KIRKLAND, Wash. (July 5, 2007) - With inventory at an all-time high in the Northwest Multiple Listing Service system, buyers are becoming more selective and sellers are receiving fewer multiple offers, according to MLS officials. Condominiums remain a bright spot, they noted.
Mid-year figures show the volume of pending sales of single family homes and condominiums (combined) is down about 7.3 percent from a year ago, while prices climbed 9 percent. Through June, members have reported 43,543 closed sales, off 3,430 units from the year ago total of 46,973. The median price for completed sales area-wide (through six months of 2007) is $326,000, up $27,000 (9 percent) from this time last year.
For single family homes (excluding condominiums), the year-to-date median sales price is $345,000. That's a 10.2 percent increase from a year ago, but the trend is pointing toward single-digit increases, except perhaps for condominiums.
June marked the third straight month of single-digit gains in sales prices overall, although several counties are still reporting double-digit jumps.
New figures from Northwest MLS for June show:
- • The median sales price on last month's closed sales of single family homes and condominiums increased 6 percent compared to a year ago. For June, the median sales price was $334,000.
- • Year-over-year pending sales are down nearly 12 percent
- • Inventory is up about 51 percent from twelve months ago; at month end, there were 45,223 active listings in the MLS database (39,047 single family homes + 6,176 condominiums).
Even though the inventory is fairly robust, the selection is slim in some close-in neighborhoods and in some price ranges. For homes priced at $247,000 or less (the price a median-income household in King County can afford, according to housing specialists from the Seattle-King County Association of Realtors®), there are only 110 current listings priced under that threshold in King County. Of these single family homes, 94 are in south King County, seven are on the Eastside, two are in Seattle, with the remainder scattered elsewhere in the county.
"Inventory levels overall were somewhat higher in June, but still well below the national average and we continue to see multiple offers in certain markets," remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Not surprisingly, he noted, markets that are closer to job centers tend to have lower inventory levels and higher price appreciation.
Area-wide there is about a 4.9 month supply of inventory, which compares to the national average of 6.8 months. In King County, there is about a 3.2 month supply, meaning if no other homes were to come on the market it would take 3.2 months to sell the available inventory.
Condo Activity Remains Strong
A closer look at the inventory shows part of the increase is due to a growing number of condominiums. In King County, for example, condos account for about 35 percent of the active listings. Of the condo inventory system-wide, about one-third of them are classified as new construction.
The volume of condominium sales and prices are both outperforming last year. Through six months this year, condo sales are up 6.1 percent compared to 2006, with prices jumping 15.6 percent. In King County, which accounts for nearly two-thirds of the transactions, the year-to-date median selling price of a condominium is $285,000, a 17.8 percent increase from the year-ago YTD figure of $242,000.
Buyers Finding Good Values
Buyers realize good values are all around them, but some are waiting too long to act, observed NWMLS director Dick Beeson, broker/owner of Windermere Real Estate/Commencement Associates in Tacoma.
"Traffic at open houses has been brisk with many buyers having started their search on the Internet, thereby increasing their knowledge and awareness of the market," Beeson stated. "When they hit the door they are generally qualified by a lender and ready to buy if the right house appears. However, some of these ‘knowledgeable buyers' tend to be slow to pull the trigger on a purchase as they search endlessly for the ‘perfect home.' Often, it is the one they didn't end up buying, but somebody else did," he reported.
"If you're a seller, you really, really need to put your best foot forward and understand what the competition is," emphasized NWMLS director Mike Larson, designated broker at Allen Realtors in Lakewood. "Sellers still don't quite understand that buyers have much more to choose from - and often a back-up property to act on," he commented. They'll end negotiations and make offers elsewhere if they perceive sellers to be unreasonable, he added.
NWMLS director Ken Bacon characterized the market as "balanced." This balance "creates a need to price the house at value" and requires agents and sellers to look more seriously at the prices of other active listings (the competition), he explained. In the past, pending and closed sales were the focus for determining value ranges, but the more balanced market requires more scrutiny of current listings around the neighborhood, according to Bacon, the broker at Windermere Real Estate in Redmond. "Having a price that is higher than the competition only helps the other homes sell," he stressed.
Noting appreciation for homes is at a lower pace than in 2006, Bacon still expects new job growth and overall economic strength of the Seattle area will sustain appreciation through the end of 2007.
Economists suggest the market is underperforming and believe fallout from subprime lending practices may be taking a toll on home sales.
NAR senior economist Lawrence Yun said consumer behavior is outweighing economic indicators. "Psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers," he said. Household formation has slowed dramatically since late 2006, Yun noted, implying that "many people are doubling-up - they're adding roommates or moving in with parents." "The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices," Yun said, adding, "It appears some buyers are simply waiting for more signs of stability."
The average person on Main Street doesn't understand the impact of tightening lending standards and rising rates, according to Bob Walters, chief economist at Quicken Loans, the nation's largest online retail mortgage lender. "But it means that 10 to 15 percent of borrowers who could get a mortgage at the beginning of the year can't get one today. That's substantial. That's a rippling effect," he remarked.
Northwest Multiple Listing Service, based in Kirkland, is the largest full-service MLS in the Northwest. The MLS is owned by its member brokers and currently encompasses nearly 2,100 companies with more than 26,000 sales associates. Together, they serve 19 counties, mostly in western Washington, plus Grant, Kittitas and Okanogan counties in the central part of the state.
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