Housing market doing "surprisingly well" without a stimulus

NWMLS: FOR IMMEDIATE RELEASE: April 6, 2011

KIRKLAND, WA, April 6, 2011.  Last month's pending sales fell below year-ago totals in Western Washington, but brokers say the market is faring quite well, considering last year's activity was boosted by federal tax credits. 

The latest report from Northwest Multiple Listing Service shows 7,570 pending sales of single family homes and condominiums during March.  That's down about 12 percent from a year ago when members reported 8,605 pending transactions (mutually accepted offers) across the 21 counties in the Northwest MLS service area.

"The market is doing surprisingly well without a stimulus," observed Northwest MLS director OB Jacobi, president of Windermere Real Estate Company.  "Considering that this time last year there was a rush of buyers trying to beat the tax credit deadline, to have the number of sales off just slightly points towards a strengthening market," he added. 

A comparison to two years ago reveals a double-digit jump in pending sales.  Area-wide, the volume is up nearly 33 percent, rising from 5,701 pending sales in March 2009 to 7,570 for last month. For the four-county Puget Sound region, pending sales spiked nearly 42 percent compared to two years ago (from 4,266 to 6,049).  "The glass is starting to look more half full than half empty," Jacobi commented.

Mike Grady, president and COO of Coldwell Banker Bain, agreed. "Most real estate professionals will be happy to move past the year-over-year comparisons that have been made the first few months of 2011, as they reflect the boost given home sales by last year's Homebuyer Tax Credit," he noted, adding, "Home sales are now standing on their own -- without the benefit of incentives -- and the market is actually behaving quite typically."

Buyers have plenty of choices, although the selection is smaller than a year ago, reflecting fewer new listings being added to inventory.  Members added 9,812 new listings to inventory last month, which compares to 12,994 additions for the same month a year ago. At month end, the Northwest MLS database included 33,444 active listings, including 28,146 single family homes and 5,298 condominiums. That's a drop of 5,272 properties, a decline of 13.6 percent.

"In fact, some urban core neighborhoods, such as Greenlake, Queen Anne and West Bellevue, are seeing very strong demand, and a waning supply of desirable homes for sale," Grady reported. Many buyers looking in these neighborhoods are beginning to express frustration over the lack of available homes, according to Grady.  "As a result, Realtors are beginning to report multiple offers, with contracts settling over the list price on the best homes."

While this certainly isn't the norm in most areas served by the NWMLS, Grady said it is encouraging that in some areas homes are selling briskly, and distressed and bank-owned properties are still in the minority.

Distressed properties continue to drag down prices.  According to research by the National Association of REALTORS®, nearly one of every four home sales (24 percent) in Washington is classified as a short sale or foreclosure.

Northwest MLS members reported 4,590 closed sales of single family homes and condominiums last month. That total represents a drop of 7.7 percent from twelve months ago when members notched 4,972 closings.  

Prices on last month's closed sales system-wide declined about 8 percent compared to a year ago. The area-wide median sales price was $242,925; a year ago it was $264,475.  In King County, prices dipped about 7 percent ($319,950 last month versus $343,950 for March 2010), although the gap was much narrower in some areas.  In the Northwest MLS map areas comprising the Eastside, prices were off about 2 percent ($435,000 versus 444,000), while in the Seattle area, the year-over-year drop was only about 1 percent ($357,500 versus $361,500).

"We saw a lot of qualified buyers making offers in March," Windermere's Jacobi remarked. "They're out of the tire-kicking mode and ready to buy now. Inventory is low in general, and there is a particular shortage of move-in ready homes," he stated, noting properties that are selling look like model homes. "Sellers realize if they remove any buyer objections ahead of time, their house will sell, and sell quickly."

Jacobi said one of his company's brokers wrote a cash offer for a client on a $1.1 million home in Bridle Trails the first day it was on the market. "The house was in perfect shape and newly painted. The sellers did a pre-inspection and spent several thousand dollars on minor repairs. The property got multiple offers," he reported. The sellers accepted the cash offer for just under their asking price.

Grady senses some neighborhoods appear to be close to recovery, citing remarks by a broker who likened the market to a space capsule re-entering the atmosphere.  "While it might appear to be burning out of control, the heat is actually beneficial, providing the friction necessary to slow the descent and allow a safe landing. Perhaps our broader market appears to be smoldering now, but some neighborhoods also appear to be close to recovery. With ‘Spaceship Seattle' currently offering fewer than two single family homes for sale for every buyer currently under contract, it could be an interesting summer around the real estate launch pad," he suggested.

Commenting on the latest nationwide report on pending sales, Lawrence Yun, NAR chief economist, said "We may not see notable gains in existing-home sales in the near term, but they're expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who've been on the sidelines."

Yun also emphasized the importance of looking at the broader trend, citing the unusually bad weather in the Northeast as having a negative impact on February's data. "Month-to-month movements can be instructive, but in this uneven recovery it's important to look at the longer term performance," he said. "Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines." 

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.

Statistical Summary by Counties: Market Activity Summary - March 2011

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)