Buyer anxiety is rising as the pace of home sales is faster than brokers are able to replenish inventory, according to members of Northwest Multiple Listing Service. Figures just released for March show 11,408 pending sales during the month while only 10,505 sellers listed their homes for sale during the same period.
“The frenzy market has returned and is in full bloom in King and Snohomish counties. Listings are selling as soon as they come on the market for sale,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
The multiple offer market has become commonplace on well-priced new listings, observed John Deely, principal managing broker at Coldwell Banker Bain. However, he cautioned, “Some sellers are pushing pricing boundaries and are not seeing the same action as their well-priced competition.”
Deely, a member of the Northwest MLS board of directors, said buyers are flooding into the Greater Seattle market due to abundant job opportunities. He also attributed the high demand to low interest rates and skyrocketing rents. “Some high demand areas in Seattle have had a doubling of per bedroom rental rates to over $1,000 per bedroom,” according to Deely.
This market is pushing buyers beyond their comfort level, suggested Northwest MLS director Frank Wilson, the branch managing broker at John L. Scott, Inc. Poulsbo. “They’re being asked to write offers faster, for more money and with less help from the seller and the result is stress. Multiple offers only add to their stress.”
The market imbalance is played out with rising prices, an acute shortage of listings — particularly in areas close to job centers – and bidding wars.
The volume of new listings (10,505) added during the month increased 9.4 percent compared to a year ago, but fell short of satisfying demand in many areas. At month end, inventory in the MLS service area that encompasses 23 counties was down almost 14 percent, dropping from 19,736 listings to 17,007. Twelve counties reported double-digit declines from this time a year ago.
Measured by months of supply, there is about 2.5 months of inventory area-wide. In King County there is slightly more than 1.3 months of supply and in Snohomish County supply stands at just under 1.7 months.
“Buyers are feeling the squeeze with the lack of inventory,” reported George Moorhead, designated broker at Bentley Properties. He noted many would-be purchasers are current owners who are unwilling to put their homes on the market until they can secure their next home. “This is becoming a systemic issue which is holding back the inventory truly available in our current market,” said Moorhead, a member of the MLS board of directors.
Deely agreed. “Sellers are currently experiencing the role of Prince Charming as buyers vie to win the Cinderella title by escalating offer prices above market value, releasing earnest money and waiving contingencies normally used to safeguard the transaction,” he suggested. The less fortunate “stepsisters” are becoming shell-shocked after numerous failed attempts, he stated. In some cases, Deely said disgruntled buyers are dropping out of the market to wait out this cycle only to be replaced by a new wave, or they’re looking to outlying areas where there is somewhat less competition.
Some brokers expect the pressure will continue with Expedia’s announcement of plans to relocate around 3,000 employees from Bellevue to its new headquarters in Seattle. “It has us all wondering how this might impact housing in the neighborhoods surrounding Elliott Bay,” admitted OB Jacobi, president of Windermere Real Estate Co. With an estimated 75 percent of the company’s current employees living on the Eastside, traffic congestion around South Lake Union is expected to worsen. “It stands to reason that as commute times go up, some of these folks will pack up and move west, adding pressure to Seattle’s already highly competitive market,” he commented.
Stiff competition is reflected in part by rising prices – but MLS officials emphasized sellers still need to be realistic.
“A 2.4 month supply of inventory has Kitsap County clearly in a sellers’ market,” acknowledged Frank Wilson. During March, 502 new listings came on the market in that county, but pending sales were reported on 535 homes. Wilson said the tight inventory “does not mean sellers can overprice their homes as the value of a purchase and sale agreement is often offset by the appraisal.”
“Sellers are in the driver’s seat, but only when they price and condition their home correctly,” cautioned Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. He said buyers’ agents are often up at the crack of dawn scouring new listings, price reductions and the back-on-market properties in search of opportunities for their clients, but fierce competition is leaving many house-hunters disappointed and frustrated.
Northwest MLS figures show prices on last month’s closed sales of single family homes and condos jumped more than 6.7 percent compared to the same month a year ago. The median price on last month’s closed sales area-wide was $292,500 which compares to the year ago figure of $274,000.
Home prices were considerably higher in San Juan and King counties. For the 26 completed sales in San Juan County during March, (one more than a year ago), the price jumped 25.5 percent, rising from $400,000 to $501,900. King County prices rose about 8.8 percent, increasing from $378,000 to $411,200.
Prices on single family homes (excluding condos) rose about 6.8 percent system-wide, increasing from a year-ago figure of $282,000 to $301,143. Within the four county Puget Sound region, Snohomish reported the sharpest hike at nearly 8 percent. The median sales price for a home in that county was $340,000 last month; twelve months ago it was $314,975. Buyers can expect to pay about 30 percent more in King County where a single family home that sold last month fetched a median price of $440,250.
MLS members logged 6,769 completed transactions of single family homes and condos during March to outgain the same period a year ago by 1,016 transactions for a 17.7 percent increase. Of that total, condos accounted for about 14 percent of the volume. The median price on last month’s condo sales was $240,000, which was about 9 percent higher than a year ago. In King County, the median sales price was $269,600.
Deely said both residential single- and multi-family building permits are up substantially compared to this time last year in the Seattle-Bellevue-Tacoma metro areas, but the gains are not enough to curb demand.
His analysis indicates foreclosures have dropped close to pre-crisis levels. Even so, he said would-be sellers are caught in the same inventory crisis as they too are unable to find suitable move up housing.
Beeson said escalating prices may ease later in the year, when interest rates edge up as the Fed stops buying mortgage-backed securities. “With near full employment levels and still historic low interest rates, it looks like spring and summer housing market will be hot. Buckle your seatbelts,” he suggested.
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 23,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.
Statistical Summary By Counties
Market Activity Summary and 4-County Puget Sound Region Pending Sales (PDF)
Information and statistics compiled and reported by the Northwest Multiple Listing Service.