New figures from Kirkland-based Northwest Multiple Listing Service indicate home sales and prices, like July’s temperatures, sizzled.
Prices area-wide rose slightly more than 9 percent from a year ago, but several counties near job centers saw larger price increases, including King County where the median price jumped 18.6 percent, according to a Northwest Multiple Listing Service media release.
The latest report confirmed what most buyers and brokers know: inventory shortages persist even though Multiple Listing Service members added slightly more new listings last month than the same period a year ago.
“We should be entering the summer doldrums, but I don’t see that happening,” said Diedre Haines, principal managing broker-South Snohomish County at Coldwell Banker Bain in Lynnwood. “Inventory remains low, but prices and demand continue to increase, prompting murmurs of a looming bubble. Some say yes, and just as many are saying no when asked about the likelihood of a bubble.”
In some areas, inventory is showing some signs of growth, Haines noted, but it’s still “way below what would be considered anywhere near normal. Frankly, I am not even sure anymore exactly what normal is – perhaps the current low inventory status is the new normal.”
Northwest MLS members added 12,300 new listings during July, a meager 122 more than the same month a year ago, but well below June’s total of 13,658 new listings.
At month end, there were 15,749 total active listings, down 13.9 percent from the year-ago total of 18,287. Measured by months of supply, there was only about six weeks (1.6 months) in the MLS system overall, which encompasses 23 counties. Twelve months ago it was closer to two months of supply (1.93 months).
King County continued to have the skinniest supply at only one month, but in many parts of Seattle and the Eastside the supply slipped below a month. Four to six months is typically considered a normal, or balanced, market according to many industry analysts.
George Moorhead, designated broker at Bentley Properties and a director with Northwest MLS, said the already-low inventory is being further squeezed when homeowners who move up are choosing to rent their current home instead of listing it.
Condo inventory is especially depleted, with only 1,330 total active listings area-wide. That’s down more than 21.5 percent from a year ago. Condos currently make up only 8.4 percent of the selection in the MLS database. (In 2015, condos accounted for 16 percent of residential sales.) Both King and Snohomish counties have only about three weeks of supply.
Despite sparse inventory, demand remains strong in most areas, with both pending and closed sales outgaining the volumes of a year ago. However, some brokers are detecting a slowdown, which they attribute to various factors from tight inventory and spiraling prices to the hot summer season.
The median price on last month’s 9,707 closed sales was $382,000, up more than 9.1 percent from 12 months ago when it was $350,000.
Homes in King County continued to command the highest prices. The median price for homes and condos that sold in King County during July was $599,000, up 18.6 percent from a year ago when it was $505,000. For single family homes (excluding condos) in King County, the median price jumped at the same rate, rising from $555,000 to $658,000.
The leap in prices may have some people crying “housing bubble,” said OB Jacobi, president of Windermere Real Estate.
“I still feel confident we’re not headed in that direction,” he said. “Bubbles result from irresponsible lending practices, but buyers in King County have high credit scores and higher than average down payments. This area also has a high percentage of homeowners who are ‘equity rich’ which means their home is worth more than twice what they owe. For a housing bubble to occur we would expect to see far lower equity, down payments and credit quality.”
Buyers in some price ranges may be cheered by observations from some industry leaders.
“We’re seeing an increase in inventory in the mid- and upper price ranges and that is creating great selection and breathing room for some of the backlog of buyers,” said J. Lennox Scott, chairman and CEO of John L. Scott.
Nevertheless, Scott said it continues to be a seller’s market. It’s still the norm for homes in areas near job centers to sell quickly with multiple offers, he noted.
“Sales activity remains at a frenzy pace in the more affordable mid-price ranges in the four-county Puget Sound area,” Scott said.
“We’re definitely seeing a redefinition of what luxury means in this market,” Scott said.
His analysis revealed one-third of pending home sales in the Seattle Metro area last month drew offers of $1 million or higher. On the Eastside, he found it’s even greater, at 39 percent. Those numbers invariably draw comparison to San Francisco, he acknowledged, but said like the Bay Area, “our housing market remains strong, with solid job growth, low unemployment, and amazing interest rates leading the way.”