gradual rises in the latter part of 2015.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state. (Note to editors: Data for Chelan and Douglas counties will be added to future reports. For now, activity for those counties is reflected in the line for “Other” areas.)
Statistical Summary by Counties: Market Activity Summary, and 4-County Puget Sound Region Pending Sales
Information and statistics compiled and reported by the Northwest Multiple Listing Service.