It’s really tough to be a homebuyer in Seattle

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If you’re hoping to buy a home in Seattle, be prepared for rejection. A lot of it.

“For buyers, we are typically making six to 10 offers before we get a house,” said Rob McGarty, who has been a real estate agent in Seattle for 14 years. “The amount of emotional energy going into preparing these offers is huge.”

Home prices in Seattle are on fire: rising nearly 13% in February from the same time a year ago, according to the latest S&P CoreLogic Case-Shiller Indices.
Prices have risen so fast that it’s led to an affordability crisis, with no relief in site.
“Seattle seems to be defying all the laws of housing market trends,” said Daren Blomquist, senior vice president at real estate data firm ATTOM.

The problem is simple: there are more people looking to buy homes than there are homes available for sale.
Seattle’s population has been rapidly growing recently thanks in part to its large homegrown businesses like Amazon and Starbucks.

Amazon in particular has played a major role in Seattle’s economic growth and strength. The company employs more than 40,000 workers at its Seattle headquarters and pays out nearly $26 billion in compensation.
“Amazon has amassed a huge talent pool of employees that has caused other companies to open offices here,” said McGarty. “We have a ton of [San Francisco] Bay area companies that now have offices in Seattle … those transplants have driven prices up.”

Home values in King County, where Amazon is located, have appreciated twice as fast as the national average, according to Blomquist. Average annual home price appreciation from 1995 (when Amazon first launched) to 2018 was 6%, according to ATTOM. Over the same time period, the national average was just 3%.

Life as a buyer

After months of online searching, open houses and having several offers rejected, Kayela Robertson and her husband, Cody, had hit their limit. She said it was common to see the homes they lost out on go on to sell for at least $100,000 over the asking price with multiple offers. They were about to expand their search radius when they made their seventh offer.

“If we were going to be in Seattle, we had joked that we needed to get this house. This was the make it or break it offer,” she said. “If we didn’t, I would have to cave and move farther out.”
Fortunately, their seventh offer was accepted. To close the deal, they offered $140,000 more than the list price of $590,000. They also dropped all contingencies, included an escalation clause, put $100,000 in escrow and promised to close within two weeks.

The couple sold their home in Spokane in January for full asking price, and the money from the sale helped make their offer competitive. They closed on the new home a month ago.
“The house we sold was much nicer and bigger and was much less [than the Seattle home],” Robertson said. “It is still an adjustment that we are paying more than two times more for this house.”

After months of online searching, open houses and having several offers rejected, Kayela Robertson and her husband, Cody, finally snagged a home in Seattle.
Where Seattle goes from here

Despite being a seller’s market, Seattle homeowners are hesitant to sell. Last year, the city was among the best markets to sell a home, and the average home seller return on investment was 64%, according to ATTOM. But even if they get a good price, sellers are struggling to find a home to trade up to.

While the demand is clearly there, there’s only so much room to build in Seattle. It’s bounded by water and mountains. The city also has strict regulations when it comes to building apartment and condos, and 70% of the land mass in the city is zoned for single family homes, according to Matthew Gardner, chief economist at Windermere Real Estate.

“We aren’t very dense at all,” he said.

The home affordability problem could make the city less appealing to businesses. The city recently passed a new tax on big businesses that will help pay for affordable housing and fight homelessness.
At some point, the housing affordability issues and high cost of living, plus the new business tax, could cause companies to think twice about starting or expanding in Seattle.


“The two most important things when companies think about growing in a market is whether there is a suitable talent pool and how much they have to pay people, and the biggest part of salary is the local cost of living,” said Gardner.

~Kathryn Vasel, CNN Money

Seattle-area home-price growth from current boom has surpassed last decade’s bubble

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SEATTLE – As the Seattle area continues its run as the nation’s hottest real estate market, it has now seen home prices surge upward for a full six years – with more growth in home values during the current boom than during past decade’s bubble.

Single-family home costs across the metro area grew 12.7 percent in February from a year earlier, the biggest increase in the nation for the 18th month in a row, according to the monthly Case-Shiller home price index, released last week. The report marked six years since home values bottomed out in February 2012. Since then, values have increased 85 percent – nearly triple the region’s historical average for a typical six-year span. Only San Francisco and Las Vegas had bigger gains during that period.

Even during the housing bubble last decade, prices didn’t rise this much. In the six years leading up to the peak of the bubble in 2007, Seattle-area prices grew a total of 73 percent before the bubble burst.

(During the bubble, home prices rocketed up quickly – fueled by lax and sometimes fraudulent mortgage lending that sowed the seeds for the Great Recession – but the peak surge only lasted a few years; this time, the growth has been steadier and keeps going and going.)

The recent boom locally has completely wiped out the effects of the recession on the housing market, when prices sank.

Local home values are now a bit higher than they were at the height of the bubble in 2007, even after accounting for inflation since then. Only Denver and Dallas have had price growth greater than Seattle’s since the old 2007 high.

There are no clear signs that we’re in another bubble. At the least, the elements that created last decade’s housing collapse – like homebuyers getting mortgages they couldn’t afford and rampant subprime lending – aren’t present this time around. The number of people defaulting on their mortgages locally is minuscule, for instance, and lenders are only issuing mortgages to people with good credit scores and financial assets.

A recession or other unexpected development – like a collapse at Amazon a la the Boeing bust of the 1970s – could change that, of course.

But for now the real-estate market shows no signs of slowing down amid record low supply of homes for sale and strong demand for homeownership. The Case-Shiller report noted that the Seattle metro area had the biggest job growth in the past year among the 20 regions covered in the report.

Compared with a month prior, home values increased 1.7 percent, according to the Case-Shiller data. The last time prices went up that much in a month was last summer.

The month-over-month growth also led the country, and was quadruple the national increase.

Seattle’s home-price increase of 12.7 percent, compared with a year earlier, was similar to the last several months and was again more than double the national rate of 6.3 percent.

Las Vegas again had the second-biggest home-price jump, and continues to heat up, with prices up 11.6 percent. San Francisco was close behind, followed by Denver, Detroit and Los Angeles.

Seattle home costs have grown more than 10 percent, year-over-year, for 26 months in a row. That’s pushed the median cost of a single-family house to $820,000 in Seattle and $926,000 on the Eastside. Even more affordable areas have recently hit record prices: $485,000 in Snohomish County, $350,000 in Pierce County and $341,000 in Kitsap County.

~Mike Rosenberg, The Seattle Times

Home Buyers Still Competing for Sparse Inventory in Western Washington, Driving Up Prices – Especially for Sought-After Condominiums

“The Seattle area real estate market hasn’t skipped a beat with pent-up demand from buyers is stronger than ever,” remarked broker John Deely in reacting to the latest statistics from Northwest Multiple Listing Service. The report on January activity shows a slight year-over-year gain in pending sales, a double-digit increase in prices, and continued shortages of inventory.

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“Sellers that have put their properties on the market early this year have less competition and are seeing multiple offers. Open houses are experiencing heavy traffic with hundreds of potential buyers attending,” reported Deely.

Of 23 counties served by Northwest MLS, eight counties, including three in the Puget Sound region (King, Kitsap and Snohomish), reported fewer pending sales than a year ago. In King County, where acute inventory shortages exist in many neighborhoods, pending sales dropped 7.5 percent and closings dropped 18.5 percent.

“The decline in sales last month can’t be blamed on the holidays, weather or football. It’s simply due to the ongoing shortage of housing that continues to plague markets throughout Western Washington,” said OB Jacobi, the president of Windermere Real Estate. The number of total active listings at month end stood at 8,037 homes and condos, down nearly 17.6 percent from a year ago. Measured by months of supply, there was only about 1.5 months overall, well below the 4-to-6 month level many industry experts use as a gauge of a balanced market.

Condo inventory is especially tight in Snohomish County (0.8 months of supply) and King County (0.92 months). System-wide there is under a month’s supply (0.93 months). For the four-county Puget Sound region, there were only 427 active condo listings at month end, down almost 31 percent from a year ago.

Despite the sparse selection, brokers expect inventory to improve.

“I actually believe 2018 will bring us moderately more listings, which should help offset the growing demand that continues to result from the area’s strong economy,” remarked Jacobi.

“The month of March can’t come soon enough for home buyers,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “In March, the number of new listings will bump up substantially from the low number of new listings typical for winter months. Better selection will start in March as we enter the spring housing season,” Scott predicts.

In the meantime, Scott reported “a multiple-offer everything, virtually sold out market” in all price ranges close to job centers and in the more affordable and mid-price ranges in surrounding counties. “Sellers are receiving premium pricing and home buyers are pouncing on each new listing,” he added.

Prices continue to rise in all but a few counties, even as the volume of closed sales fell about 9.3 percent. For January’s 5,325 closed sales, the median price was $363,500, a jump of about 11 percent from the year-ago figure of $327,500. Twelve counties reported double-digit spikes.

Within the four-county Puget Sound region, King County had the largest year-over-year gain. Prices for homes and condos combined shot up 20.3 percent in that county, rising from $475,000 to $571,250. Pierce County reported a jump of 15 percent, followed by Snohomish County at about 12.2 percent and Kitsap County at nearly 3.5 percent.

The depleted supply of condos meant premium prices. Area-wide the median price for last month’s completed transactions rose nearly 18.6 percent, from $269,900 to $320,000. Snohomish County’s condo prices surged nearly 25.5 percent, followed by King County at nearly 22.6 percent.

Some brokers expect the hefty price gains to ease.

“As interest rates rise, the rate of price increases will slow down,” predicts Northwest MLS director Dick Beeson, principal managing broker at RE/MAX Professionals in Gig Harbor. Despite this expectation, he believes sparse supply and the area’s appeal both nationally and internationally will mean ongoing competition and multiple offer situations.

 

The luxury market is also off to a quick start in 2018. “Close to job centers, the luxury market is gaining positive momentum due to the wealth effect of the stock market, the strength of the U.S. economy, and homebuyers from the Pacific Rim, especially China,” noted Lennox Scott.

Northwest MLS figures show sales of homes selling for $2 million or more are far outpacing year-ago activity. Last month, member-brokers reported selling 55 residences at this price threshold. That’s up 66 percent from the same month a year ago when brokers sold 33 such homes.


~Northwest Multiple Listing Service

Can Seattle’s Real Estate Market Keep Up This Growth?

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If Seattle’s real estate market is going to slow down over the next year, will it be a burst or a dribble?

That’s the question on a lot of analysts minds. According to the latest S&P Corelogic Case-Shiller home price index, Seattle has lead the nation in home price increases for  14 months in a row.

The only relief buyers seem to get is a holiday slowdown, and even that is fairly short-lived: Adjusted for seasonal changes, prices grew 0.6 percent from the month prior, according to Case-Shiller, and the Northwest Multiple Listing Service report found that while both inventory and pending sales dipped to their lowest levels since April, prices still increased by double-digits in most of the 23 counties NWMLS serves.

While many brokers see the market growing at more than double the rate of the national average and think the boom is unsustainable in the next year, the question now is mostly whether Seattle will go out with a bang or just start to rise more gradually.

According to the NWMLS report, many brokers are seeing signs that Seattle is not a bubbling market.
“Prices are expected to see some much needed slowdown in 2018 which will help bring more balance to the market,” OB Jacobi, president of Windermere Real Estate, said. “Rising home prices on their own don’t lead to a bubble; a number of other factors have to come into play.”

But can Seattleites be expecting another 12.67 percent growth over last year? Probably not, is what most brokers hope, but so far there’s not much indication that Seattle is slowing down in the first part of 2018.
As one put it to the NWMLS, 2018 could be “less glamorous with 6-to-8 percent appreciation, or even a slight flattening of the market for 8-to-12 months.” But J. Lennox Scott, chairman and CEO of John L Scott Real Estate, “market conditions are set for another robust market in the year of 2018.”

~Zosha Millman, Seattle PI

Snohomish County home prices reach new high — again

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EVERETT — Housing prices continue to climb in Snohomish County reaching never-seen-before heights.

Median prices for houses and condos reached $430,000 for July, up from $385,000 for the same month a year ago, according to the Northwest Multiple Listing Services.

That’s an 11.7 percent increase year-over-year. It’s also a $10,000 increase on the same numbers in June, when the median price was $420,000.

“We should be entering the summer doldrums, but I don’t see that happening,” Diedre Haines, principal managing broker-south Snohomish County at Coldwell Banker Bain in Lynnwood, said in a statement.

The median price for closed sales for all homes surpassed $400,000 for the first time this year in April. Prices have been rising steadily ever since.

Last month, a news story in the Orange County Register in Anaheim, California, reported that Snohomish County trailed only King County in the nation for the shortest amount of time a home was on the market. The report citing numbers from Realtor.com said that houses sold in 20 days. Houses in King County sold in 19 days. Arapahoe County east of Denver came in third at 23 days.

Home prices vary greatly with location, with homes in south Snohomish County costing far more than homes in the north.

Almost all of the county saw double-digit price increases year-over-year. The biggest jump was for the Multiple Listing Service area along the U.S. 2 corridor. There, housing prices rose to $433,000, up from $322,475 a year ago, or a 34.3 percent increase.

The only listing service area that did not see a double-digit increase was the one around Edmonds and Mountlake Terrace in south Snohomish County. There, prices reached $470,000, up from $444,000 a year ago, or an increase of just under 6 percent.

The median prices for houses alone is $453,000 for all of the county. The median prices for condos is $323,475, according to the numbers released Monday.

One of the reasons for the climbing prices is a lack of inventory. Only 1,759 Snohomish County homes were on the market for July. That’s down 10.7 percent from the same month a year ago when there were 1,969 homes.

“Inventory remains low, but prices and demand continue to increase, prompting murmurs of a looming bubble,” Haines said, adding, “Some say yes, and just as many are saying no” when asked about the likelihood of a bubble.

In some areas, inventory is showing some signs of growth, Haines noted, but it’s still “way below what would be considered anywhere near normal. Frankly, I am not even sure anymore exactly what normal is — perhaps the current low inventory status is the new normal.”

~Jim Davis, Everett Herald Net