Housing activity during October shows mixed results with sales up, prices down, buyers still hesitant

By
Real Estate Agent with Edwards Real Estate Group, Inc.

FOR IMMEDIATE RELEASE: November 3, 2011

 

Housing activity during October shows mixed results with sales up, prices down, buyers still hesitant

 

KIRKLAND, WA, November 3, 2011. Befitting October and Halloween, last month's housing activity had both tricks and treats. Northwest Multiple Listing Service members reported solid gains in pending sales (up almost 21 percent from a year ago), consistent demand in many price ranges, a shortage of homes in a few categories, and some resurgence of move-up buyers.

 

Despite those encouraging indicators, prices were down almost 11 percent area-wide compared to a year ago and brokers say there is persistent "hesitancy" in the market. "All the pieces (for a recovery) exist -- low interest rates, lots of choices, increasing loan availability as well as purchasing programs, yet as a whole the housing market has stalled in many places," said Northwest MLS director Frank Wilson. "What is holding back the housing market has little to do with houses," Wilson stated, pointing to uncertainty in the stock market and volatile global economies, along with a more complicated, prolonged transaction process and lack of job creation.

 

"We knew the median price would take a hit in October because the ‘temporary' loan limit for conventional financing dropped back down from $567,500 to $506,000 after being in place for two years," said OB Jacobi, president of Windermere Real Estate Co. As of October 1, buyers in need of a mortgage above $506,000 must now qualify for a jumbo loan which is more restrictive and comes at a higher cost than conventional financing, he explained. "With fewer financing options for buyers of higher priced homes in our metro area, it's only natural that this would cause downward pressure on October's median price," added Jacobi, a member of the Northwest MLS board of directors. In King County, nearly one-third of the available inventory is priced above the new, more restrictive dollar limit.

 

Northwest MLS brokers added 7,235 new listings to inventory during October, almost 1,000 fewer residential properties than the same month a year ago. Sixteen of the 21 counties served by the MLS reported shrinkage in inventory. At month end, MLS members reported 33,094 active listings of single family homes and condominiums.

 

Any discussion about real estate has to be hyper-local, that is, specific to a geographic area and in some cases as specific as a neighborhood, Wilson suggested. "Just viewing the latest report reveals wide variation of inventory from county to county; Snohomish has 3.2 months of inventory while Okanogan has an 18 month supply of homes," he noted.

 

The housing market in Kitsap County is quietly gaining strength, said Wilson, the branch managing broker at John L. Scott's Poulsbo office. "Even though we are still seeing a settling of prices, there is good momentum in home sales, up almost 12 percent," he noted.  Northwest MLS data show inventory in that county is down to about 5.9 months of supply compared to 7.1 months at this time last year. (Five-to-six months of inventory is a neutral market, below five months favors sellers, and more than six months is considered to be a buyer's market, Wilson explained.) "As the supply continues to decrease, we expect shorter market time, with home prices stabilizing and even beginning to appreciate again," Wilson predicts.

 

Pending sales (mutually accepted offers) increased nearly 21 percent from a year ago, rising from 5,653 transactions to 6,817. In the past four months, the combination of shrinking inventory and more sales (both pending and closed) have led to a swift change in the supply of homes, remarked NWMLS director Darin Stenvers, the managing broker at John L. Scott's Bellingham office.

 

Demand is remaining consistent in many price ranges and move-up buyers are returning to the market because of a shortage of homes that are not distressed, Stenvers noted. This move-up segment can list and sell their homes, then buy a better home with essentially the same payments, he explained. "Buyers know interest rates will not be at these historically low levels forever so they may pass up a short sale/fixer bank owned home for a more conventional transaction," he remarked.

 

Buyers still have bargaining power, according to Stenvers.  He cited a recent transaction involving a home where the appraisal was $40,000 under the asking price because of disparities with the comps used. The buyers negotiated a price that split the difference, deciding that was preferable to "losing a beautiful home altogether."

 

Two key factors support a healthy real estate market -- jobs and low interest rates, said J. Lennox Scott, CEO and chairman of John L. Scott Real Estate. "Interest rates are at historic lows, and here in the Puget Sound we are fortunate to have a stable employment base," he observed.

 

Commenting on the selection of listings, Scott said 10 months of healthy sales activity have reduced the home inventory levels significantly in the greater Seattle area. "We have a shortage of homes for sale in the more affordable ranges throughout the region, and a healthy level of homes for sale in the mid-price range. Sellers with homes that are priced right are seeing multiple offers," according to Scott.

 

Prices for last month's closed sales of single family homes and condominiums (combined) fell 10.9 percent from a year ago, dropping from $255,932 to $228,000. While all but two counties in the Northwest MLS market area experienced declines, the drops were by single digits in 10 counties.

 

King County reported one of the sharpest year-over-year declines. The median price on last month's completed transactions in the county was $287,500, which compares to a year-ago figure of $350,000 (down about 17.9 percent). For single family homes (excluding condominiums), median prices slipped 14.7 percent, dropping from $375,000 a year ago to last month's figure of $320,000.

 

Pricing data should be viewed with some misgivings, said Joe Spencer, president and COO of John L. Scott Real Estate. "Headlines stating home values have fallen by double digits compared to last year don't always reflect what is really happening," he explained, noting factors that can influence prices.

 

"Not every home has dropped 15 percent in value," Spencer insists. He attributes much of the decline to a combination of factors, including shifting demographics and the influence of distressed properties, which he said may be as high as 40 percent in some areas.  More investors and first-time buyers are purchasing in the more affordable price ranges, which results in a downward shift of median prices, Spencer explained. Also, he noted, distortions caused by REO (bank- or other lender-owned) and foreclosed properties contribute to price depressions. "When you adjust for these conditions and compare ‘standard resale homes' the change in home values is much less drastic," Spencer emphasizes.He believes a more accurate reflection of price declines for the Seattle area is around 6 percent, citing research by CoreLogic, Wells Fargo Securities and other analysts.

 

Not always apparent in the raw numbers are the hurdles faced by "real live buyers and sellers who are having a harder time than in the past," lamented Wilson. "Transactions are more complicated and have a higher chance to fail. Lenders who are involved with short sales and bank owned homes further complicate and lengthen the transaction process due to their policies and practices." Consequently, Wilson emphasized, buyers and sellers need to be explicit about what they want to accomplish. "They also need lots of patience and should choose their team wisely, making sure to select real estate professionals who can walk them through the process."

 

Comparing last year with this, Mike Grady, president and COO of Coldwell Banker Bain, noted inventory was plentiful and competition was relatively light last year. Now, he said the market "ingredients" appear to be changed: the number of buyers is increasing and there are fewer homes for sale. "While that's a typical recipe for stable or increasing prices and quicker decisions, today's market has some ‘less palatable ingredients,' such as foreclosed properties and shaky consumer confidence."

 

"Knowing whether these new inventory dynamics will be slow-baked or microwaved into the housing market is still anyone's guess," Grady suggested, adding, "It looks like more people are coming off their home buying diets only to find a reduced supply of homes for sale. That could create some welcome momentum in local markets heading into the new year."

 

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 brokers. The organization, based in Kirkland, serves 21 counties in Washington state.

 

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

 

 

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2000

3706

4778

5903

5116

5490

5079

4928

5432

4569

4675

4126

3166

2001

4334

5056

5722

5399

5631

5568

5434

5544

4040

4387

4155

3430

2002

4293

4735

5569

5436

6131

5212

5525

6215

5394

5777

4966

4153

2003

4746

5290

6889

6837

7148

7202

7673

7135

6698

6552

4904

4454

2004

4521

6284

8073

7910

7888

8186

7583

7464

6984

6761

6228

5195

2005

5426

6833

8801

8420

8610

8896

8207

8784

7561

7157

6188

4837

2006

5275

6032

8174

7651

8411

8094

7121

7692

6216

6403

5292

4346

2007

4869

6239

7192

6974

7311

6876

6371

5580

4153

4447

3896

2975

2008

3291

4167

4520

4624

4526

4765

4580

4584

4445

3346

2841

2432

2009

3250

3407

4262

5372

5498

5963

5551

5764

5825

5702

3829

3440

2010

4381

5211

6821

7368

4058

4239

4306

4520

4350

4376

3938

3474

2011

4272

4767

6049

5732

5963

5868

5657

5944

5299

5384

   

 

 

 

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Rainer
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James A. Browning
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Thank you for sharing your blog; we need Real estate Professionals to share their comments and information regarding their markets and experiences. Thanks again from beautiful

Jun 19, 2012 12:02 PM #1
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