Western Washington Housing - Now and What May Be Ahead
/Key indicators for Western Washington housing still rising, but brokers detect slowdown and uncertainty.
Early seasonal snow and questions swirling around the tax plan unveiled last week by House Republicans could make the usual seasonal slowdown more pronounced, say industry leaders from Northwest Multiple Listing Service. For October, however, key indicators trended upwards.
Pending sales rose nearly 8 percent from a year ago, closed sales were up 5.2 percent, and prices jumped about 8.2 percent, with 14 counties reporting double-digit gains. Even the number of new listings improved on the year-ago total.
Northwest MLS figures for the 23 counties it serves show members added 8,466 new listings to inventory during October, out-gaining the year-ago total of 7,575 by 11.8 percent. Buyers outnumbered new listings, with 10,586 of them having their offers accepted. That number of pending sales was up nearly 8 percent from the same month a year ago.
Buyers may find themselves in a quandary as the year winds down as they contemplate limited supply, possible upticks in interest rates and tax reform. Last week's announcement of a provision in a GOP tax proposal to cap the mortgage interest deduction is concerning to buyers, brokers and builders.
"Imagine if the proposed plan to cap the mortgage interest deduction at $500,000 is approved in a market that is starved for homes and where the median price [for a single family home in King County] is now $630,000," said O B Jacobi, president of Windermere Real Estate. "Homeowners may be less likely to sell because they would be giving up their grandfathered tax credit on their current home. That's fewer homes for sale in a market where we really need them," he stated, adding, "There could also be a flood of new buyers trying to purchase before the plan is passed, adding to the already hyper-competitive market conditions."
The president of the National Association of REALTORS® also weighed in, saying details are currently under review, but stated, "Eliminating or nullifying the tax incentives for homeownership puts home values and middle class homeowners at risk, and from a cursory examination this legislation appears to do just that."
Northwest MLS data show 66 percent of single family homes sold so far this year (Jan. - Oct.) in King County had selling prices of $500,000 or higher.
For single family homes (excluding condos), the median sales price for last month's completed transactions was $381,000. Within King County prices are considerably higher. In Seattle, year-over-year prices jumped 17.6 percent, from $625,000 to $735,000. On the Eastside, the median price for a single family home rose 10 percent from a year ago, increasing from $768,000 to $845,000. Nevertheless, high prices did not seem to deter many house-hunters.
End of year and early 2018 home sales
With a large buyer pool for each new listing, a higher percentage of new listings sell within the first 30 days of coming on the market. As we enter the winter market, the number of new listings being added will be in short supply from now through February. Compared to spring months, the next few months will be at 30-to-50 percent of spring totals. The stage is set once again for a frenzy housing market after the first of the year in the price ranges where there is a shortage of active listings for sale.
Inventory remains low in many counties in the Northwest MLS system. Overall, there is only 1.5 months of supply of single family homes and condos combined. In King County, it's less than one month. Industry analysts say four to six months typically indicates a balanced (or "normal") market.
Most brokers agree inventory will not grow over the next few months. Sellers who bring their homes on the market over the next three months will have a lot of interest because of the pent-up demand of buyers who are going to have fewer houses to consider.
Brokers in Snohomish County are detecting some tapering of activity
Buyers are no longer being as aggressive with concessions on homes when making offers and they are unwilling to compete for a home where sellers are being too aggressive with a list price. Buyers who have been on the sidelines are now more active as they see a slowdown and an opportunity to finally own a home without the multiple offer competition.
Additionally the usual seasonal slowdown is apparent a bit earlier than usual. Multiple offers are continuing but listings in Snohomish County are experiencing longer market times, fewer above-list price offers, and a noticeable increase in price reductions. All of this puts an emphasis on how important correct, accurate pricing has become.
Statistics for October at first blush suggest the lack of listings of single family homes and condos in the region is self-correcting. As an example, new listings in the tri-county region (King, Snohomish and Pierce) increased 11 percent from a year ago, while year-over-year sales rose only 6 percent. That implies the shrinking inventory of homes for sale experienced over the past couple of year may be evening out.
The story continues to be in the 'commuter' counties, which are experiencing the biggest shrinkage from a year ago. This reduction of supply will continue to put pressure on rising prices. Bottom line: investment in a home continues to be bullish with no change in sight.
Northwest MLS board member Robert Wasser said while it may be a difficult time to be a buyer and a positive time to be a seller, the best strategy "regardless of market conditions is to calculate the pros and cons involved and make informed choices." Wasser, the owner/broker at Prospera Real Estate in Seattle, recommends working with a real estate professional who, among other topics "is equipped to discuss market conditions, financing considerations, historic trends, and buying and selling strategies."
- NWMLS & Seattle King-County REALTORS®
