Slower Market Means Homebuyers Have "Newfound Ability to Negotiate"
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KIRKLAND, Washington (November 6, 2018) - Seven months of steadily rising housing inventory reversed course in October when Northwest Multiple Listing Service brokers added the fewest new listings since February, according to a new report. MLS members believe the onset of wintry weather and transition to the holiday season are factors, but suggested the slower pace also signals improving conditions for house-hunters.
Northwest MLS members added 8,865 new listings to inventory last month in the 23 counties it encompasses, down from September's volume of 10,458, but up 4.7 percent from the year-ago total of 8,466 new listings. Compared to September, last month's number of total active listings shrunk nearly 6.7 percent, but year-over-year inventory rose 33.2 percent, from 13,680 to 18,223 offerings.
Brokers generally welcomed the bump-up in inventory.
Real estate veteran Mike Grady, the president and COO of Coldwell Banker Bain, commented on the current "win-win" conditions. "We're entering that time of year when historically the market slows a bit as we head into the holidays. Buyers continue to see an improving market compared to last year with the inventory increasingly to 2.4 months of supply in King County, compared to the year-ago figure of less than a month (0.98)," he stated.
Area-wide there is nearly 2.3 months of inventory, slipping from more than 2.5 months in September, and improving on the year-ago figure of about 1.5 months of supply.
The year-over-year gains in supply, while notable, are still "way off from a balanced market that provides five to six months of inventory," Grady remarked, adding, "Contrary to recent media reports, the sky is not falling," he emphasized, pointing to rising prices and strong jobs reports as factors for a positive outlook. (The State Employment Security Department reported Washington gained 4,500 jobs in September.)
Northwest MLS figures for October show median prices system-wide for homes and condos are up about 4.6 percent from a year ago, rising from $373,000 to $390,000. King County prices jumped from $565,000 to $613,509 for a gain of about 8.6 percent. All but four of the 23 counties in the report experienced price increases from a year ago.
Condo prices are up 7.8 percent from a year ago. In King County, which accounted for more than half of last month's condo sales, prices rose 5.8 percent, from $378,000 to $400,000. Median prices in King County peaked so far this year (at $466,500) in the spring when sales closed at several newly built condos in downtown Seattle and Bellevue. The median price on newly built condos that have sold in King County so far in 2018 is $830,287.
Both pending sales (mutually accepted offers) and closed sales dipped by double-digits during October. MLS members reported 9,015 pending sales, down 14.8 percent from the year-ago total of 10,586, but up slightly from the previous month's figure of 8,913.
The volume of closed sales declined nearly 11 percent area-wide, although eight counties reported double-digit year-over-year increases. For the four-county Puget Sound region, the number of completed transactions fell 15.3 percent from a year ago, but rose 5.2 percent compared with September.
Brokerage owner George Moorhead of Bentley Properties has noticed a "significant uptick in buyer activity during the past three weeks," calling it typical for this time of year. "Buyers are more than testing the waters as they see better pricing, less competition, and have a desire to secure their next home for the holidays."
In response to persistent questions about a possible housing bubble, Moorhead said the clear answer is "Absolutely not." As buyers, sellers and even brokers adjust to a more balanced and healthy market, "there will be some feeling of the unknown," he believes.
Recent rises in interest rates are of some concern, according to some industry leaders.
"The rise in interest rates has some sellers and buyers concerned as it erodes the affordability of our already price sensitive market," stated Deely.
Moorhead reported buyers have expressed little concern, but are more worried about home prices and future values over the next 3-to-5 years. With a diminishing pool of buyers as the year winds down, builders are ramping up incentives, according to Moorhead. He said mortgage interest rate buydowns are among the incentives, along with custom upgrades and payment of closing costs.
Lawrence Yun, chief economist at the National Association of Realtors, expressed concern about inventory and interest rates. "The insufficient supply of low to-mid-priced homes in metro markets with strong job growth continues to drive up prices and push prospective buyers out of the market," he said in a NAR report on third quarter activity.
"As mortgage rates continue to rise, reaching the decade's highest rates this quarter, an increase in the supply of affordable homes has become even more important to help temper price growth across the country," Yun commented.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of around 2,200 member offices includes more than 29,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in the state.