5 trends fueling hot real estate market

The housing market is on fire.

What began as a pickup in demand early in the pandemic has evolved into an all-out buying spree. Sales of new and previously owned homes, while off their peaks, remain elevated. Construction has picked up somewhat, but contractors are struggling to shore up supply. With inventory sitting near record lows, price growth has accelerated to rival the 2000s housing bubble.

Reports published Tuesday confirmed the boom is alive and well. Prices soared through March at the fastest rate since 2005, according to S&P CoreLogic. Separately, Census Bureau data showed new single-family home sales slowing 5.9% through April. Still, the sales pace sits well above the pre-pandemic norm.

But it’s not just conventional gauges posting shocking superlatives — fundamental change is afoot in US housing. Alternative data, from lumber prices to the realtor-to-listing ratio, show a handful of structural shifts taking place throughout the market. Glenn Kelman, CEO of real-estate brokerage Redfin, unpacked several of them on a Twitter thread that racked up more than 14,000 likes in less than 48 hours. 

     Here are the five major changes reshaping the US housing sector.

1 – Buyers face a persistent shortage of available homes

At its core, the market boom is simply a result of too few homes. Economists are largely confident that, while trends are similar to the mid-2000s bubble, it’s a nationwide supply shortage driving prices higher, and not risky lending practices.

  • More realtors than listings

The number of available homes in the US totaled 1.16 million at the end of April, according to the National Association of Realtors. NAR ended last month with 1.48 million members.

The association’s membership has exceeded listings through much of the year as sales bite into home availability.

  • Historically low inventory

The national supply of available homes in the US plummeted to record lows at the start of the pandemic and have only just risen from those levels through 2021. The monthly inventory rose to 4.4 months in April, but the bounce has as much to do with a slowing pace of sales as it does with a pickup in construction.

  • Homes selling at a record pace

When homes are coming up for sale, they aren’t staying on the market all that long. The average home now sells in a record-low 17 days, Kelman wrote on Twitter.

2 – People are fleeing cities for cheaper locales

The story of the 2020-2021 housing market is also one of migration. Americans largely fled densely populated cities for suburbs and traded their apartments for homes while mortgage rates were low. And after years of intense crowding in metropolitan areas, people seeking more space during the work-from-home period rushed to less populated states.

  • Low-tax states seeing huge inflows

Attractive tax rates seemingly played a major role in the moving bonanza. Four people moved into low-tax states for every one that left, Kelman said. That ratio rose to 5:1 in Texas and 7:1 in Florida.

  • Moving families face a new status quo

Americans who moved during the pandemic took a few risks. In a Redfin survey of 2,000 homebuyers, 63% said they bid on a home they hadn’t seen in person yet.

Separately, those moving to low-tax states enjoyed far lower housing costs. In many instances, the money saved allowed one parent to stop working, and many buyers are retiring early, Kelman said in a Wednesday tweet.

  • Inventory and prices up in SF and NYC

Still, some of the country’s biggest cities aren’t down for the count. Inventory has swung higher in New York City and San Francisco by 28% and 77%, respectively, according to Kelman. Yet prices are increasing steadily in both markets, suggesting that, while many are moving out, enough are moving in to support already lofty prices.

3 – It’s getting more and more expensive to build homes

The simplest solution to slowing homes’ rapid price growth would be to increase supply. Yet the combination of a historic surge in demand with supply-chain bottlenecks as the economy reopened have hindered contractors.

  • Lumber prices exploded higher

Most recently, surging lumber costs cut into builders’ efforts. Prices soared to record highs earlier in May and closed 280% higher year-over-year on Tuesday.

  • Not enough building space

Even if lumber cost less, there’s scant room to build homes. The New Home Lot Supply Index — which tracks lots ready for building — fell 10% to a record low in the first quarter, according to housing analytics firm Zonda.

Even the firms that have empty lots are running behind in converting them to sellable homes. About 242,000 authorized homes hadn’t been started yet in April, the Census Bureau said last week. That’s the highest level since 1979. 

  • Builders waiting for the opportune moment

The various shortages and bottlenecks have led builders to hit the brakes and wait for profitability to rebound. Nearly one-in-five contractors surveyed by the National Association of Realtors in April said they’re delaying construction or sales.

About 47% said they added escalation clauses to contracts last month. The clauses allow contractors to lift homes’ selling prices to offset an increase in building costs.

4 – Pricey construction, unrelenting demand is driving stronger home inflation

With builders unable to meet demand with new supply, prices predictably shot through the roof. Experts see home-price inflation staying hot into 2023, and with selling prices already elevated, a long rally could further dent home affordability across the US.

  • Prices hit record highs

While the rate of sales has cooled slightly, price growth remains strong. The median selling price of new homes rose to a record-high $372, 400 in April, the Census Bureau said Tuesday.

The median price for previously owned homes rose to a record of its own last month. The average existing home cost $341,000 in April, the National Association of Realtors said on May 21.

  • Sell-over-ask at record highs

For those looking to sell, there’s never been a better time. Homes are selling on average for 1.7% above their asking price, Kelman wrote on Twitter. That’s the largest average overshoot on record.

5 – Americans increasingly prioritize value and space

Still, not all buyers are losing out as the market boom charges onward.

  • Two-thirds of buyers say they snagged great deals

A Redfin survey of 600 homebuyers found that about two-thirds of people who moved during the pandemic bought a unit that was the same size or larger than their previous home. The same share of buyers spent the same or less on housing, the firm added.

  • Most had more cash after they moved

Moving during the pandemic also tended not to break the bank. Of the Americans reporting they moved into larger homes, 78% said they have the same amount of disposable income or more after their move, Kelman said.

“Idaho home price could triple and still seem affordable to a Californian,” the Redfin CEO said in a tweet.

~Ben Winck, Insider 

Buyers snapping up homes in 5 days or less

Nationwide, almost half of homes sold above list price. These and several other record-breaking measures made April a historic month for housing.

Note: Pandemic lockdowns significantly slowed home buying and selling in April 2020, which means the year-over-year trends for home prices, pending sales, closed sales and new listings are somewhat exaggerated. 

April was another history-making month for housing, with homes selling for higher prices and in fewer days since at least 2012. The following measures all hit new records:

  • The national median home-sale price hit a record high of $370,528, up 22% from 2020.
  • The number of homes for sale fell to a record low.
  • The typical home sold in just 19 days, a record low.
  • 49% of homes sold above their list price, a record high.
  • The average sale-to-list ratio, a measure of how close homes are selling to their asking prices, hit a record high of 101.6%.

“To put the scarcity of housing into context, there is plenty of room for supply to increase and demand to taper off, and we would still find ourselves in a historically strong seller’s market,” said Redfin Chief Economist Daryl Fairweather. 

“While Americans brace themselves for a lot of changes as workplaces and schools reopen, the story of the housing market will largely remain the same. There simply aren’t enough homes for sale in America for everyone with the desire and the means to buy one right now. Until new construction takes off–over the course of years, not months–home prices will continue to increase. This housing boom is nowhere close to over.”

Indianapolis is home to the country’s fastest housing market. The typical home in the Indianapolis metro went under contract after just four days on the market in April, down from 10 days a year earlier.

“I’m helping buyers understand the current market by advising them that it’s no longer unusual for a home to sell for up to $50,000 above asking price,” said Indianapolis Redfin agent Andrea Ratcliff. “Builders have waiting lists of at least a year and people are hesitant to sell their homes because there are so few options available for them to buy. Plus, remote workers are moving into the Indianapolis area, fueling even more homebuyer demand. Those factors are exacerbating our local housing shortage and fueling the competitive cycle.”

Homes in Seattle also sold exceptionally fast in April, with half of all homes pending sale in just 5 days in each of those metros.

Three of the five most competitive markets of the month were in California. In Oakland, 81.5% of homes sold above list price, a higher share than any other metro. It’s followed by San Jose (78.2%), Tacoma, WA (73.7%), Austin (73.7%) and Sacramento (72.5%).

~Tim Ellis, Redfin

Home prices at all-time high

Home prices are sky-high, and a recent report from Redfin underlines that point with some staggering data.

Median home-sale prices increased 17% year-over-year to $335,613 – a record high, per data taken from more than 400 metro areas during the four-week period ending March 28, 2021. And asking prices of newly listed homes rose 14% year-over-year to $353,500, another all-time high.

Pending home sales were up 38% from the same period in 2020 — and up 28% from the same period 2019 — but pending sales grew just 0.9% from Redfin’s previous four-week report.

Sales in general are still high, per Redfin Chief Economist Daryl Fairweather — 59% of homes that went under contract in the current four-week period had an accepted offer within the first two weeks on the market — but the recent low numbers suggest some homebuyers have reached their limit on high home prices and bidding wars.

“Add to the mix a dwindling number of homes for sale and rising mortgage rates, and the typical family that is still searching for an affordable house may have missed the boat,” Fairweather said. “First-time homebuyers who were already stretching their budgets will have to make bigger compromises on size and location or resign to renting for another year.”

Active listings fell 42% according to the report, spurring would-be buyers to submit offers that are significantly over asking price and making the market difficult to navigate for first-time homebuyers and other price-conscious buyers. Redfin reported that 47% of homes that went under contract in the current four-week period had an accepted offer within one week of hitting the market – yet another all-time high. And 41% of homes sold for more than their listed home price, which was 16 percentage points higher year-over-year.

Fairweather’s suggestion for those would-be buyers: look at condominiums and other more realistic purchases, build some equity, and wait this out.

“[President Joseph Biden’s] infrastructure plan aims to incentivize zoning for multifamily homes, which could increase the supply of affordable homes and provide even more people a path to homeownership,” Fairweather said. “But, there is no guarantee the incentives would be enough for local governments to change their zoning practices.”

The aforementioned infrastructure plan, dubbed the American Jobs Plan, aims to inject $213 billion into housing with the building of 500,000 homes in low- and middle-income areas. And two million affordable homes and commercial buildings would be built and renovated over the next decade as part of the initiative.

~Tim Gaze, HousingWire

All-time record for home sale prices

The median home sale price increased 16% year-over-year to $331,590 – an all-time high, per a report this week from Redfin. But that’s not stopping buyers from snatching up homes days after they’re listed.

During a four-week period ending March 21 and covering 400 metros, 58% of homes that went under contract had an accepted offer within the first two weeks on the market. And between March 14 and March 21, 61% of homes sold in that timeframe had been on the market two weeks or less, and 48% had sold in one week or less.

And offers are coming in well-above asking price, too. Nearly 40% of homes sold above their list price – another all-time high – and 15 percentage points higher year-over-year. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.2%.

This is concerning for experts, though, many of whom believe home prices will remain high even after mortgage rates, inventory, and building material costs recover to pre-pandemic levels. Rates are already above 3% – after falling into the 2% range during the majority of 2020 – but construction companies are still struggling to keep up with insane lumber prices, stifling new builds.

National Association of Home Builders Chairman Chuck Fowke recently noted that supply shortages and high demand have caused lumber prices to jump “about 200%” since April 2020, and the elevated price of lumber is adding approximately $24,000 to the price of a new home.

When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans,” said Daryl Fairweather, Redfin chief economist. “That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society.”

Fairweather noted that President Joseph Biden’s hopeful $3 trillion infrastructure plan includes building 1.5 million sustainable homes, but there is no guarantee the bill will be “passed with every policy proposal intact.”

“America needs an audacious goal to increase the housing supply, given the U.S. is short 2.5 million homes,” she said. “It may be expensive to build millions of homes, but ignoring the problem would only cause housing to become more unaffordable and worsen housing insecurity.”

The best chance at home prices lowering is the continued rollout of the COVID-19 vaccine, experts said, which will allow lumber mills to reopen and material prices to lower. Builders will then be spending less on new builds, which will help the backlogging of inventory.

~ Housing Wire

What Buyers Focus On Most When Touring A Home, According To Eye-Tracking Software

Turns out, it isn’t all about the stainless steel appliances.

One of the many mantras in the real estate world is the saying “kitchens sell houses,” but until now there has been very little information about exactly what it was in a kitchen that would make buyers pay attention. With the help of a few homebuyers wearing glasses that track eye movements, we are beginning to have some hard facts.

It isn’t the shiny metallic fridge or the latest high-tech dishwasher their eyes go to when they first walk in the kitchen. It’s the oven. Many of the buyers in the study would go so far as to look inside the oven, and some of them would even turn it on to see how well it worked. So if you’re selling your home, make sure the oven is so clean it sparkles inside and out. If it isn’t in working order or has a few bad burners, you don’t necessarily have to get it replaced, but you might consider offering the buyer a credit for a new one.

Bedrooms are one of the next priorities in a house that can make or break a sale and eye-tracking software reveals a buyer’s eyes go straight to the bed when they walk into the room. Most likely buyers are wondering if their bed will fit in the space and if there is enough room to fit the rest of their furniture as well. This means if you’re in triage mode when it comes to decluttering on short notice, make the bedrooms a priority over other rooms in the house.

Outdoor accessibility was another big takeaway from the study. When buyers walked into a room that accessed the backyard their eyes immediately went to the outdoor space and the doors that opened out to it. Make sure the windows and doors (if they have glass) are as clean as can be so they show off the view to the outdoors in the best way possible.

But how about those stainless steel appliances? Are they worth it in the end? This study wasn’t designed to measure whether people’s eyes looked at stainless steel more than other types of finishes, but I’ll pass on the main reason why they have become so much of a trend: They can make a small kitchen look much bigger. The reflective surface acts the same way a mirror does by bouncing light around the room and giving the impression of spaciousness. To continue with the mirror example, a designer once told me hanging a mirror is almost as good as adding a window to a room. Stainless steel can have the same impact within a kitchen so it is still worth keeping it in mind if you are going to buy a new appliances.

~ Amy Dobson, Forbes

U.S. Real Estate Predictions for 2020 Suggest More of the Same, Mostly

According to Freddie Mac’s latest set of predictions, issued on October 31, the U.S. real estate market will “continue to firm” as home sales increase. In fact, they believe housing is currently one of the brighter spots in the U.S. economy.

Their chief economist, Sam Khater, said that despite a global economic slowdown the U.S. real estate market “remains on solid ground with housing starts, building permits, existing home sales, and new home sales all outperforming the broader economy.”

Home Sales Expected to Increase Slightly

The first and most notable prediction has to do with home sales in 2019 and 2020. The group issued a mostly positive outlook for residential real estate sales activity in 2020. Home sales nationwide are expected to reach 6 million by the end of this year, and then rise to 6.1 million during 2020.

This contradicts some of the previous predictions for the U.S. real estate market, which suggested that the market could actually cool down next year.

A growing chorus of voices are now predicting that real estate sales activity could actually ramp up next year, partly due to low mortgage rates (see below).

Inventory Challenges Will Carry Over to Next Year

Home sales nationwide would likely be higher right now (and in 2020) if there was more inventory available. But most real estate markets across the country are still experiencing a shortage of homes for sale relative to the demand from buyers. This has constrained the housing market.

Robert Dietz, chief economist for the National Association of Home Builders, called it a “perfect storm of supply side challenges.” He told CNBC that the residential construction industry has been grappling with a prolonged labor shortage, along with a scarcity of buildable land.

Supply is especially tight at the lower end of the pricing spectrum, where many first-time home buyers tend to shop. As a result, buyers seeking an entry-level or “starter home” in 2020 should start early and pack their patience. (See: Biggest challenges for first-time buyers.)

Mortgage Rates Could Be Slightly Higher in 2020

Real estate predictions for 2020 suggest we could see more of the same next year, in terms of home sales and price growth. A similar “status quo” forecast has been issued for mortgage rates.

In their latest round of economic and housing predictions, Freddie Mac said they don’t expect to see a major increase in rates between now and next year.

In October 2019, the company’s research team predicted that 30-year fixed-rate mortgages would end up averaging 3.7% for 2019, and then “tick up slightly” to 3.8% in 2020.

Granted, this is just a prediction. It’s the equivalent of an educated guess. But if it’s even close to being accurate, it’s a pretty big deal from a home buyer’s perspective. It removes the sense of urgency that’s usually associated with a period of very low mortgage rates.

If rates continue to hover within their current sub-4% range through the end of 2019 and into 2020, home buyers would be able to benefit for the foreseeable future.

Home Prices Expected to Keep Rising, in Most Markets

Freddie Mac’s latest real estate predictions suggest that home prices across the U.S. could rise more slowly in 2020 than they did in 2019.

And that’s not surprising. House values in most U.S. cities have been rising at an above-average pace for the past few years. That has created affordability problems for buyers in many cities. So a slowdown is to be expected at this point.

According to their October 2019 forecast:

“The house price forecast is expected to appreciate 3.3 percent in 2019 and 2.8 percent in 2020.”

This closely resembles a similar prediction issued by the real estate information company Zillow. In October of this year, Zillow’s economists wrote: “United States home values have gone up 4.8% over the past year and Zillow predicts they will rise 2.8% within the next year.”

So here we have two separate research teams making an identical prediction for U.S. home prices in 2020. Both groups expect the median home price to rise by around 2.8% next year.

But real estate predictions for the nation as a whole don’t always tell the full story. Both companies predicted that the nation’s median home value will continue to climb in 2020, albeit at a slower pace than previous years.

But that’s the median (or midpoint) for all home values nationwide. This means they expect prices in most cities to continue rising in 2020, as they did in 2019.

When you drill down to the city level, however, it’s more of a mixed bag. Some local housing markets are actually seeing a steady drop in home prices right now. And that could continue in 2020 as well.

(This is something we’ve written about in the past. In July, we published a report on local housing markets that might be a bad investment due to ongoing price declines. And in September, we published a “crash alert” for nearly two-dozen California cities where home values were dropping.)

A Lot of Homeowners Will Refinance in 2020

Home prices in the U.S. have risen steadily over the past few years. And mortgage rates are currently hovering below 4%. As a result of those two trends, refinancing activity picked up during the fall of 2019.

During the last week of October 2019, the Mortgage Bankers Association reported that their “Refinance Index” had increased by 134% over the same week in 2018. Low rates and rising home values have a lot to do with that.

This ties into one of Freddie Mac’s real estate market predictions for 2020. They expect to see a continuation of the current “surge” in refinancing activity, as homeowners take advantage of low rates and increased equity.

To quote their forecast: “The surge in [mortgage] refinance activity will carry over into next year, with a projected $789 billion and $785 billion in single-family refinance mortgage originations in 2019 and 2020, respectively.”

The bottom line to all of this is that 2020 could look a lot like 2019.

~Brandon Cornett, HBI

Fall real estate may bring big openings for Seattle buyers, experts say

While supply problems hamstrung most of the market during the end of summer — what’s normally known as the peak real estate season — September was a different beast entirely, more like a “roller coaster” where prices were up in certain areas and down in others.

But as the summer season gives way to fall, that can open up avenues for those trying to break in to the market.

“The transition into the fall housing market creates opportunities for homebuyers,” J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said in the latest Northwest Multiple Listing Service report. “Although there are fewer listings than what buyers find during peak summer months, there is also less competition.”

By the end of last month, NWMLS brokers reported 15,982 total active listings, more than 18% less than from the same time a year ago (in 2018 that number was 19,526). Only three of the 23 counties served by NWMLS — Clark, San Juan and Whatcom — reported year-over-year gains in inventory; 19 counties had double digit drops.

With that drop in both number of listings and competition comes a predicted drop in price as well; this is the time of year that home prices typically start to taper off a bit, given the drop in demand.

In King County, the median price for single family homes and condos sold in September was $593,750 — down from the September 2018 figure of $610,000 and the first time the median price dipped below $600,000 since January.

Unfortunately for hopeful homebuyers, OB Jacobi, president of Windermere Real Estate, says that’ doesn’t necessarily mean it’s going to be easy pickings in King County.

“In King County, prices were down nearly 2.7% while pending sales rose nearly 10%. This tells us there is no shortage of buyers in the Greater Seattle area,” Jacobi said in NWMLS report. “Buyers continue to be drawn to the area thanks to more affordable housing costs, but this influx is also driving up prices.”

Still, there’s opportunity to be had; as the market begins to hunker down for the winter, Jacobi and Scott both expect the number of unsold listings to continue to decrease once the “winter clean-up” of inventory begins. For some lucky homebuyers, this could be the perfect set of circumstances.

~Zosha Millman, Seattle PI

What to know about buying a co-op apartment in Seattle

Sunny Eckerle

Homebuying is time- and energy-consuming, and for the uninitiated, co-ops can be especially confusing. The extra designation of “co-op” is another murky term on an already lengthy list of unfamiliar vocabulary words. (We’re looking at you, PMI, escrow, and rate lock.)

For Seattle homebuyers considering their options, here’s what you need to know about co-ops.

What’s a housing co-op?
The National Cooperative Bank, which supports and advocates for American co-ops, defines housing co-ops as groups of people who own or control the buildings where they live together.

When someone buys a co-op, they’re buying stock—or a membership—in a cooperative corporation that owns the building, land and common areas. Buyers don’t receive a deed to the property like they would with other housing types. “Instead, they’re issued a stock certificate and proprietary lease for their shares within the co-op,” explains Tessa Gaines, loan officer at the National Cooperative Bank.

Typically, the bigger a co-op unit is, the more shares its owner(s) hold and the higher proportion of the building’s property taxes, utilities, and insurance they pay. Cooperative corporations are governed democratically with each member getting a say in decisions—from the furnace to the roof—that will impact the community.

Who are co-ops a fit for?
From first-timers to folks looking to downsize, there’s no typical co-op buyer, says Jeff Reynolds, a real estate broker with Windermere that runs the blog Urban Condo Spaces. “I encourage buyers to keep an open mind. Know the situation you’re buying into, and if it fits your objectives—buy it!”

One characteristic most co-op denizens do share is an interest in being active within their co-op community. Every member is vetted by the board and is expected to weigh in on matters related to the cooperative.

“Co-ops are hands-on, and that’s beneficial for people who truly want to be part of a community and to build better relationships and friendships,” says Val Gaifoulline, broker and realtor with Keller Williams Realty Greater Seattle.

What are some pros and cons of co-op ownership?
Co-ops are hands-on, and that’s beneficial for people who truly want to be part of a community and to build better relationships and friendships.
Like any condo, townhouse, or single-family home, there are pros and cons to co-op ownership that prospective buyers should consider. Reynolds says that related expenses—purchase price, price per square foot, closing costs and property taxes, for example—are typically lower at co-ops. If owners maintain the co-op themselves instead of hiring a staffer, that further lowers costs. As mentioned, co-ops can create an environment ripe for community in the city. If you’re looking for that, it can be another positive aspect of choosing a co-op.

On the flip side, getting into a co-op through its board can be difficult. Rules governing everything from renovations to bike parking and pets can be more stringent at co-op buildings, too. Reynolds says that cooperatives are responsible for paying the salaries of any employees through the owner-paid monthly maintenance fees, including doormen and cleaning staff. If funds are needed elsewhere or if most owners prefer it, residents can be on the hook for a larger portion of the building’s upkeep compared to condos.

What are some common misconceptions about co-ops?
One myth is that co-ops may be harder to sell, Gaines says, “but co-op owners are able to sell their units just like any other real estate transaction.” Reynolds agrees that issues associated with co-op resales are mostly just perception. “The challenge is getting over the misconception that ‘you don’t own it,’” he says.

Like other property types, co-op owners looking to sell set a list price and entertain offers, negotiated or not, from there. There are some unique aspects to selling a co-op though, including that all prospective buyers are thoroughly vetted and ultimately approved or denied by the co-op’s board. Many prohibit subleasing, too.

“That’s good for the long-term co-op tenants cut cuts out the portion of buyers that are investors,” Gaifoulline says. Both could add time to the process, though recent data suggests that on average, co-ops in Seattle spend only slightly more days on the market compared to condos—44 days for co-ops vs. 33 days for condos.

What else do prospective homebuyers need to know?
Financing a co-op is different than financing other property types and can be tricky, Gaifoulline says. “You’re buying shares, and most banks don’t provide that type of financing—called a share loan,” he says.

Are there other types of co-ops?
The term co-op can refer to more than the residential co-ops that house more than a million people in the U.S. Member-owned and controlled business and organizations exist across industries, services, and interests, including food and agricultural enterprises, insurance companies, banks, childcare providers, and more. Seattle co-ops unrelated to housing include Verity Credit Union, the grocery store Central Co-op, and the Flying Bike Cooperative Brewery in Greenwood.

~Kelly Knickerbocker, Curbed Seattle

April showers brought more good news for home buyers, but inventory is still below ‘balanced’

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Good news, buyers: The latest real estate report from the Northwest Multiple Listing Service shows that more balance is returning to the local market.

During April, housing inventory continued to grow, the rate of price increases slowed in many areas (sometimes even decreasing), and mortgage rates remained low. NWMLS statistics saw a 28.5% overall increase in active listings compared to April 2018, and there was a 5.8% gain in pending sales.

Of course, according to NWMLS director John Deely, principal managing broker at Coldwell Banker Bain that’s not news to many buyers hitting the market. After such a long run as the hottest market in the country, many buyers are starting to get smarter about navigating buying a house.

“With an increased supply of listing inventory, low interest rates, and a positive economic climate, buyers are confident that this is a good time to buy,” he reported, while noting a larger number of buyers are opting out of competing with other buyers.
“This year’s buyers and sellers are approaching the market with more caution and a focus on an analytical, versus emotional approach that has ruled the last several years.”

Increased inventory takes a lot of the responsibility for lightening the load on buyers: according to NWMLS, seven counties had double-digit growth in inventory from a year ago, led by King County, which reported a 78.5% growth, and Snohomish County (up nearly 57%).

That doesn’t mean the market is wholly balanced, unfortunately. As NWMLS report notes, though inventory is up drastically in some areas, there’s still just about 1.7 months of supply across the NWMLS’s 23 county system.
“That is still slim compared to the National Association of Realtors’ data showing a national average of 3.9 months of inventory,” Gary O’Leyar, designated broker and owner at Berkshire Hathaway HomeServices Signature Properties, said. “Despite the increase in inventory over last year at this time in King County, we are seeing a very robust spring market laced with multiple offers in many instances.”

Mike Grady, president and COO of Coldwell Banker Bain, put it thusly: “Buyers now have three-to-four weeks instead of three-to-four days to make a decision, so it’s still quite a ways from a balanced market.”

Zosha Millman, Seattle PI

Like spring, Seattle’s real estate season is just getting started

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A month out from “peak real estate season” in Seattle, and the local market is still not among the hottest in the country.

That is, likely, more than alright for a number of home-buyers, who might’ve been burnt out from last year’s market which seemed to go nowhere but up in median price. But it’s also a bit surprising — and not confined to Seattle, according to a new monthly report from CoreLogic.

According to CoreLogic’s numbers, Washington’s growth in February 2019 for single-family home prices year-over-year was just 4.6%, only marginally more than the national average, 4%. Both those numbers represent something of a cooldown, according to Dr. Frank Nothaft, chief economist for CoreLogic.

“During the first two months of the year, home-price growth continued to decelerate,” Nothaft said in their most recent report. “This is the opposite of what we saw the last two years when price growth accelerated early.”

That doesn’t mean that housing is suddenly cheap, either locally or nationwide; CoreLogic’s report also looked at the top 50 markets based on housing stock. They found 40% were overvalued, 18% were undervalued, and 42% were at value in February 2019.

And according to Nothaft, the peak season is primed for prices to go up even further.

“With the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest of the year, we expect mortgage rates to remain low and be a boost for the spring buying season,” he said in the report. “A strong buying season could lead to a pickup in home-price growth later this year.”

And while Seattle had some other things on its mind in February that might’ve contributed to a cool down, local analysts agree that it’s shaping up to be a good season too.

After all, even with the Snowmageddon, home prices in King, Snohomish and Pierce counties rose significantly, ending the month-over-month declines that started last May. And as CoreLogic notes in their report, Seattle’s market was considered “at value” in February.

“Similar to previous months, prices are moving upwards the most consistently in exurban areas along the Interstate 5 corridor,” James Young, director of the Washington Center for Real Estate Research at the University of Washington, said in the latest Northwest Multiple Listing Service report.

“Look for prices outside the major urban areas to continue rising as the weather improves and the main selling season arrives.”

~Zosha Millman, Seattle P-I