Anxiety among home buyers incredibly high as they vie for unprecedented shortage of homes across much of Washington state
KIRKLAND, Washington (November 5, 2020) – “Finding and buying a home today is more difficult than at any time in the past 40 years of my career,” was how broker Dick Beeson summed up the latest statistics from Northwest Multiple Listing Service.
The Northwest MLS report recapping October activity showed a 40% drop in active listings compared to the same month a year ago, an increase of 16% in pending sales (mutually accepted offers), and a year-over-year (YOY) jump of nearly 30% in closed sales. The median price of single-family homes and condominiums that sold last month was $500,000, up 19% from the same period a year ago, according to the MLS summary, which encompasses 23 counties, mostly in Western and Central Washington.
Beeson, the managing broker at REMAX Northwest in Tacoma-Gig Harbor, said he has never seen so many buyers needing to write multiple offers before securing a home. “Interest rates are incredibly low. Inventory is incredibly low. And anxiety is incredibly high among buyers,” he remarked.
“Sellers are struggling, too,” Beeson said. “They worry they’re leaving money on the table by accepting an offer within days of their property coming on the market,” he remarked, adding, “But brokers know that in this market, if a seller doesn’t receive an offer within a short time after the property is listed, the home is most likely overpriced.”
NWMLS members added 10,428 new listings to the supply during the month, improving on the year-ago total of 8,394 for a gain of 24%. In keeping with the pattern of previous months, October’s 11,039 pending sales surpassed the number of new listings.
“Yet again, the four-county area of King, Snohomish, Pierce, and Kitsap counties broke the record for the month of October for the number of homes going under contract,” stated J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. The MLS reported 7,934 pending sales for the four-county region. A comparison of October pending sales dating to 2002 shows the previous high of 7,740 occurred in 2017.
Matthew Gardner, chief economist at Windermere Real Estate, said his biggest concern continues to be the ongoing lack of homes for sale in the Central Puget Sound area. “Keep in mind that a four-month supply of homes for sale is a sign of a balanced housing market, but in 14 counties, including the King/Pierce/Snohomish region, there is currently less than one month of supply. This is what is allowing home prices to escalate at double-digit rates.”
Whether Boeing’s recent announcement of significant layoffs will affect the housing market is being watched by industry experts.
“I’ve been watching the Snohomish County housing market closely but, as I predicted last month, there has not been any negative fallout so far,” Gardner stated. “In fact,” he continued, “compared to a year ago the number of homes for sale is down and home prices are still rising.”
Gardner said he maintains his position that “any additional inventory that may come to market will likely be absorbed swiftly as we continue to see buyers moving from the more expensive King County market to the relative affordability that Snohomish County offers.”
According to the latest MLS report, the median-priced single-family home (excluding condos) that sold in Snohomish County last month was about $165,000 (about 28.5%) less than the figure for King County ($579,972 vs. $745,000).
Area-wide the median price for last month’s sales of single-family homes (excluding condos) was $515,000, a 20.2% jump from a year ago. For single-family homes and condos combined, prices rose by double digits in 21 of the 23 counties in the MLS market area. The highest median prices for homes and condos that sold last month were in San Juan County at $705,000 and in King County at $685,000. Those two counties also had the highest median prices for single-family homes (excluding condos). In San Juan County the price was $753,250, while in King County it was $745,000.
Scott noted the luxury market in the Puget Sound region also had record-breaking sales for the month. Last month, NWMLS brokers notched 1,004 sales priced at $1 million or more in the tri-county area of King, Kitsap, and Snohomish. That volume easily surpassed the previous high of 553 luxury sales in 2019.
“Supply and demand continue to drive the real estate market,” observed Dean Rebhuhn, broker-owner at Village Homes and Properties in Woodinville. Record low-interest rates have increased purchasing power with mortgage programs such as FHA 3.5% down payments, he noted. Also, he added, “The availability of funds has allowed record refinancing for purchasing second homes and investment properties.”
With home prices increasing, which Rebhuhn believes indicates strong jobs and lifestyle demand, he said it raises questions about whether our market is underpriced. “Highly likely,” he suggested.
Brokers in Kitsap County reported a “huge pent-up demand.” Frank Wilson, the Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo, said, “The lack of listings and the extremely low-interest rates are two of a growing number of reasons why buyers are looking in our area.” He said they’re beginning to see a flight from larger cities as more and more jobs can be done remotely.
Wilson also reported strong traffic at open houses since the Governor announced in early October that limited open houses would be permitted in all counties with strict adherence to occupancy restrictions and other safety guidelines.
“Now that we can hold homes open again, we are seeing anywhere from five to 20 small groups coming through, with showings often resulting in multiple offers,” Wilson stated, adding, “It is good to see both brokers and buyers working together plus the stringent use of masks, social distancing, hand sanitizer and other tools to ensure safe and healthy showings.”
Broker/owner Frank Leach at RE/MAX Platinum Services in Silverdale said Kitsap County continues to enjoy brisk activity, “but not without the frustration of having historically low inventory. Although new listings are on the rise, they are being stripped from the market at a stunning pace. Buyers are bidding up properties as demand stays steady and inventory continues to dwindle.” He attributes part of the surge to buyers east of Kitsap County coming into the market.
Northwest MLS data show Kitsap has only about two weeks of supply (0.57), with inventory plummeting more than 41% from a year ago.
Mike Grady, president and COO at Coldwell Banker Bain, said October reflected a continuation of the summer market well into autumn and puts sellers in a great position. “We’re seeing buyers snapping homes up almost as fast as they’re listed,” he commented, adding, “With interest rates remaining at record lows and employment in major tech industries very strong, this is a good indication that we may well skip the usual slowing in the winter market altogether.”
Rebhuhn said the coming holiday season may present more opportunities for buyers, with less competition for new listings. However, given the current sparse inventory and keen competition, broker Frank Leach, a member of the NWMLS board of directors, emphasized buyers must be prepared when entering the marketplace “with funds and financials at the ready.”
Condo shoppers are less pressured in some parts of the market. System-wide, inventory is up about 5.4% compared to twelve months ago, aided in part by the addition of 1,589 new listings during the month – a healthy 37.6% YOY improvement. At month end there were about 1.5 months of supply.
Pending sales of condos jumped nearly 35%, while area-wide closings nearly doubled from a year ago, rising from 950 transactions to 1,414. Prices were up slightly more than 14%. The overall median price for last month’s sales was $395,000. In King County, which accounted for nearly six of every 10 sales (58.7%), the median price was $459,970, which reflects a 19.5% increase from this time a year ago.
Information and statistics compiled and reported by the Northwest Multiple Listing Service.
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 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.