Happy New Year! The real estate market was a tale of two halves in 2017 in North King and South Snohomish Counties. January through June was a frenzy of multiple offers and escalating prices. The lowest average sales price during the year was in January at $582,000. That ballooned 18% through June to a high of $689,000. Prices then leveled off and closed the year at $671,000. Average Price per SQFT also started the year at a low of $266/sqft and jumped over 16% to $310/sqft in the summer. It too leveled off and ended the year at $301/sqft.
While sales prices didn’t technically rise in the second half of the year, the market was still brisk and many good homes at fair prices continued to receive multiple offers. Seller’s asking prices did continue to rise, creating a pretty wide gap between what some sellers wanted and what buyers were willing to pay. That caused many overpriced homes to sit on the market and the “Days on Market” rose from a monthly low of 17 days in June to 31 days by December.
I know the “low inventory” theme sounds like a broken record, but December had a modern history record low of only 1988 homes for sale in all of King and Snohomish Counties combined. Last year’s high was 4700 active listings in September. As a striking comparison, there were over 15,000 active homes for sale when prices peaked during the housing bubble in the summer of 2007.
My takeaway is that until inventory rises substantially, companies in our area stop hiring, interest rates rise significantly, or some combination thereof, I don’t see too much of a change in the price appreciation trend, although likely at a more modest rate of increase.
This is officially the wildest housing market I have seen in my 15+ years in the business! 2005-2007 was wild too but the exuberance wasn’t quite as high, especially outside core Seattle. Now, bidding wars are escalating home prices significantly (sometimes 10% or more) over the asking price nearly everywhere. However, overpricing your home will still backfire! My clients have been most successful by pricing fairly and letting buyers fight over it.
While it may seem “easy” to sell your home, it is still a complicated process. Some sellers are finding buyers themselves and selling it off market. That sounds good, except I would argue that you will get more money, and/or better terms, if you expose your home to the whole market, especially right now. How can it hurt to have a dozen buyers interested instead of just one?
I am also seeing a frustrating trend of sellers (and their agents) who are willing to accept the first offer that comes in, sometimes on day one on the market. I believe it always benefits the sellers to wait at least a few days and then review offers on a set advertised date. I’ve had 3 cases recently where a great offer came in early, but per my advice, the sellers respectfully declined it and waited until the scheduled review date. In two of those cases, the same buyers submitted new offers that were significantly better than their first offer! In the third case, the buyer did not submit a new offer but we received two other much better offers that were $50k over the asking price!
This extra enthusiastic market really just started in February and prices have increased a lot since January. So, if you are thinking it might be time to sell or if you would just like to update a 3-month-old market analysis, please contact me today for a no-obligation consultation!
I made a similar post a few years ago as mortgage rates were rising slightly, but low and behold, they then turned lower again. Now, rates have increased noticeably since the election and are forecast to continue to rise, albeit at a moderate pace. So again, I thought I would talk a little about mortgage interest rates and how, as rates rise, affordability decreases. Rates for a 30 year fixed mortgage are currently hovering around 4.25%. Prior to the election, the same 30 year fixed rate averaged 3.50%. According to the Mortgage Bankers Association, rates are projected to hit 5.0% in 2018. If you are thinking about making a move and can’t decide whether to do it this year or next, let’s look at an example of house payments with the different rates.
A $500,000 loan last year at 3.5% would have equaled a monthly principal and interest payment of $2,245. That same $500K loan right now would be $215 more per month at $2,460. A year from now, if the projections hold, that same payment at 5.0% will be $2,684 per month, which is $224 per month more than right now. In other words, it will cost you $2,688 more per year if you wait until next year, and that equals $80,787 over the life of the loan, if you hold it the full 30 years. And while the price of homes may slow from the recent 10% per year rise, we could still easily see an increase of another 5% in sales prices over the next year, thus further decreasing your purchasing power.
First and foremost, it is most important to make a move when the timing is right for you and your family. But if the timing isn’t as critical, you may want to consider making that move sooner than later if you will be financing the purchase with a mortgage.
As 2017 kicks off, I get to celebrate my 15-year anniversary at Windermere! I’m proud to be associated with such a great company, and I’m grateful to be able to work with so many enjoyable, well-educated, and ethical colleagues. In an ever-changing real estate market and political landscape, it’s nice to have some consistency.
To recap the 2016 real estate market in King and Snohomish Counties combined, there were 14% fewer listings during the year, but 6% more homes sold in 2016 than in 2015. Inventory is near all time lows and average days on market is sitting at only 29 days, although most well priced homes sell much faster. The average sales price in our area rose about 8% in 2015 and rose another 11% in 2016 to end the year at $593,000 and $265/sqft.
I do believe the new Trump administration brings some uncertainty, but it may or may not affect the housing market much. Mortgage rates do need to be watched closely though as they have ticked up in the past two months. That is having a real effect on buyer’s purchasing power and some are already feeling pinched if they are searching at the top of their price range. Hopefully, rates don’t rise too far too fast. We are fortunate to live where we do as the Puget Sound economy is doing well and people are still moving here for jobs so I am fairly confident that the current seller’s market will continue through most of this year.
I hope everyone enjoyed our beautiful Pacific Northwest summer! While I've been able to enjoy some of it myself, I've also stayed very busy as the housing market continued to be strong over these past two months. I thought it might be a good time for a market update so below you will find a few data charts for King and Snohomish Counties combined. These charts are a good representation of what's going on in north King and south Snohomish Counties including cities like Lake Forest Park, Kenmore, Shoreline, Bothell, Brier, Mountlake Terrace, and Edmonds.
The inventory of active homes for sale is finally higher than at any point last spring or summer. However, it is still historically low at only 2.2 "months of inventory" which means it technically remains a seller's market. New listings and closed sales fell off a bit compared with July, but pending sales (homes placed under contract) did increase slightly from last month.
This graph shows the pop up in months of inventory to back over 2 months. Will it stay there or fall back down like it did last year going into the fall months?
Sold prices have appreciated very slightly from July to an Average of $466,000. This is up 12.8% compared to last August. More interesting is that the average Active asking price is coming down into more reasonable territory after a somewhat irrational exuberance by some sellers in the spring.
The average dollar per square foot value held basically flat since last month at $210/sqft.
The average selling price as a percentage of the original listing price is holding steady at 99%. There are still many multiple offer situations but that trend is cooling a bit.
The average consecutive days on market remains steady as well at 34 days.
To conclude, the market is still very strong, although it did level off in the late summer. The early fall months typically bring a new crop of buyers and sellers out who want to make a move before the holidays and the end of the year. It'll be interesting to see if that trend holds true once more. Stay tuned!
Is the housing market in a state of rational exuberance? Since the beginning of this year, activity, sentiment, and even prices, have taken a turn for the better. And it does seem that a solid case can be made that the housing market finally bottomed in late 2011 into the beginning of 2012. BUT, let’s not get too far ahead of ourselves and let’s not get too excited that prices are going to skyrocket and go up at a bubble inducing 10% per year again. However, if you look at the past 2 months in King County, “asking” prices are indeed skyrocketing up while sales prices have only increased a modest amount. Take a look at this chart for average For Sale and Sold prices in King County over the past 15 months:
The average listed price (the green line) is currently $693,000. That is up 5.5% over last month alone and up 19.5% from May 2011! The red line is the average sold price and you can see that it has bumped up a bit since the beginning of the year, but it is only up $1,000 from April and is still actually down nearly 2% from last May. Here’s the same chart over the past 9 years:
To me, that recent blip in asking prices seems a bit irrationally exuberant to me, given what we’ve been through. However, if you dive a little more deeply into the numbers, inventory numbers are very low under $500k and staying low up to the $1million mark. So it looks like a good part of this widening of the gap between bid and ask is that the lower priced and more affordable homes are just selling quick and often. Higher priced homes are staying on the market longer and therefore the average price of “for sale” homes is simply a higher average price. If you’ve been looking to buy a home lately, you’ll know that inventory is very tight, to nonexistent, under $500k and when something does come on the market, especially in desirable neighborhoods, it’ll often be met with a bidding war.
It is essentially a sellers market in the Seattle area right now, especially in the lower price ranges. However, that does not mean you can ask 20% more for your home than you could have last year, it just means that you can lean toward the top end of your price range rather than have to settle at the bottom of the range to undercut your nearest competition like we’ve had to do the past few years. Right now, you may not have any competition in your neighborhood because it has all sold.
The moral of the story is that sellers can be rationally exuberant about selling right now, but just don’t be too irrationally exuberant when it comes to pricing your home. The same laws apply: if you price it fair, present it right, and your home is in top condition, you will sell quickly.
So far, the theme of 2012 is that there is definitely a lack of inventory. The housing market has been extremely busy in the low to median price ranges, but the upper middle to higher price ranges are starting to pick up steam too. The fact is, many buyers literally can’t find good homes to buy! Low prices and extremely low interest rates have pulled a lot of buyers off the fence in the first two months of the year. More homes will come on the market as we get into spring but that should be met with more buyers as well. So, it is reasonable to expect brisk activity for at least the next several months.
Since pictures can often tell a better story than words, take a look at this “heat map” for King and Snohomish Counties. It shows how most every MLS area has gone from a “balanced market” with 3-6 months of inventory in February 2011 to a “seller’s advantage” with less than 3 months of inventory as of the end of February 2012. Ignore most of the national news when it comes to housing because real estate truly is local. If you’re thinking about making a move, Call a Realtor with experience who knows your neighborhood to get specific professional advice for your situation.