January 2021 Puget Sound Market Update

Home buyers who have been precluded from entering Puget Sound’s competitive market may want to consider condominiums as an option, according to industry experts who commented on the latest housing statistics from Northwest Multiple Listing Service.

“With the trend toward telecommuting and moving to outlying suburban areas, the Seattle/King County condominium market presents a new option,” suggested Gary O’Leyar, owner and designated broker at Berkshire Hathaway HomeServices Signature Properties. Noting the county’s bigger supply of condos – 1.67 months of inventory versus 0.69 months for single family homes – and a slight break from doubledigit appreciation, O’Leyar said buyers may want to take a closer look at this “window of opportunity.”

Northwest MLS director John Deely agreed, calling condos “one bright spot for buyers. They are more reasonably priced and there is more months of inventory than with single family homes.” With interest rates so low, “buyers should definitely consider condos as an ownership opportunity and a way to build equity – especially if they’re currently renting,” said Deely, the executive vice president of operations at Coldwell Banker Bain.

Of 4,432 active listings in the MLS system at the end of January, about one of every four offerings (1,051 units, or around 23.7%) was a condo, with the remaining 76% (3,381 listings) being a single family home.

In King County, where 76% of available condo inventory is located, NWMLS data show prices range from $149,000 to $14,895,000, with a median asking price of $525,495. The median price for condos that sold in King County last month was $399,975; system-wide the median sales price was $359,950.

Single family homes (excluding condos) had an area-wide median sales price of $509,950. That is $150,000 more than condos (nearly 42% higher).

Matthew Gardner, chief economist at Windermere Real Estate, noted King County condo prices “entered negative territory in January,” down about one-half percentage point compared with the same month a year ago. He attributes increased inventory as “likely due to COVID-19, possibly pointing to a growing number of homeowners who are choosing to move further away from core urban areas in favor of more space. I’m not ready to say this is a persistent trend quite yet, but it’s something to keep an eye on.”

Commenting on the MLS statistics overall, Gardner said the market “ignored the traditional winter slowdown and kept its foot firmly on the accelerator in January.” While inventory levels were generally down in December, he noted there was actually an uptick in new listings in King, Pierce, and Snohomish counties last month. “Most of those homes sold so quickly they aren’t reflected in the overall total active inventory numbers,” Gardner remarked, adding, “Clearly, demand is still very strong which is further confirmed by the fact that year-over-year (YOY) price growth remains well above long-term averages.”

The NWMLS report covering 26 counties, shows a YOY increase in new listings of single family homes and condos (up about 5.5%) and a jump of more than 16% in closed sales, rising from 5,074 transactions to 5,896. The median price for last month’s sales ($483,250) surged 14.3% from the year-ago figure of $422,750. Pending sales grew slightly from last year (less than 1%) but were up 7.4% from December.

“The economics of scarcity are driving prices up at an unsustainable pace,” said Dick Beeson, managing broker at RE/MAX Northwest. “What will happen this spring and summer will likely be more of the same. The real estate vortex we’re in of depleted inventory and high prices is real and unrelenting.”

“If interest rates weren’t historically low, buyers would be unable to afford the escalating cost of housing,” suggested Beeson. “We’re feeling nervous ab