January 2021 Real Estate Market Update
What’s Happening in the Market
In this January 2021 real estate update we see record-low temperatures combined with record-low inventory put a chill on housing activity in December. With very few homes available to buy, sales were down. Lack of supply and high demand continued to push prices up. Since the winter months historically bring the smallest number of new listings, buyers should not expect relief anytime soon.
December Results
While up from a year ago, home prices in general were relatively flat from November to December. In King County, the median single-family home price rose 9% from last December to $810,000. Despite high demand and low inventory, prices in Seattle continue to level off. While down slightly from November, the median price increased a modest 5% over a year ago to $839,000. The Eastside was again the outlier. After breaking price records in October and November, home prices soared 37% year-over-year to set yet another all-time high of $1,529,500 in December. That represents a 7% increase from November. In further evidence of just how hot the Eastside market is, 75% of the properties there sold for over list price. Prices in Snohomish County continued to inch closer to King County. The median home price there jumped 22% to $700,000.
The driving force affecting affordability is lack of inventory. In both Snohomish and King counties it would take less than a week to sell the homes that are currently on the market. At the end of December, Snohomish County has just 210 single-family homes for sale in the entire county. Seattle had only 167 homes for sale; the Eastside just 55. That represented 70% less inventory for both Seattle and the Eastside as compared to a year ago. To give some historical perspective, the ten-year average inventory for the end of December is 545 homes in Seattle and 743 homes on the Eastside.
Matthew Gardner, Chief Economist at Windermere, registered his concern. “The Puget Sound region is in dire need of more housing units which would function to slow price growth of the area’s existing housing,” he said. “However, costs continue to limit building activity, and that is unlikely to change significantly this year.”
The demand side of the equation isn’t expected to wane any time soon either. With millions of square feet of new office space and new light rail developments in the works, the area continues to be a draw for employers – and more potential homebuyers.
2022 Predictions
What’s ahead for 2022? Matthew Gardner expects the market to continue to be strong, but believes the pace of appreciation will slow significantly from this year. “I predict single family prices will increase by around 8% in King and Snohomish counties. Affordability issues and modestly rising interest rates will take some of the steam out of the market in 2022.”
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This post originally appeared on GetTheWReport.com.
The Gardner Report – Quarter 3
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
REGIONAL ECONOMIC OVERVIEW
The emergence of the of COVID-19 Delta variant had a palpable impact on the region’s economy, which, naturally, impacted job recovery. Employment levels in Western Washington had been picking up steam in the spring but started to slow quite dramatically over the summer. To date, the region has recovered more than 201,000 of the jobs that were lost due to the pandemic, but we appear to be in a bit of a holding pattern. That said, the ending of enhanced unemployment benefits has led many business owners to see more applicants for open positions, so I am hopeful the numbers will pick back up as we move into the winter months. The most recent data (August) shows the region’s unemployment rate at a respectable 5%, but we still have a way to go before we reach the pre-pandemic low of 3.7%. On a county level, the lowest unemployment rate was in Kitsap County (4.4%) and the highest was in Grays Harbor County (6.6%). There are still many hurdles in front of us, but I believe we will continue to add jobs and reach full employment recovery by mid-2022.
WESTERN WASHINGTON HOME SALES
❱ Sales in the third quarter rose 6.4% year over year, with a total of 27,280 homes sold. The increase matched what we saw in the second quarter of this year.
❱ I was pleased to see sales growth continue. This rise was supported by a 28.4% increase in the number of homes for sale. Listings rose the most in Grays Harbor (+62.6%), Lewis (+53.6%), and Skagit (+52.0%) counties.
❱ Sales activity was mixed. Nine counties saw year-over-year growth, but sales slowed in six counties. That said, sales were up in every county other than King and San Juan compared to the second quarter of 2021.
❱ The ratio of pending sales (demand) to active listings (supply) showed pending sales outpacing listings by a factor of 4.6. Even with the increase in the number of new listings, the market is far from balanced.
WESTERN WASHINGTON HOME PRICES
❱ Home prices rose 18.9% compared to a year ago, with an average sale price of $726,168—another all-time record.
❱ When compared to the same period a year ago, price growth was strongest in Clallam, San Juan, and Jefferson counties, but all markets saw prices rise more than 12% from a year ago.
❱ Average sale prices pulled back 1.1% compared to the second quarter of this year. Given the massive increase in value over the past few years, it is not at all surprising. The key indicator has been a softening in list prices and that naturally translates to slower price growth. This is nothing to be worried about. It simply suggests that the market may finally be heading back to some sort of balance.
❱ Relative to the second quarter of this year, all counties except San Juan (-0.1%), Island (-0.5%), and Whatcom (-0.5%) saw higher sale prices.
DAYS ON MARKET
❱ It took an average of 17 days for a home to sell in the third quarter. This was 19 fewer days than in the same quarter of 2020, and 1 fewer day than in the second quarter of this year.
❱ Mirroring the second quarter, Snohomish, Kitsap, Thurston, and Pierce counties were the tightest markets in Western Washington, with homes taking an average of 9 days to sell in Snohomish County and 11 days in the other three counties. The greatest reduction in market time compared to a year ago was in San Juan County where it took 102 fewer days for homes to sell.
❱ All counties contained in this report saw the average time on market drop from the same period a year ago, but eight counties saw market time rise from the second quarter; however, the increases were minimal.
❱ Even with inventory levels increasing in most markets, the region’s housing market remains remarkably tight. That said, I do see some of the heat dissipating and I am hopeful that if inventory levels continue rising, we will start a slow move back toward a balanced market.
CONCLUSIONS
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Even given the speedbump that hit the region’s economy with the emergence of the Delta variant, the housing market remains remarkably resilient. Demand from buyers continues to be very strong, and modestly increasing inventory levels appear to have—at least for the time being—reduced some of the fever from the market. Mortgage rates remain very favorable, and my current forecast is for them to stay in the low- to mid-3% range until next summer. Rising inventory levels have led price growth to slow and days on market to start increasing, which may be a sign that the market is retreating from a prolonged period of exuberance.
As we move through the balance of the year, I believe demand will remain solid, but we will continue to see price growth soften as more listings compete for the buyers that are out there. That is not to say price growth will turn negative; rather it suggests that we are slowly moving back toward a more balanced market. That said, the market certainly still favors home sellers. As such, I am leaving the needle in the same position as the second quarter. I may move it a little in the direction of buyers next quarter if the current trend continues through the winter months.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
This post originally appeared on the Windermere.com Blog.
April 2021 Real Estate Update
Despite a bump in new listings the supply of homes still can’t keep up with the demand. The result? Multiple offers, escalation clauses, and record-breaking prices. If you’re considering selling your home, you’d be hard pressed to find a more lucrative market than what we have today.
March marked the first post-COVID/pre-COVID comparison, and the results were dramatic.
The drop in the number of listings was profound. In King County there were 54% fewer single-family homes on the market at the end of March than the same time a year ago. The Eastside had 68% fewer listings. There were just 216 homes for sale on the Eastside, which stretches from Issaquah to Woodinville. Extensive new investments there, including Amazon’s plan to add 25,000 jobs in Bellevue, will only increase demand for housing. North King County, which includes Richmond Beach and Lake Forest Park had just 26 homes for sale. In Seattle, the 498 listings there represents a drop of 18% from a year ago. Despite the comparatively greater number of listings, Seattle still has only two weeks of available inventory. The situation was even more dire in Snohomish County. With the number of homes for sale down 68%, the county has just one week of inventory.
So why is inventory so low? The pandemic certainly has played a part. People now working from home have bought up properties with more space in more desirable locations. Nervousness and uncertainty about COVID compelled many would-be sellers to postpone putting their home on the market. Downsizers who may have moved into assisted living or nursing homes are staying in place instead. But there are other factors as well.
For more than a decade, less new construction has been built relative to historical averages, particularly in the suburbs. Interest rates have also been a factor. Windermere Chief Economist Matthew Gardner noted, “I think a lot of the urgency from buyers is due to rising mortgage rates and the fear that rates are very unlikely to drop again as we move through the year, which is a safe assumption to make.” Homeowners who refinanced when rates were at record lows are staying in their homes longer, keeping more inventory off the market. And those same low interest rates have compelled many homeowners who bought a new home not to sell their previous one, but to keep it as a rental property.
While the number of listings tanked, the number of sales skyrocketed. That’s the recipe for soaring home prices. Housing prices here have been growing at the second-fastest rate in the nation for a full year. Nearly every area of King County saw double-digit price increases, with the exception of Seattle. In King County the median price for a single-family home in March was a record-high $825,000, up 15% from a year ago and an increase of 10% from February. The median home price topped $1 million for every city on the Eastside, where the overall median price surged 30% to $1,350,000, the highest median price ever recorded for the area. Seattle homes prices were also record-breaking, rising 4% to $825,000. Snohomish County prices set yet another all-time high as the median home price jumped 22% to $640,000.
The appeal of our area just keeps growing. For the second time, Washington took the No. 1 spot in the U.S. News Best States ranking – the first state to earn the top ranking twice in a row. The bottom line: the local real estate market is extremely competitive, and it shows no signs of slowing down. Successfully navigating today’s market takes a strong plan. Your broker can work with you to determine the best strategies for your individual situation.
The charts below provide a brief overview of market activity. If you are interested in more information, every Monday Windermere Chief Economist Matthew Gardner provides an update on the US economy and housing market. You can get Matthew’s latest update here.
EASTSIDE
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KING COUNTY
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March 2021 Real Estate Update
Neither the snowstorm nor the increase in mortgage rates dampened buyer demand in February. Lack of inventory continues to be a frustration as there are way more prospective buyers than there are homes for them to buy. As a result, prices continued their upward climb.
While the number of homes for sale edged up, it was still far shy of demand. This is especially true of single-family homes. There were 41% fewer homes on the market in King County in February than the same time last year. In an indication of just how competitive the current market is, the entire Eastside ended the month with just 224 homes for sale. Inventory was even more scarce in Snohomish County where the entire county had just 283 homes for sale, a drop of 58% from a year ago. Condo shoppers have more options as the number of units on the market in King County increased 56% from last February.
With inventory so slim, competition is fierce. 57% of King County properties that sold in February sold over the list price. The median sale price paid was 9% over list price. Both are record highs. Competition doesn’t show signs of easing any time soon. A hike in interest rates is expected to only increase buyer urgency. An average rate of 3.02% for a 30-year fixed-rate mortgage for the week ending March 4 is the first time since July that the benchmark mortgage rate climbed above 3%.
The enormous imbalance between supply and demand sent single-family homes prices soaring throughout the region. In King County, the median home sold for $750,000, 11% higher than a year ago. Most areas in the county saw double-digit increases. Home prices on the Eastside jumped a whopping 28%. Seattle home prices were up 9%. In Snohomish County, the February $624,075 median price was up 21% from a year earlier and far surpassed the previous all-time high of $599,990 set in January.
With seller review dates, escalation clauses and multiple offers now the norm it’s more important than ever for buyers to work with their broker to create a strategy that balances their wants and needs with their budget.
The charts below provide a brief overview of market activity. If you are interested in more information, every Monday Windermere Chief Economist Matthew Gardner provides an update on the US economy and housing market. You can get Matthew’s latest update here.
EASTSIDE
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KING COUNTY
Connect with us on Facebook!
SEATTLE
Follow us on Instagram!
SNOHOMISH COUNTY
VIEW FULL SNOHOMISH COUNTY REPORT
Kari Haas is a 2020 Five Star Professional award winner!
Click here to see her in Seattle magazine!
This post originally appeared on GetTheWReport.com