May marked a month of new records
May was a month of record-setting highs and lows for some key housing market indicators tracked by Northwest Multiple Listing Service.
Northwest MLS director Robb Wasser, branch manager at Windermere Real Estate/East in Bellevue, noted the number of active listings for single family homes dropped from April to May for the first time in at least 20 years. The month-to-month decline was small (only 83 listings), but compared to 12 months ago, May's inventory plummeted by 4,824 listings (down 46.6%).
Months of inventory of homes and condominiums fell to just over two weeks (0.59 months) system-wide, which encompasses 26 of Washington's 39 counties. Only March 2021 and December 2020 have been lower when both months ended with only 0.53 months of supply.
Year-over-year price increases measured by percentages appeared to hit a new high with the median price on last month's 9,374 closed sales soaring 30% from a year ago.
A check of Northwest MLS data shows prices on the 8,011 single family home sales (excluding condos) that closed last month sold for 107.3% of the asking price. In the 4-county Puget Sound region (King, Snohomish, Pierce and Kitsap), the figure was 108.6%, while in King County it was 109.5%.
"Everything is about breaking records this past year with record-breaking housing prices, record-breaking low inventory, and record-breaking consumer savings rates during the pandemic," remarked Meredith Hansen, owner/designated broker at Keller Williams Greater Seattle. "All this equals a very strong, chaotic market that may not slow down for the next year," added Hansen, who is also a member of the NWMLS board of directors.
"Last month's listings came in lower than we would normally see due to the month starting on a Saturday and ending with a holiday weekend," noted J. Lennox Scott, chairman and CEO at John L. Scott Real Estate. "New resale listings typically go on the market on Wednesday, Thursday or Friday," he explained, adding, "In today's instant-response market, new listings often go pending over the weekend or early the next week."
Scott expects an elevated number of new resale listings for just three more months before the fall housing market. "This time period will be critical for home buyers looking to secure their home of choice while interest rates are at historically low levels."
"The summer real estate market is upon us with an increased number of new listings giving homebuyers more selection. Record low interest rates and job gains continue to drive the market, along with focused lifestyle changes," reported Dean Rehhuhn, owner at Village Homes and Properties. He also noted rising home prices are prompting buyers to drive farther north, south, and east to find affordable homes.
Brokers added 11,922 new listings of single family homes and condos during May, slightly fewer than April's total of 12,043. Compared to a year ago, as brokers, sellers, and buyers were adjusting to pandemic related restrictions on the real estate industry, the volume of new listings rose 20.8%.
Pending sales edged above the volume of new listings, with brokers reporting 11,969 mutually accepted offers. That number also outgained the year-ago total of 10,389 (a gain of 15.2%), and was the highest number since September when MLS members logged 12,053 pending sales.
High demand kept supply depleted. At month end, there were 5,533 active listings in the NWMLS database, nearly half the inventory of a year ago when buyers could choose from 10,357 listings.
"The dramatic increase in prices and low inventory just continue in such a way that although we have more inventory coming on the market, it is immediately absorbed because of a demand that simply cannot be met," said NWMLS director John Deely, executive vice president of operations at Coldwell Bank Bain.
Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate-Poulsbo, said brokers there are seeing increases in new listings, like most counties, and also pent-up demand. However, he noted, "We are also beginning to see isolated instances of homes not selling right away, or homes that only receive one offer. Part of this could be the backlog of buyers is shrinking, or it could be that sellers are just asking too much for their home."
Kitsap brokers are also experiencing increases in the time it takes to get an appraisal, according to Wilson. "In some cases, appraisers are just not picking up an appraisal unless it comes with a rush fee," he reported.
Another Kitsap County broker, Frank Leach, owner at RE/MAX Platinum Services in Silverdale, described the market in that county as "extremely active." MLS figures show there is only 0.62 months of supply (about 19 days) with most homes selling at 108% above asking price. Closed sales jumped nearly 42% from a year ago. Prices on last month's closed sales of single family homes and condos (combined) in Kitsap County increased from $395,600 to $486,944 for a gain of more than 23%.
Leach, a board member at Northwest MLS, said Kitsap County continues to be an affordable alternative to counties to the east. "New construction is booming throughout Kitsap with thousands of single family and multifamily projects underway. Low interest rates and easing of COVID-19 restrictions are bringing buyers out to take advantage of the market."
James Young, director of the Washington Center for Real Estate at the University of Washington, commented on the challenges facing first-time buyers. "Residential month's supply (excluding condos) has continued to decline with less than two weeks of inventory in King, Snohomish, and Pierce counties, and slightly more than two weeks in the region. These are amazingly low levels of inventory," he noted.
"Coupled with continued low interest rates and eased borrowing criteria, rapidly rising prices reflect huge supply imbalances. Given these imbalances, first-time buyers have had almost no chance to take advantage of low interest rates unless they leave the city. Unfortunately for them, continued supply constraints along the I-5 corridor mean they are increasingly being left out of the market for the whole region. Only a decrease in demand will moderate house price trends," Young stated.
Industry veteran Mike Grady expects demand will remain strong. "While we're starting to hear some talk about increasing inflation given a lack of new construction and skilled labor and supply chain shortages, our market is counteracting that," suggested Grady, the president and CEO at Coldwell Banker Bain. He believes three factors will continue to drive demand for the next six to 12 months: having the main bulk of the millennial generation finally entering their home buying years; the acceleration of retirement of boomers and their subsequent home downsize or relocation moves; and the relocation of people from all over the world to the Pacific Northwest as part of the Work from Home (WFH) mindset due to the coronavirus lockdown.
Windermere Chief Economist Matthew Gardner commented on the "pronounced impact" COVID-19 had on the urban Seattle condominium market last year as many condo owners decided to sell and relocate away from the downtown area. "By summer, inventory had jumped to levels we had not seen since the bursting of the housing bubble in 2008, resulting in more supply than demand and lower listing prices."
Continuing, Gardner said, "The good news is the Seattle condo market has settled back down with inventory dropping and sales rising. Because of the shift in this market there was a price reset, but this appears to be luring buyers who previously thought they could not afford to buy downtown, leading to more balance between supply and demand."
The NWMLS report for May shows condo inventory is down nearly 36% from a year ago as pending sales (1,613) outgained new listings (1,607). At month-end, the condo selection totaled 1,093 listings, with about three weeks of supply (0.80). Young noted the condo supply in King County is dwindling. There was about a month's supply at the end of May, down from 1.67 (about 50 days) in January.
Pending sales of condos in King County surged 62.4% from a year ago. In Seattle, last month's pending sales shot up 83.7%, while area-wide, they rose 37.2%.
Closed sales of condos system-wide more than doubled from a year ago, from 658 to 1,363 (up more than 107%). Prices on last month's sales increased 21.7% from last year, with the largest gains outside of King County. Within King County, which accounted for 799 of the total sales volume (58.6%), year-over-year prices rose 9.3%, from $420,000 to $459,000.
Commenting on the uptick of condo activity, Deely noted there is less than a month's supply (0.80). "As many of our large companies announce their intent for a hybrid work-from-home/in-office approach, it appears concerns about commutes are starting to drive buyers into the urban condo markets once again."
Scott is confident the robust activity will continue. "We are in a prime position to see a good number of resale listings and a proportional number of homes going under contract. Frenzy-level buyer demand has not waned. The local market is still virtually sold out in the more affordable and mid-price ranges, as well as into the luxury ranges in some areas."
Hansen agreed, reminding buyers "they need to be ready to compete in this market by reviewing successful offer strategies with their broker and lender."