KIRKLAND, Wash. (June 4, 2012) – Low listing inventory and plunging mortgage rates are fueling buyer competition for homes close to job centers, according to brokers who commented on the latest market report from Northwest Multiple Listing Service.
The figures for the 21 counties in the MLS market area show inventory is down sharply from a year ago (declining almost 28 percent), while pending sales (mutually accepted offers) rose almost 22 percent. The volume of closed sales increased more than 20 percent, topping the 6,000 mark for the first time since September 2007.
The median price on last month’s completed transactions of single family homes and condominiums edged up slightly more than a percentage point compared to a year ago, rising from $239,999 to $242,500. For single family homes (excluding condos) prices area-wide increased 2.34 percent, while condo prices slipped more than 5 percent.
Since January, median prices are up 12.8 percent system-wide, with nine counties reporting gains of 15 percent or higher (Clallam, Grays Harbor, Island, King, Kittitas, Kitsap, San Juan, Skagit, and Snohomish counties). Grays Harbor topped the list, reporting a 34.8 percent spike in prices since the first of the year.
“The six month trend of low listing inventory continues to cause strong buyer competition for homes close to job centers,” noted Northwest MLS director Joe Spencer, area director for Keller Williams Northwest Region. He said he does not expect this trend to change direction “for quite some time due to what appears to be long-term economic and demographic influences.”
MLS data suggest competition is strong in many areas. Pending sales surged more than 30 percent in nine counties last month compared to a year ago. Those areas included Clallam, Island, Jefferson, Kittitas, Kitsap, Okanogan, Pacific, San Juan, and Skagit counties.
Spencer said low inventory levels, combined with “unbelievably low interest rates” will continue to lead to home values stabilizing in most areas, while in other areas “we are already experiencing modest appreciation.”
Northwest MLS figures show 10 counties in its service area experienced year-over-year price gains on closed sales of single family homes. Several areas scattered around King County reported double-digit gains in both the volume of closed sales of single family homes and the corresponding median selling prices. Those areas included:
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, described activity as a “double quick action market.” He noted local home buyers are back purchasing homes, “igniting strong sales activity up the price points.” This, combined with the low supply, and in some areas, shortages of homes for sale, is creating what Scott said is “instant market activity from a backlog of home buyers” when market-ready homes are listed.
Northwest MLS brokers added 9,861 new listings to inventory during May, down from the year-ago total of 10,293 new listings. At month end, there were 26,191 single family homes and condominiums for sale across 21 counties, a drop of almost 28 percent from the year-ago selection of 36,261 properties.
Five counties have less than a four-month supply of homes available for sale, well below the figure of 5-to-6 months that many industry analysts use as a barometer of a balanced market. Using this gauge, Snohomish County reports the lowest supply at 1.51 months, followed by King (1.73), Pierce (2.52), Thurston (3.53) and Kitsap (3.75) counties.
Three other counties have less than five months of supply: Clark (4.46 months), Whatcom (4.83) and Skagit (4.88).
Record-low mortgage rates are driving homebuyer affordability, according to Frank Nothaft, vice president and chief economist at Freddie Mac. Rates as of May 31 were reported to be 3.75 for a 30-year fixed average, an all-time record low, and “an unprecedented” 2.97 percent for a 15-year fixed average.
Nothaft said ongoing economic turmoil in Europe contributed to a decline in long-term Treasury bond yields to help bring fixed mortgage rates to new record lows. Compared to a year ago, he said rates on a 30-year fixed mortgage rate are almost 0.9 percentage points lower which translates into nearly $1,200 less in annual payments on a $200,000 loan.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington State.
Summary statistics follow: