Current Eye On The Market.

Housing market rebound continues,
with “slow, unprepared buyers” settling for “2nd choice” homes

KIRKLAND, WA, October 4, 2012 – Home sales around western Washington continue to outpace activity of a year ago while inventory remains thin, according to new figures from Northwest Multiple Listing Service.  Brokers say that combination is resulting in disappointment for buyers who are slow to accept the reality of a recovering housing market.

Commenting on September data from Northwest Multiple Listing Service that shows upticks in sales and prices, broker Frank Wilson said buyers who make unrealistic offers and requests are “back on the street looking at their second choice home.”  Meanwhile, some sellers with well-priced, well-prepared homes are receiving multiple offers according to Wilson, a member of the Northwest MLS board of directors and the managing broker of John L. Scott Real Estate in Poulsbo.

Northwest MLS figures for September show the pace of sales slowed from the past six months, but still outgained activity of a year ago.  Members reported 5,535 closed sales, which compares to the year ago total of 4,988 for an increase of nearly 11 percent. Thirteen of the 21 counties served by the MLS reported double-digit gains in the number of completed transactions.

Through three quarters of 2012, closed sales are up 14.6 percent from a year ago (48,022 versus 41,906).

Prices on last month’s closed sales rose 9.2 percent from twelve months ago.  The area-wide median price on single family homes and condominiums that sold last month was $255,500.

Prices on single family homes (excluding condominiums) increased more than 12 percent, rising from $240,000 to $269,000.  The most expensive homes sold in San Juan County, which reported a median sales price of $380,000, and in King County, where the median selling price was $375,000.

Brokers added 7,300 new listings to inventory last month, the fewest number since January.  With those additions, there were 25,476 active listings in the MLS system at the end of September. That total is down 27.7 percent from the year-ago selection that encompassed 35,254 listings.

The sharpest drop in active listings occurred in Snohomish County, which has about half the inventory of a year ago (2,187 currently versus 4,308 active listings at end of September 2011).  Northwest MLS figures show year-over-year prices there jumped 14.6 percent.

The imbalance between supply and demand is “wreaking havoc” with some buyers and sellers, said Northwest MLS director George Moorhead, branch manager at Bentley Properties in Bothell.  Some sellers are lamenting “missed opportunities,” but he believes positive momentum will continue with the combination of below-normal inventory, record-low interest rates and changing views on home ownership. “We are seeing clients’ views change from a home being a short-term investment vehicle to being a place where we raise and teach our families,” Moorhead remarked.

MLS members tallied nearly 600 more pending sales last month than a year ago. Brokers reported 7,494 mutually accepted offers for an increase of 8.7 percent from the year-ago total of 6,897 pending transactions. Sales results were mixed across the MLS market area, with 12 counties reporting increases, eight reporting declines and one unchanged.

The rapid pace of sales in some areas coupled with dwindling inventory means below-average months of supply in some counties. Area-wide there is about 3.4 months of supply, with five-to-six months considered to be average.  King, Pierce and Snohomish counties all report levels below three months.

All cash buyers are returning to the entire market, observed MLS director Darin Stenvers. “Cash offers are being made across the price spectrum, including the million dollars-plus ranges,” he added.

Stenvers, the office managing broker at John L. Scott, Inc., in Bellingham, said the ingredients are in place for “a perfect buying season,” citing rapid absorption of inventory and well-priced homes as two factors. How long such conditions will last is “the $64,000 question,” he stated, noting pent-up demand in some areas has buyers feeling the pressure to move quickly to get their offers accepted.

New home construction will continue making a rebound, Stenvers believes. He said builders are moving cautiously in most markets, being careful to build only the sizes and quality of homes that are likely to sell before completion, and not starting too many foundations at one time.

Despite brisk activity, Stenvers noted foreclosures and owners who are delinquent on mortgage payments remain a concern. The number of owners nationwide who are 90 days or more late in making payments is again on the rise, a situation that will continue to affect foreclosure rates, he explained.

“The lack of foreclosed homes not coming on the market has successfully stabilized prices but also created a lack of homes for buyers to buy,” Stenvers stated.

Buyers are also weighing the pros and cons of renting or buying.  “The rent versus buy conundrum is still the biggest obstacle facing buyers today,” Stenvers reported.

Referring to new reports on recent and planned rent increases and low availability of good rentals in some areas, Stenvers said home ownership is “a better investment in many areas even if buyers are thinking of holding the home for a relativity short time frame.”  It is hard for someone to move into an apartment after having the freedom of a larger home, so displaced home owners are looking to rent homes first, he reported, adding, “This alone is driving investors back into the housing market,” he stated.

MLS director Wilson said while the story of a few years ago has flipped, the path to ownership remains constant. “We used to say the seller who priced and staged their home the best would get buyers. Today we’re saying buyers who are most realistic with their offers and pre-approved with a lender, and who are the most aggressive might get the house they want.”

“This is what a normal market looks like — buyers and sellers negotiating fairly with each other and each feeling they may have left a little on the table,” Wilson remarked. One of the benefits of a “normal” market is that it is not all about sale price, he explained, noting closing costs, type of loan, closing date, possession date and work orders are all things that balance out a normal transaction.

Setting up buyers for success remains the paramount goal, according to Wilson. A buyer’s path for success includes pre-approval with a lender, sufficient funds to pay their own closing costs, and the patience to wait through the closing process, especially if they are buying a short sale or bank owned home, he explained.

George Moorhead, another MLS director, echoed that advice, saying “Smart recovery is what everyone should be considering as we heal from the neglected financial actions of the past.”

Current buyers are cautiously optimistic, Moorhead reported.  Clients in general are united in debt reduction, building up savings and reserves, spending more wisely than they ever have, and have an optimistic outlook of the economy as a whole.

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 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.

Statistical Summary by Counties: Market Activity Summary – September 2012

Single
Family
Homes
+ Condos
LISTINGS PENDING
SALES
CLOSED SALES
New
Listings
Total
Active
# Pending
Sales
#
Closings
Avg.
Price
Median
Price
King 3,009 6,312 3,072 2,312 $424,085 $335,000
Snohomish 987 2,187 1,206 880 $284,833 $261,658
Pierce 1,128 3,731 1,247 773 $231,335 $200,500
Kitsap 379 1,552 346 238 $282,866 $240,250
Mason 102 791 75 68 $202,012 $180,000
Skagit 156 904 146 121 $267,587 $230,000
Grays Harbor 100 858 93 59 $142,108 $130,000
Lewis 107 717 64 68 $159,612 $155,000
Cowlitz 137 526 102 78 $141,492 $127,450
Grant 70 571 52 57 $147,326 $137,000
Thurston 323 1,283 317 289 $223,461 $211,000
San Juan 18 408 35 29 $736,017 $375,000
Island 114 848 132 90 $311,867 $270,900
Kittitas 67 506 55 38 $259,489 $196,500
Jefferson 47 515 52 39 $239,002 $225,500
Okanogan 35 438 18 22 $206,500 $192,150
Whatcom 272 1,529 271 216 $277,558 $239,944
Clark 45 229 37 30 $194,755 $175,450
Pacific 34 414 34 23 $138,635 $119,000
Ferry 8 82 1 0 0 $0
Clallam 49 422 39 37 $223,025 $220,000
Others 113 653 100 68 $219,385 $214,750
MLS TOTAL 7,300 25,476 7,494 5,535 $323,747 $255,500

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 4814 4197
2012 4921 6069 7386 7015 7295 6733 6489 6341 5871

Current Statistical Reports

Information and statistics compiled and reported by the Northwest Multiple Listing Service.

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