Northwest MLS brokers say home buyers are sprinting, but sellers are stalling.
News Release  June 15, 2015

Home buyers are in "full sprint" mode while sellers are stalling, according to brokers from Northwest Multiple Listing Service. As a result, MLS members are juggling severe inventory shortages and multiple offers in many Seattle neighborhoods and beyond.

MLS figures for May show double-digit drops in inventory compared to a year ago and double-digit gains in both sales and prices. Commenting on the numbers, Northwest MLS director Dick Beeson said "The crush between the lack of inventory and desperate buyers may soon generate the next TV reality show! The stressed market is exhausting everyone in its path, with no relief in sight."

Last month's volume of 11,425 pending sales across the 23 counties in the latest report nearly matched the number of new listings added to the database (11,862). At month end, the total number of active listings stood at 19,515, a drop of more than 18 percent from a year ago when members reported 23,917 active listings. Only two counties (Douglas and Ferry) reported year-over-year gains in inventory.

George Moorhead, another director with Northwest MLS, said multiple offers are commonplace for well-priced homes in desirable areas. "We are definitely feeling the squeeze on inventory levels with sellers holding off until they can find a home," commented Moorhead, the designated broker and owner at Bentley Properties.

MLS figures for May show supply has dwindled to about 1.2 months in King County and 1.6 months in Snohomish County. Several neighborhoods near Seattle's job centers have less than a month of supply.

For the MLS service area overall, there is about 2.4 months of supply - well below the 4-to-6 month figure used by many industry watchers as an indicator of a balanced market. About half the counties reported less than four months of supply.

Beeson, the principal managing broker at RE/MAX Professionals in Tacoma, noted supply in Pierce County has slipped to record lows, at just over 2 months. For sellers, there may be little solace. When they decide to sell they'll need a replacement home "which may or may not be there," he explained.

Pending sales jumped more than 10 percent in May compared to the same month a year ago, rising from 10,373 mutually accepted offers to 11,425. Last month's pendings rose slightly from April's total of 11,384. For the Central Puget Sound region encompassing King, Kitsap, Pierce and Snohomish counties, the MLS recorded 8,620 pending sales - the highest total for the month of May in at least 15 years.

J. Lennox Scott, chairman and CEO of John L. Scott, Inc. called 2015 "the best start ever for sales activity." Citing MLS figures, he noted cumulative pending home sales in the four-county Puget Sound area for the first five months of the year are outpacing the previous record year of 2005. "This time," he emphasized, "the housing market is built on a strong foundation of qualified buyers."

"This is a supply-demand-distance type of market," said Frank Wilson, branch managing broker at John L. Scott in Poulsbo. "They have run out of inventory in the Seattle market so now it's just a matter of how far a buyer needs to drive to find a home that is available and affordable. Kitsap is seeing that demand increase with a bit of a lag as the market rolls from east to west into Kitsap and beyond," said Wilson, another director on the Northwest MLS board.

With demand exceeding supply, prices continue to climb. MLS statistics show an area-wide year-over-year gain of more than 11 percent. The median price for last month's 8,229 closed sales, including single family homes and condominiums, was $317,000. That compares to the year-ago median sales price of $285,000 for the 7,187 completed transactions.

In King County, the median sales price for single family homes and condos (combined) was $434,000, an increase of 9 percent from twelve months ago when brokers reported a median sales price of $398,000. Prices on single family homes (excluding condos) that sold in King County jumped to $480,942, about the same as April ($480,000), but up nearly 8.8 percent from the year ago figure of $442,250.

"Locally, home prices are continuing to rise at a steady pace, and they continue to outpace both inflation and wage gains," observed Mike Gain, CEO/president at Berkshire Hathaway HomeServices Northwest. Pent-up demand is pushing inventory lower, he notes. Gain believes the supply challenges could be alleviated if more sellers put their home on the market. "Sellers may never see a better time to be a seller," commented Gain, a former chairman of the Northwest MLS board.

OB Jacobi, president of Windermere Real Estate, echoed comments about the supply. "We're still in desperate need of inventory. The irony is that there are plenty of people who want to sell, but won't put their home on the market until they can buy something new. But they can't buy something new until there are more homes on the market. It's the proverbial chicken and egg situation for which I see no end in the near future."

Demand exists across the price spectrum, fueled by renters, high wage earners and investors.

Gain noted renters are re-entering the housing market as they find they are better off buying than continuing to pay rent. "They are finding their monthly payment to be less than their rent payment for a similar home. They also like the fact their payment will remain the same. And they're finding there are numerous low down payment assistance and no down payment mortgages available at incredibly low interest rates."

Luxury home buyers are also active participants in the current market. A check of MLS statistics shows 887 single family homes priced at $1 million or more have sold during the first five months of the year. That compares to 696 for the same timeframe a year ago for a jump of more than 27 percent.

The segment of distressed properties is also rebounding. Moorhead cited figures showing 57 percent of REO (bank-owned) listings sold at or above 100 percent of list price.

Given the fast pace of housing activity, Northwest MLS brokers urged buyers and sellers alike to make sensible decisions and to take advantage of assistance from professionals.

Sellers should avoid the temptation to be greedy suggests Moorhead. "Our message to sellers is to be cautious with pricing or it will cost you thousands by over pricing."

Frank Wilson advises sellers to refrain from agreeing to "select showings." "To maximize on this market sellers should be sure their listing is exposed to all brokers in the Northwest Multiple Listing Service," he explained.

Wilson also offered advice to buyers to avoid disappointment. "We are still seeing buyers who think getting a loan is like it was in the old days: fog a mirror and get a loan. That's no longer the case," he said, adding these misinformed buyers are offended when they are asked for documents and verifications all the way through closing. "Buyers need to be ready to buy on day No. 1," he emphasized. "This means getting approved with their lender, being clear about what they want in a new home, becoming educated about the market, and being ready to write a strong offer when they find the right home."

Mike Gain expects historically low interest rates, a growing economy, improving consumer confidence and consumer finances will continue to fuel activity and push up the numbers. "Anyone who can buy a home today at today's prices with today's low interest rates should do it. In my opinion, prices and monthly payments will never be lower than they are today."

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 Washi

KIRKLAND, WA, September 6, 2011. August now ranks as this year’s best month for both pending and closed sales around Washington state, according to the latest report from Northwest Multiple Listing Service. Last month’s volume of pending sales was the highest number of mutually accepted offers since April 2010 when the homebuyer tax incentive expired.

Northwest MLS brokers reported 7,632 pending sales during August, a gain of more than 26 percent from the same month a year ago when they notched 6,037 pending sales. Last month’s total for the 21 counties in the MLS service area surpassed July by 450 transactions.

Thirteen counties had double-digit gains from a year ago, led by Snohomish County where pending sales jumped more than 46 percent.

“For the first time in a long time, I can say with confidence that things feel better,” said Northwest MLS director OB Jacobi, president of Windermere Real Estate. “We shouldn’t get too distracted by the large increase in pending sales,” he cautioned, noting, “It’s a positive sign, but these figures are being compared to last summer’s post-tax incentive doldrums. With that being said, we’re excited about the positive momentum in the market.”

“Interestingly enough,” Jacobi remarked, “We’re seeing the most activity in the $600,000 to $800,000 price ranges in King County, but low inventory continues to be an issue across the board.” He also noted the company’s mortgage reps are reporting a 50 percent increase in non-refinance loan applications, which he believes “is a positive indicator of things to come.”

Closed sales during August climbed more than 35 percent from the same month a year ago, rising from 4,211 sales to 5,704. Through eight months, this year’s completed transactions have outgained last year by 592 sales (36,918 versus 36,326, for an increase of more than 1.6 percent).

Northwest MLS members added 9,128 new listings to inventory last month, the fewest since February. With those additions, the selection at month end included 36,907 active listings, with about 86 percent of the inventory being single family homes.

Inventory has dropped more than 16 percent compared to a year ago (36,907 active listings at end of August versus 44,186 for same month a year ago).

“With a low level of home inventory for sale and historically low interest rates, we are seeing a healthy volume of sales activity causing multiple offers,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

Multiple offers are occurring below the one million dollar mark close to job centers in Seattle and Bellevue, and below the mid-price point elsewhere, according to Scott, who advised would-be buyers and sellers to get “buyer ready.”

To get ”buyer ready,” Scott said potential purchasers “should get pre-approved for a home loan, understand the inventory level in your selected market area and price range, and sign up to receive daily email notifications of just-listed properties.” Sellers should take similar steps, he suggested: “If you have a home to sell, start investigating the process.”

Selling prices are still below year-ago levels. Area-wide, the median price for last month’s completed sales was $236,000, about 12.4 percent less than twelve months ago. Year-to-date through August, prices for sales of single family homes and condominiums (combined) are down about 9.4 percent.

In King County, last month’s median selling price was $315,000, down nearly 9.9 percent from a year ago. A year-to-date price comparison shows a decline of just under 8.4 percent.

Five counties show slight year-to-date price changes: Kitsap (-2.1%); Grant (-1.85%); San Juan (+2.6%); Okanogan (unchanged); and Whatcom (-0.65%).

Commenting on the latest numbers, NWMLS director Frank Wilson emphasized, “A real estate market is about activity and momentum.” He also noted historic affordability, with the cost of a home better matching income levels and extremely low interest rates contributing to favorable conditions. “We continue to live in a real estate market of extreme affordability, affordability levels that have not been seen in decades,” he stated.

Wilson, the branch managing broker at John L. Scott Real Estate in Poulsbo, noted Kitsap County is seeing slightly more new listings come on the market than a year ago, but total inventory is down about 6.6 percent.

“From a marketing prospective there is nothing better than motivated sellers who are willing to stage their home for sale and price it to be competitive in today’s market,” Wilson stated. “This market is now about serious buyers and serious sellers -- people who have a plan and goals in mind,” he observed, adding, “Our pending sales are up more than 15 percent which shows the activity of a healthy market.” He also noted a more balanced market, based on months supply (currently about 5.8 months supply compared to the year-ago figure of 7.1 months). However, he acknowledged, home prices continue to settle as they have dropped about 12 percent in Kitsap County compared to a year ago.

The National Association of Realtors® attributes much of the price drops around the country to sales of distressed homes, which are usually sold at deep discounts. NAR’s analysis shows 29 percent of sales nationwide are classified as distressed.

NAR officials also fault banks for “unnecessarily restrictive practices.” Such practices are restraining the housing recovery by denying loans to many creditworthy potential buyers, according to NAR. “Those declined buyers represent the difference between an uneven recovery, and a much more robust housing market that could stimulate the economy and create jobs,” the association declared.

Commenting on the Realtors’ most recent statistics, NAR Chief Economist Lawrence Yun described sales activity as underperforming. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”

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 22,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.