Brokers added the largest monthly number of new listings during July since May 2019, but pent-up demand from homebuyers meant inventory remained tight. The NMLS report for July, which covers 23 counties in Washington state, shows brokers added 12,514 new listings during July, up from the year-ago total of 11,193 for a gain of 11.8%. Pending sales jumped nearly 14%, while inventory remained well below year-ago levels (down about 39%). Measured by months of inventory, the system-wide supply slipped to about a month (1.04 months). Brokers reported 9,840 closed sales during July, up slightly more than 3% from a year ago and the highest volume since June 2018. Overall prices on those sales, which include single family homes and condominiums, jumped 12.8% from twelve months ago. Prices on single family homes (excluding condos) surged 13.6%, while year-over-year (YOY) condo prices rose about 8.6.
Opportunities abound for both buyers and sellers if they’re willing to act quickly. Interest rates at historical lows means those who are looking to purchase their first or even their second home can get much more for their money. First-time homebuyer can obtained a 30-year, fixed-rate FHA secured loan “at an incredible rate of 2.25%!” Depleted inventory means we are seeing multiple offers in just about every market and at every price point. There is only about 24 days of inventory in King, Kitsap, Pierce, and Snohomish counties. We’ve seen an uptick in the number of listings in King and Snohomish counties, but it’s still well below what we need to meet the volume of buyers right now.
The market is characterized as being in “high gear” during July, with pent-up demand and the need for housing outweighing fears of the coronavirus. Although new listings of single family homes in King County jumped more than 24% from a year ago, the total available inventory dropped to a 10-year low for the month. Single family listings priced at or below market are receiving multiple offers with one recent Seattle listing attracting 40 offers. A lot of people who would otherwise be content to stay in their homes now rushing to get their homes on the market. Likewise, for buyers – particularly first-timers. It’s the fear of missing out.
Last month’s pending sales in King, Snohomish, Pierce and Kitsap Counties were the best-ever for the month of July. Sellers benefit from the highest median home prices, while buyers are taking advantage of the lowest interest rates on record. The combination of the huge backlog of home buyers and being virtually sold out of inventory makes it feel like it’s a multiple-offer everything. This is a historic moment in residential real estate. An unprecedented eight counties in the NWMLS report had less than one month’s supply of homes and condominiums for sale at the end of July. They included Clark, Cowlitz, Island, Kitsap, Mason, Pierce, Snohomish, and Thurston. Kitsap County continues to be attractive to East Puget Sound buyers as well as stay-at-home professionals. Residents are now enjoying the speedy open-access fiber-optic connections that Kitsap PUD started installing years ago, initially to serve rural areas that lacked broadband access. High speed internet access has become a definite selling point for many homes and building sites. As market demand continues, the median value jumped 11.7% from a year ago. Buyers are frustrated with the low inventory but elated to see interest rates continuing to drop. We are seeing offers coming in well over the list price, but this may not last long as inventory continues to inch up. Suburban lifestyle continues to draw buyers. July sales suggest homes may be underpriced. With record low interest rates under 3%, buyers have increased purchasing power, but with low inventory prices continue to increase. The double-digit home price growth in Pierce County might point to the theory that there’s a COVID-induced flight from more urban markets. This also supports the forecast that home prices in Pierce County in 2020 will rise a significant 10.6% compared to 2019.
The median price increases of around 20% or more in counties outside of the metro job centers, including Cowlitz, Grays Harbor, Lewis, and Okanogan show that remote work practices are having an effect, and people can now move to more rural areas and work from home. There is an increased activity in areas outside of King County. Outer areas continue to outperform. There not only appears to be a continued move to value in areas outside the Seattle region, there also appears to be a move outside the main cities. Everyone is buying now. With the virus and increased home working, people are able to move to suburbs and outer areas in search of value and lower population density. Demand will continue to far outstrip supply for a quite a while.
2020 home prices will rise by 5.4% in King County and 5.8% in Snohomish County compared to 2019 due to the continued shortage of homes for sale and market demand. King County continues to have the highest median price for homes and condos, but a look at that county’s 29 map areas covered in the report shows price changes ranging from an increase of 21.6% in North Seattle to a 17.4% decrease in the Bellevue area west of I405. Properties with aggressive (over-market) pricing are sitting idle as the current pool of savvy buyers waits for price reductions or for properly priced, new listings. July was great month. The trend we’re seeing foretells stronger results going forward for the next three months, especially in the context of the slowdown we experienced in April and May. Robust activity will continue for a longer period. Anticipate that the market will remain this way until at least April 2021. At that time, normal seasonal patterns will emerge. Builders are frustrated at not having the inventory to meet current demand and “tradespeople are strained to meet the construction needs.” More and more buyers are making buying decisions based on virtual tours. Note to buyers, “If you see something that piques your interest, don’t delay!”
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