According to the Northwest Multiple Listing Service (NWMLS), pending sales surged almost 19 percent in February compared to one year ago. At the same time, the inventory of homes for sale is near a 10-year low. There is speculation the increase in sales might be even higher but for the low supply of listings.
In King County, there were 3,217 pending (new) sales in February, but just 2,919 new listings for the month. Clearly, demand is exceeding supply. (Sellers, take note.)
Across the 23-county NWMLS system, listing inventory is down at least 12 percent from one year ago. Anecdotally, I believe the volume of listings in Seattle has declined more than that. Open houses are mobbed, drawing 100 groups of visitors and fueling bidding wars. In the Brighton neighborhood in Southeast Seattle, an affordably priced home drew at least 20 bids, pushing the sale price more than $100,000 above the asking price. And I’m hearing from agents that this is a pretty common occurrence.
Among the most-surprising data, one of the strongest markets is for homes priced more than $900,000. In Bellevue, there were 88 sales in January and February. In Seattle, there were 176 sales of homes priced more than $900,000 in January and February.
The average sale price of a single-family home increased 7.4 percent over the same time last year; by comparison, home prices nationwide increased 5.7 percent during the same period. The jump in prices is attributed to the tight supply of listings and also Seattle’s robust local economy.
Current market won’t last
So why is the inventory of listings so tight? There is speculation that sellers won’t list their homes because they fear not finding a suitable replacement home. For some homeowners, the tight lending climate means they may not qualify for a new mortgage for that move-up home. Still others remain hesitant about taking on more debt, a hangover-effect of the Great Recession.
Right now, the housing market is red-hot. Realtors haven’t seen a market like this for at least 10 years. For those sellers who list their homes, they can expect multiple offers. But don’t expect these market conditions to last forever. Interest rates will rise, and the inventory of listings will increase, restoring more balance to our real estate market. But for now, this may be the best market in a decade for sellers.
“With real incomes rising rapidly and consumer confidence soaring, the conditions are certainly in place for a temporary period of faster house-price inflation,” said Ed Stansfield, chief property economist for Capital Economics. And, home-price appreciation has been stronger in the western United States, according to data from CoreLogic.
“However, we don’t expect such rapid price rises to be sustained in the longer term. Increased homebuilding and the acceleration in prices will bring more sellers into the market, helping to keep a lid on prices,” Stansfield said.
Experts forecast interest rates will rise, an increasing inventory of listings will bring balance back to the market and home prices are expected to moderate later in the year. In other words, if you snooze, you lose.
RAY AKERS is a licensed Realtor for Lake & Co. Real Estate in Seattle. Send your questions to ray@akerscargill.com or call (206) 722-4444.