Region’s housing activity still "speeding along"

 

Region’s housing activity still “speeding along,” but pace slowing as seasons change, uncertainty looms amid government shutdown

 

Kirkland, WA – October 4, 2013. September tested the housing market’s resilience around Western Washington with fluctuating mortgage rates, record-setting rains, and persistent inventory shortages in some areas. By month’s end, however, both pending and closed sales outgained the same period a year ago, according to the latest figures from Northwest Multiple Listing Service.

Prices also increased compared to 12 months ago, but fell slightly from the previous month. Year-to-date figures through nine months show prices for homes and condominiums that have sold in the 21 counties served by the MLS are up 12 percent from a year ago.

With uncertainty about the duration of the government shutdown, brokers say the positive momentum could stall.

Asked about the shutdown, Northwest MLS director OB Jacobi said, “Nobody has a crystal ball, but in some instances, lenders will face challenges verifying information from various federal agencies, like the IRS, which impacts their ability to approve and close home loans.”

Noting all except one government agency (USDA) involved in housing finance remain open, Jacobi, the president of Windermere Real Estate, explained the shutdown affects various functions that are part of the financing process. “On a macro level, we don’t expect this to have a significant impact on the housing market,” he stated, while cautioning, “This will largely depend upon the length of the shutdown and its effect on consumer confidence.”

The shutdown was preceded by four weeks of falling mortgage rates, which brokers credit with boosting September sales. Improving inventory also help spur activity. Brokers reported September’s inventory was up 2.1 percent compared to a year ago, marking this year’s first year-over-year gain for that measure.

Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma, described the South Sound market as “still speeding along, just not as high and mighty as it was.” Noting inventory has now matched or surpassed year-ago levels and closed sales are up more than 21 percent, he said it’s been an “amazing run-up” for both indicators. He expects the 4th quarter to be near normal levels, but adds, “A lot depends on several unknowns,” mentioning monetary policies, job formation, a shrinking number of first-time home buyers, and the government shutdown.

Traffic at open houses and at builder sites, although challenged by the wettest September in recent memory, “has remained steady and buyer interest remains high,” according to Beeson.

In neighborhoods close to job centers, brokers are reporting brisk activity.

Northwest MLS director John Deely said the Seattle market shows no signs of slowing down and house-hunters seem undaunted by soggy weather. “Buyers continue to flood open houses and multiple offers rain down on competitively priced properties,” he commented.

Deely, the principal managing broker at Coldwell Banker Bain in Seattle, said one newly listed home had 25 potential buyers show up at a midweek brokers open house to get a first glimpse at it. “Multiple offers are still prevalent,” he said, citing an example of one appropriately priced listing receiving 11 offers, and ultimately drew a bid of more than 20 percent above list price. Other new listings in Seattle are experiencing similar activity, according to Deely. “Buyers with all cash have decreased and financed offers now outpace cash offers,” he stated.

MLS figures show mixed activity across its service area:

  • September’s volume of new listings increased nearly 17 percent compared to a year ago, pushing the total number of active listings slightly ahead of 12 months ago (up 2.1 percent). However, of the 21 counties the MLS serves, 11 reported having fewer listings than a year ago.
  • Pending sales (mutually accepted offers) rose 4.6 percent area-wide; 14 counties had double-digit gains, while three counties reported declines.
  • Closed sales for September increased 21.2 percent year-over-year, rising from 5,536 to 6,711.
  • While selling prices area-wide are up 8.7 percent from a year ago, prices were below year-ago figures in five counties. Conversely, seven counties notched double-digit gains. The area-wide median price for last month’s closed sales was $278,000, up 8.7 percent from the year-ago figure of $255,745, but $5,000 less (down about 1.8 percent) from August.
  • Prices on closed sales of single family homes (excluding condos) rose 8.2 percent, while condo prices surged 12.3 percent.

“We are currently experiencing a mini power surge of sales activity, the third such event this year,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He attributes the bursts to interest rates. “With interest rates suddenly coming off their peak for the year, we’re having another surge of activity, which is keeping the inventory at the shortage level in both King and Snohomish counties.”

MLS figures show King County has less than two months of supply (1.95 months). Snohomish County is slightly better at 2.32 months. System-wide, there is 3.32 months of supply, well below the level of 4-to-6-months that is generally accepted as an indication of a balanced market.

In Kitsap County, where there is a more balanced market (4.3 months of supply, up from 3.4 months in August), the pace of sales and price appreciation are both moderating. Well-priced properties are still drawing considerable activity.

“As is typical at this time of year, September’s pace slows a bit compared to August as families focus on back to school and all the activities that go along with that,” observed Frank Wilson, branch managing broker at John L. Scott in Poulsbo.

“We continue to see buyers who are negotiating against several other buyers on a house they like,” said Wilson, a member of the Northwest MLS board of directors. He noted well priced homes are drawing offers in the first few weeks of being listed, while listings that are getting no showings most likely mean they’re at least 5 percent high on pricing. “Homes that are priced correctly will receive showings and offers,” he emphasized.

Northwest MLS director George Moorhead, the branch manager at Bentley Properties in Bothell, said market activity “waned just a bit” towards the end of August and during September, a pattern he said is normal with students going back to school and last-minute vacations. He expects interest rates will climb to 5 percent by summer 2014, and says the big message is “If you want to capitalize on the current lower interest rates, don’t delay any longer.”

Other comments on the government shutdown
Wilson said the government shutdown is a concern in Kitsap County, which has several military installations. “It may affect our market in several ways, some of which may be unintended consequences.” He noted USDA loans (for residences in qualifying rural areas) will not be funded. Also, veterans who need certificates of eligibility may need more time to get them from the VA and the overall confusion may make buyers think twice before moving forward with a purchase.

Another consequence of the shutdown could affect furloughed employees. Wilson said for those in the process of buying a home, the lender may need to slow down the loan, thereby affecting closing dates and interest rate locks.

“On some level everyone – buyers, sellers, brokers, lenders, appraisers, inspectors — are uncertain what the government shutdown will mean to the market,” Beeson stated. With the IRS closed down, funding of any new loans will not occur, and that will slow and even halt the closing process, he explained. He is hopeful the resolution is “only one vote away,” but recognized that vote might not occur until November 5 (Election Day).

Moorhead believes the government shutdown will be short lived and pose only a temporary hardship on buyers and sellers. He suggests buyers can sidestep unnecessary challenges by avoiding FHA, VA or USDA loans as delays could be encountered with a protracted shutdown.

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 follows.

Statistical Summary by Counties: Market Activity Summary – September 2013

Single
Family
Homes
+ Condos
LISTINGS PENDING
SALES
CLOSED SALES MONTHS
SUPPLY
New
Listings
Total
Active
# Pending
Sales
#
Closings
Avg.
Price
Median
Price
King
3,457
6,275
3,218
2,802
$466,946
$384,925
1.95
Snohomish
1,277
2,666
1,150
1,032
$310,582
$284,950
2.32
Pierce
1,258
3,810
1,231
996
$246,379
$220,000
3.10
Kitsap
403
1,524
352
300
$300,149
$245,277
4.33
Mason
110
796
88
71
$197,550
$165,000
9.05
Skagit
198
862
174
128
$252,621
$234,950
4.95
Grays Hbr
132
820
103
77
$132,807
$133,000
7.96
Lewis
117
747
91
71
$136,838
$142,500
8.21
Cowlitz
111
482
138
94
$174,589
$156,000
3.49
Grant
75
515
74
72
$168,771
$146,750
6.96
Thurston
392
1,320
354
282
$243,359
$228,497
3.73
San Juan
32
430
26
14
$473,307
$423,000
16.54
Island
144
827
152
129
$296,638
$270,000
5.44
Kittitas
78
489
64
63
$248,812
$213,000
7.64
Jefferson
62
481
55
57
$285,600
$255,000
8.75
Okanogan
67
503
28
36
$207,750
$162,250
17.96
Whatcom
311
1,602
303
259
$301,552
$269,000
5.29
Clark
57
208
37
47
$301,371
$235,000
5.62
Pacific
42
459
41
37
$153,774
$147,000
11.20
Ferry
4
69
2
4
$171,250
$170,000
34.50
Clallam
65
442
59
57
$201,445
$186,800
7.49
Others
137
687
99
83
$291,646
$195,000
6.94
MLS TOTAL
8,529
26,014
7,839
6,711
$349,649
$278,000
3.32

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 7374 7264 6916 5951

__________
Copyright © 2013 Northwest Multiple Listing Service
ALL RIGHTS RESERVED

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