The number of homes for sale in August increased dramatically over the same time a year ago. This is the result of a moderate increase in new listings and a much slower pace of sales. Homes are staying on the market longer, giving buyers more choices and more time to make an informed decision. While home prices are up compared to a year ago, the rate of increase was in the single digits rather than the double-digit surges of past months. It’s still a seller’s market, but sellers need to have realistic expectations about pricing their homes as the market softens.
The median price of a single-family home on the Eastside was up nearly 10 percent from the same time last year to $935,000. Home prices have declined each month from the all-time high of $977,759 set in June. Inventory increased 73 percent over last August. With supply soaring and home prices moderating, sellers need to work with their broker to price their home to meet the current market conditions. A year ago 47 percent of the homes on the Eastside sold for over list price. This August that number was down to 29 percent.
King County experienced yet another flood of inventory with the number of homes for sale jumping 65 percent over the previous year. Despite the growth, the county has just 1.9 months of inventory and remains a seller-oriented market. The market has slowed but it remains fast-paced, with 62 percent of the properties here selling in fewer than 15 days. While home prices were up 3 percent from a year ago, the median price of $669,000 represented the third straight month of declines from the record-high of $726,275 reached in May.
After leading the nation in home price growth for nearly two years, Seattle is finally cooling off. The median home price in August was $760,000, up just 4 percent from last year and down from the record $830,000 reached in May. Inventory soared in August, but the city still has just two months of supply, far short of the four to six months that is considered balanced. Bidding wars are becoming less common and price drops more common. Sellers must adjust their expectations to what appears to be a long waited moderating of the market.
Mirroring the market slowdown in King County, Snohomish County also experienced a cooling off in August. The median price of a single-family home was $492,000, up 8 percent from a year ago but down from the record high of $511,000 two months prior. Inventory increased nearly 30 percent, but at just 1.6 months of supply the market remains very tight and sales are brisk. Sixty percent of homes here sold within 15 days.
This post originally appeared on the WindermereEastside.com Blog.
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions.
The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.
The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.
Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.
I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.
Home Sales Activity
- There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
- Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.
- Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.
- The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the final quarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.
- With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
- Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
- When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
- Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.
Days on Market
- The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
- In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the first quarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.
- Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.
This article originally appeared on the Windermere.com blog.
The holiday can be a unique opportunity for Buyers with less competition in the market. Inventory remains limited, so well-priced homes continue to sell quickly, often with multiple offers.
The rate of appreciation for homes on the Eastside continues to be as robust – or more so – as in Seattle. Both local and international buyers attribute the appeal of the area to larger lot sizes, newer construction, and highly-rated school districts. Inventory here is extremely low, and homes are selling quickly. The median price for a single-family home on the Eastside reached $851,000 in November, a 12 percent increase over the same time last year.
The number of new listings in King County is down 19 percent as compared to a year ago. With demand still strong, the median home price in King County rose 15 percent over last year to $630,750. Condo inventory, long an option for more affordable housing, is at a record low as developers opt for building apartments to avoid the legal and financial risks that come with building condos.
Seattle is one of the fastest growing American cities, and demand doesn’t look to be slowing any time soon. Combine that with a very limited supply and it’s no surprise that for over a year home prices here have been rising faster than anywhere in the country. Last month, the median price for a single-family home in Seattle was $741,000, soaring 21 percent from the previous year.
Buyers priced out of the King County market are taking this advice: drive until you qualify. Many are ending up buying in Snohomish County. The number of homes for sale was down more than 24 percent here in November and there is currently less than one month of inventory available. The median price of a single-family home was $445,000, up 11 percent year-over-year.
Prices in our area have now been rising faster than anywhere in the country for twelve months. Sellers seem to be getting the message that now is a good time to put their home on the market. There was an increase in new inventory in October, but with homes selling rapidly, there still aren’t enough properties to meet demand. As a result, counties throughout the Puget Sound area saw year-over-year price increases in the double digits.
The median price for a single-family home on the Eastside rose 10 percent from a year ago to $845,000. Homes in West Bellevue hit a new record median price of $2.6 million. Despite soaring prices, demand has remained strong in this desirable area. And the continued robust economy makes it unlikely that home prices here will cool any time soon.
The number of new listings in King County increased at the highest rate in more than a year. But, they were grabbed up quickly, with most homes selling in well under 30 days. The shortage of homes for sale propelled prices up, with the median home price in King County jumping 15 percent over the same time last year to $630,000.
Seattle remains the hottest real estate market in the country, with prices rising here at more than double the national rate. Rents in Seattle are also rising faster than almost anywhere else in the country, pushing more people into the home buying market. High demand and slim supply helped boost the median price of a single-family home nearly 18 percent to $735,000.
The median price of a single-family home in Snohomish County in October was $440,000, an increase of 14 percent over the prior year. The market here may be moderating slightly. Brokers note that while multiple offers are continuing, listings are experiencing longer market times and fewer above-list price offers.