Competition among home buyers Fierce!

News from NW Multiple Listing Service

FOR IMMEDIATE RELEASE: June 5, 2013

Competition among home buyers “still fierce;” rising interest rates adding to fury

NWMLS, Kirkland, WA, June 5, 2013 – Well-priced homes continue to draw multiple offers and sell at a brisk pace around Western Washington as buyers react to increases in interest rates and asking prices.

Northwest Multiple Listing Service reported double-digit gains in several key indicators it tracks for the 21 counties in its service area. Compared to a year ago, the number of new listings climbed 16 percent, pending sales increased about 10 percent, closed sales jumped nearly 22 percent, and prices rose more than 13 percent. Despite gains in listing activity, inventory remains tight.

Commenting on the latest report, brokers said the fast pace is frustrating some buyers — and surprising sellers with unrealistic expectations. One broker cautioned against an overheated market. “We do not want a market that escalates too fast and topples again,” commented Frank Wilson, Kitsap district manager at John L. Scott Real Estate and branch managing broker for its Poulsbo/Kingston office.

“Overly aggressive sellers find themselves disappointed when no or low offers are presented,” remarked Northwest MLS director Kathy Estey, the managing broker at John L. Scott in downtown Bellevue.

With inventory apparently improving, some would-be buyers are staying on the sidelines. The increased inventory is “cooling some buyers,” reported George Moorhead, managing broker at Bentley Properties in Mill Creek and a member of the MLS board of directors. “We also have buyers who are stepping back as they are frustrated with current inventory and multiple offers going well above asking price,” he added.

Inventory showed signs of improving with the addition of 11,445 new listings during May, the highest number since April 2010. May’s total outgained the year-ago figure of 9,861 new listings for a 16 percent gain.

“It has been refreshing to see more listings coming on the market, but with overall inventory remaining low the competition among buyers is still fierce for homes that are priced properly,” commented Estey.

At month end, there were 21,943 total active listings in the Northwest MLS database, a drop of 4,248 from the same time a year ago for a decline of more than 16 percent.

Buyers looking for condominiums will find slim pickings. Condos currently account for only about 10 percent of the available inventory. The area-wide selection, which numbers 2,253 listings, is down more than 26 percent from a year ago.

Brokers reported nearly as many pending sales system-wide (10,045) as new listings (11,445). Nine counties reported year-over-year gains in pending sales that exceeded 30 percent (Clallam, Cowlitz, Ferry, Grant, Grays Harbor, Island, Kitsap, Lewis, and Okanogan).

Most metro area counties had more modest gains in pending sales: King (up 6 percent) Snohomish (down 5.8 percent) and Pierce (up 10.6 percent).

Closed sales continue to track well ahead of a year ago. During May, members tallied 7,349 completed transactions, outpacing the year ago total of 6,027 by nearly 22 percent.

Prices jumped 13.4 percent from twelve months ago, rising from an area-wide median selling price of $242,500 to last month’s price of $275,000. The median price for homes and condos that sold in both King County and San Juan County was $375,000 ($100,000 higher than the area-wide figure). In King County, that represented a gain of 15.4 percent, while for San Juan County prices edged up only about 1.8 percent compared to a year ago.

“We’re seeing the trajectory of home prices beginning to soften and the number of days on the market decline,” observed Mike Grady, president and COO of Coldwell Banker Bain, adding, “The trends suggest inventory levels are slightly more sustainable, but we’re still clearly in a seller’s market. For the foreseeable future, buyers will continue to pay more the longer they wait to purchase a home.”

Frank Wilson, who is also a board member for Northwest MLS, said recent market activity is affecting home values. In Kitsap County, where his office is located, brokers added 575 new listings to inventory during May, improving on the year-ago total of 515. During the same period, MLS members reported 567 pending sales to soar past the year ago figure of 414 sales for an increase of nearly 40 percent. Median selling prices in Kitsap County rose 5.3 percent, from the year-ago figure of $228,000 to $240,000.

“Slow and steady is the key here,” Wilson cautioned, while also raising concern about low appraisals, which he described as the “inchworm effect” of the market. “As prices begin to appreciate we will continue to see challenges with low appraisals,” he predicted.

Moorhead said increased activity is very noticeable, with mixed outcomes. “We are seeing multiple offers at 5-to-12 percent over list price in highly sought-after areas,” he reported, but also noted “there are other homes on the market that are not selling with no real reason why.”

Some brokers also commented on rising interest rates.

Wilson said the biggest effect of the upswing in the real estate market has been the erosion of a buyer’s buying power. In May alone, interest rates jumped almost 0.75 percent, he noted, which reduces a buyer’s ability to purchase a $350,000 home by almost $31,000. Coupled with an increase in price, he said it “creates a compounding affect, which will frustrate buyers in today’s market.”

Estey said interest rate increases are “adding fury to the already frenzied buyers who must finance their purchase.”  A one-half percentage point increase in interest rates reduces buying power by 5 percent, she explained, adding, “so as prices increase about a percentage a month, the feeling of urgency mounts too.”

Commenting on the challenges buyers are encountering, Estey said, “The joy of buying a home in today’s market is in the long-term result of settling in, but the competitive process is sometimes not so joyful! Hiring the right broker who can add some fun elements and insights while wisely guiding buyers through the decision process can make a huge difference,” she suggests.

Federal officials are downplaying rising interest rates. In a recent interview, Frank Nothaft, Freddie Mac’s chief economist, commented on the latest rise that marked three consecutive weeks of increases. “While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” he remarked, adding, “The rates are also lower today than they were a year ago at this time.”

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 and sources quoted follow.

Statistical Summary by Counties: Market Activity Summary – May 2013

Single
Family
Homes
+ Condos
LISTINGS PENDING
SALES
CLOSED SALES MONTHS
SUPPLY
New
Listings
Total
Active
# Pending
Sales
#
Closings
Avg.
Price
Median
Price
King

4,352

4,832

4,041

3,122

$457,903

$375,000

1.20

Snohomish

1,564

1,777

1,487

1,131

$309,112

$285,000

1.20

Pierce

1,576

3,025

1,648

1,116

$234,875

$210,000

1.84

Kitsap

575

1,426

567

345

$286,870

$240,000

2.51

Mason

206

759

94

71

$178,045

$149,900

8.07

Skagit

245

785

226

149

$238,902

$220,020

3.47

Grays Hrbor

165

807

114

68

$143,411

$139,000

7.08

Lewis

187

700

90

74

$150,977

$134,500

7.78

Cowlitz

164

455

134

83

$174,330

$169,000

3.40

Grant

145

547

92

76

$169,412

$157,840

5.95

Thurston

506

1,121

482

332

$241,093

$225,500

2.33

San Juan

67

415

25

19

$519,047

$375,000

16.60

Island

279

834

199

117

$281,624

$240,000

4.19

Kittitas

150

447

66

60

$285,393

$217,995

6.77

Jefferson

123

466

53

40

$308,200

$298,750

8.79

Okanogan

114

447

48

28

$193,686

$147,950

9.31

Whatcom

552

1,448

398

279

$290,196

$250,000

3.64

Clark

83

149

69

54

$255,812

$229,000

2.16

Pacific

91

436

36

27

$136,736

$121,000

12.11

Ferry

11

76

4

5

$139,600

$151,000

19.00

Clallam

104

415

68

62

$191,923

$181,000

6.10

Others

186

576

104

91

$217,902

$179,900

5.54

MLS TOTAL

11,445

21,943

10,045

7,349

$343,639

$275,000

2.18

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 6453 5188 4181
2013 5548 6095 7400 7462 7743

__________
Copyright © 2013 Northwest Multiple Listing Service
ALL RIGHTS RESERVED
This material may not be copied, published, broadcast, rewritten or redistributed without prior permission.

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