The supply of available homes remains at critical levels, with both King and Snohomish counties showing less than a month’s supply of inventory. With demand far outstripping supply, home prices increased by double-digits over last year throughout the Puget Sound area. The red hot market allows sellers to call the shots. Since some sellers are hesitant to put their home on the market for fear they won’t be able to find their next home quickly enough, many are negotiating with buyers to stay in their house for several months after the sale to ease the transition.
EastsideEastside home prices were up 17 percent over last March to $739,440. That price was unchanged from February of this year. Inventory, which traditionally increases in the spring, continued to shrink. With under a month’s supply of properties on the market, homes at every price point are selling quickly and often with multiple offers.
King CountyAfter breaking records in February, home prices hit a new high in March. The median price of a single-family home soared to $531,250, a 21 percent increase over the same time last year. Homes are selling within days, and the area has only several weeks of available inventory. Frustrated buyers are waiting for more sellers to take advantage of the jump in prices and put their home on the market.
SeattleA booming economy has drawn many new residents to the Seattle area. The city has the lowest inventory in the region, and that is reflected in home prices. The median price of a single-family home was up 20 percent over last March to $640,000. That was down slightly from the high of $644,950 in February.
Snohomish CountyAfter posting more moderate gains than King County so far this year, Snohomish County home prices jumped 13 percent over last March. The median price for a single-family home climbed to $385,000. With buyers increasingly looking to the area for more affordable home options, inventory has shrunk to historic lows. Multiple offers are now the norm.
Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).
In a Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.
Read the full post on Keeping Current Matters.
The Washington State economy has added almost 370,000 jobs since the lowest point of the recession at the start of 2010. Additionally, total employment is 176,000 jobs higher than seen at the 2008 peak. With a vast majority of our metropolitan areas having fully recovered from the job losses seen during the recession, I expect to see somewhat more modest job growth in the coming year. That being said, our economy will continue to expand, which will be a benefit to our region’s housing market.
Home Sales Activity
- There were 16,895 home sales during the fourth quarter of 2015, up by 4.6% from the same period in 2014. Sales activity is starting to slow somewhat but this is due to inventory constraints.
- The growth in sales was most pronounced in Cowlitz and Lewis Counties and double-digit growth was also seen in Thurston County. Sales declines were seen in Grays Harbor County and Skagit County, but only minimally.
- The number of home sales grew in all but two counties, with the average number of sales up by almost 6% from the same period in 2014.
- I am not surprised to see some decline in sales start to appear. Listing activity was down by 28% compared to the fourth quarter of 2014, and there were no counties where there were more homes for sale in Q4-2015 versus Q4-2014.
- Prices in the region rose by an average of 9.3% on a year-over-year basis but were 0.4% lower than seen in the third quarter of 2015.
- Unsurprisingly, no counties saw a drop in average home prices compared to fourth quarter last year.
- When compared to the fourth quarter of 2014, San Juan County again saw the fastest price growth with an increase of 37.6%. However, this county is notorious for extreme swings given the huge variations in prices in the San Juan Islands. Double-digit percentage gains were also seen in five other counties.
- As long as inventory constraints persist, it is likely that price growth will continue. That said, modest increases in interest rates, in combination with declining affordability conditions in several markets, will likely slow price appreciation.
Days on Market
- The average number of days it took to sell a home dropped by nine days when compared to the third quarter of 2014.
- It took an average of 78 days to sell a home in the fourth quarter of this year—down from the 91 days it took to sell a home in fourth quarter of last year.
- There were just two markets where the length of time it took to sell a home did rise, but the increases were minimal. Jefferson County saw an increase of eight days while Mason County rose by two days. King County remains the only market where it takes less than a month to sell a home.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the fourth quarter of 2015, I have left the needle at the same position as the previous quarter. In as much as the market is still very heavily in favor of sellers, I fear that some markets are reaching price points that will test affordability. Furthermore, while inventory levels are likely to see some growth in 2016, it will not be enough to satisfy demand, adding further upward pressure to prices. Overall, 2015 was a stellar year with sales volumes and home prices moving higher across the board. In 2016, I believe we’ll see some growth in sales activity, as well as continued price growth – just at more modest levels than last year. Interest rates are going to rise moderately through the year, but still remain very competitive when compared to historic averages. In other words, any increase in interest rates should not be a major obstacle for home buyers. Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.
If you are debating purchasing a home right now, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home.
There are 3 questions you should ask before purchasing in today’s market:
1. Why am I buying a home in the first place?
This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:
2. Where are home values headed?
When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.
So what does that really mean for you and your family?
Read the rest of the article on Keeping Current Matters.
The real estate market traditionally cools off in the summer, but August saw a continuation of the market’s hot streak. Home prices increased by double digits over a year ago, fueled by strong demand and the lowest inventory in more than a decade. Rising prices are kindling hopes that more sellers will be willing to put their home on the market.
Home values on the Eastside continue to be the highest in the region. The median price for homes sold in August was up 11 percent to $672,000. Very limited inventory translated into brisk sales as buyers snapped up homes at every price point. A $3.7 million home on Yarrow Point sold in just four days after being listed.
The median price for a single family home in King County was $499,950, a 14 percent increase over last August. Inventory has inched up, but the five weeks of existing supply is far below the three to six months of supply that is considered to be balanced. Condo sales were strong, with 22 percent more sales than a year ago.
Buyers frustrated with high home prices in King County have been drawn to Snohomish County in search of finding more home for their dollar. That demand has driven down inventory, which stands at just under two months of supply. Demand has also pushed prices higher. The median price of a single family home rose 11 percent over a year ago to $366,825.
We’re still having record heat in the Puget Sound region, and our home prices are rising with the thermometer. It’s still a roaring seller’s market out there, especially on the Eastside. We continue to have local markets in dire need of inventory, so this is an excellent time to list your home and take advantage of the current market.
• The months supply of inventory continues to decline from the prior year in Seattle and the Eastside, as well as King and Snohomish counties.
• Closed sales on the Eastside have started to decrease in number due to seasonal trends and lowered inventory.
• The majority of those Eastside closed sales in July sold over original list price.
The Eastside had the highest increase in home sales prices since last July, increasing 9 percent to $681,600. We continue to have the highest median home prices in the region. Inventory had the slightest increase since June's 1.1 months of inventory with July holding 1.2 months (a balanced market reflects 3 to 6 months of inventory). Total closed sales dropped to 932, 3 percent less than July 2014 and 5 percent than last month's 981 total closed sales on the Eastside.
Inventory actually increased for the third month in a row, but was still held at a stark 1.1 months supply. While median sales prices fell 3 percent from the previous month, July's sales prices were still 4 percent higher than the previous year at $485,000. With inventory so low and the county's higher prices, many potential buyers are being pushed farther out than they would have previously wanted to buy.
Snohomish County has increased its median sales price 8 percent since July 2014 to $362,987 last month. It holds a stronger, though less than normal, inventory of 1.5 months. The number of closed sales has increased sharply to 1,156 in July, a 19% increase since the previous year. While many potential buyers are being forced out of the Eastside and the Seattle area, Snohomish County proves to be a less expensive and more promising market.
Windermere's chief economist, Matthew Gardner, recently shared some insight on what we're currently seeing in our local housing market. Here is his commentary, originally posted on Windermere.com.
Exactly 10-years ago this month, Alan Greenspan was asked if he had any concerns regarding the housing market. At that time, he emphasized that he saw no sign of a nationwide housing bubble, but he did have concerns over "froth" in the market and pointed to a big increase in the purchase of investment properties — particularly in second homes. As a result, he said, there are "a lot of local bubbles" around the country, but not at a national level.
As we are all very much aware, he, along with many other esteemed economists, was incorrect in his prediction that there was no national housing bubble in sight.
So here we are, a decade later, and some are starting to suggest that we are on the verge of another “bubble” bursting due to an overheated housing market. I’m often asked if there is any truth to this, and my response is no, I don’t believe there is a national bubble on the horizon. And here are the reasons why:
1. The flippers have left the building – in as much as it causes me untold angst to see the resurgence of reality TV programs espousing the wonders of house flipping, the country has seen a marked slowdown in this type of business. Why? Well one reason is that the number of foreclosed homes continues to drop. Foreclosures are the preferred property type for flippers, as margins can be significantly higher.
2. Lending standards remain very stringent – Banks actually did learn a lesson from the collapse of the housing market and remain wary, and because of this, qualifying for a mortgage remains difficult. For example, in April of this year, the average FICO score required for an approved conventional home loan was 756 with a 19 percent down payment. The average FICO score for someone who was denied a loan (with an average down payment of 17 percent) was very high at 699.
3. Home prices are up, but not to pre-bubble levels – here I looked at data provided by S&P Case Shiller index which is a useful resource because it calculates the increase/decrease in value of the same house over time, rather than just the make-up of sales during a specific time period. At the national level, the bursting of the housing bubble led to a 27 percent drop in the index. The index has risen back up but is still 9 percent below the prior peak.
4. Interest rates are going to (eventually) start to rise – and this will take some of the heat out of the market. Now, there are some who will say that any increase in mortgage rates will negatively impact the housing market, but I don’t agree. Although it is true that an increase in rates does decrease buying power, the naysayers are ignoring the fact that we are in a growing economy. The growth in employment, and the subsequent drop in the unemployment rate, will lead to wage growth, and increasing incomes will take some of the sting out of any rate increase.
Given all of these points, I do not see the risk of a national “housing bubble” anywhere in the foreseeable future; however, I do think we are seeing localized “froth” in some markets.
View the original post by Matthew Gardner on the Windermere blog.
Continued strong demand has pushed home prices in King County over their 2007 peak. Faced with record low inventory and anxiety about rising interest rates, buyers are snapping up homes as soon as they come on the market. What is tough news for buyers is a boon for sellers. A recent analysis of home sales in King County showed that 41 percent sold for over list price. • Both closed sales and pending sales (agreements that have been signed but not yet closed) in King County were up by double digits over last March. • Home prices continued their steady rise. • April was the sixth consecutive month of record-low inventory.
EastsideBoth home sales and home prices on the Eastside rose in April. The number of closed sales were up by 15 percent over last year. The median price of a single family home was up 6 percent to $654,650. Stiff competition for homes was exacerbated by lack of inventory, with just one month supply available.
King CountyApril was the second month in a row that King County had less than one month of available inventory. (A supply of three to six months is considered balanced.) The number of closed sales climbed 17 percent over the same time last year. The median price of a single family home in King County rose 11 percent over last year to $480,000.
See the original article on the Windermere Eastside blog.