Real estate brokers expected some seasonal slowing during November, but last month’s falloff was less than what some industry veterans anticipated. Members of Northwest Multiple Listing Service reported 6,522 pending sales last month — the highest total for November in six years.
“The market is done with needed correction,” declared one broker (who did not want to put their name on the quote for fairly obvious reasons).
New figures from the MLS show last month’s pending sales rose 6.9 percent compared to a year ago, and was the best November for mutually accepted offers since 2006 when members tallied 7,022 pending transactions. As expected, the volume dropped from October’s total of 8,312 pending sales.
Closed sales and selling prices both rose during November versus a year ago, while the selection continued to shrink.
“There continues to be extremely low inventory levels and high buyer demand which is causing multiple offers in many local areas,” reported OB Jacobi, president of Windermere Real Estate. He also noted a “definite uptick” in the number of cash buyers, “many of which are investors.”
Commenting on the expected dip in activity, Jacobi, a member of the Northwest MLS board of directors, said it “was less than we usually experience during this time of year.” Based on the current combination of sparse inventory and high buyer demand, Jacobi said those who are considering selling are encouraged to “list their homes sooner rather than later” in order to take advantage of unique market conditions.
MLS members across the 21 counties in its service area added a paltry 5,315 new listings to inventory last month. That compares to 6,043 additions for the same month a year-ago. Notably, both the number of pending sales (6,522) and closed sales (5,333) outgained new listings, contributing to a market imbalance. Inventory, which typically shrinks during the holidays, totaled 21,042 active listings, plummeting more than 31 percent from twelve months ago when the selection included 30,650 listings. Condo inventory is at half the year-ago levels.
Northwest MLS director George Moorhead said many buyers are complaining about the “limited quality inventory,” prompting “aggressive multiple offers on well priced homes.” Moorhead, the branch manager at Bentley Properties in Bothell, cautioned there is still a huge shadow inventory of bank owned homes, but he expects they will be put on the market “at a trickle to mitigate any adverse impact on the market.”
System-wide prices on last month’s 5,333 closed sales of single family homes and condos jumped 14.9 percent from a year ago, the largest year-over-year increase since July 2006 when prices surged 15.5 percent. Twelve counties reported double-digit gains in the number of closed sales compared to the same month a year ago.
Area-wide, the median sales price on last month’s closed sales of single family homes and condominiums was $258,500. Last month’s price gains on these closings were led by Jefferson County (up 26.2 percent), Grant County (up 23.5 percent) and King County (up 21.8 percent).
Single family homes sold last month for a median price of $269,000, while condos fetched $185,000.
In King County, single family homes that closed during November commanded the highest price at $385,000 (up 19.7 percent), edging out San Juan County’s median selling price of $375,000.
Frank Wilson, another MLS director and the branch managing broker at John L. Scott Real Estate, described the current market as “the best of most worlds: low interest rates, a supply of homes to choose from that are aggressively priced, and lenders who are beginning to engage in ‘make sense’ loans.”
Moorhead noted short sales are up significantly from two years ago “and now outpace bank owned (REO) listings,” prompting outreach to hesitant sellers. “We all have a call out to sellers who are on the fence to remind them this is the first ‘sellers market’ we have seen since 2007. This also means sellers who were on the edge of being in a short sale situation may actually be on the positive side of the ledger,” he added.
Commenting on the recent uptick of investors and cash buyers, Jacobi said there is good reason for that. Following a prolonged decline, real estate investors are usually the first to re-enter the market. “This is because investors are generally less concerned with timing the bottom of a market perfectly and more focused on the longer term financial benefits,” he explained, adding, “ Many investors also believe their cash is better invested in real estate than money market accounts, where it might actually be losing money given the current rate of inflation.”
Wilson echoed Jacobi’s assessment. “With the population of renters expected to grow for the next 3-to-5 years, now is a good time to buy a rental and let someone else make the payments,” he stated, adding, “With so many people having lost their homes and now having marred credit, they will become renters for the next few years as they get their foreclosure, short sale or bankruptcy behind them.”
Northwest MLS director Darin Stenvers believes the market is done with needed correction, saying “the bottom has come and passed. We are seeing some new loan programs designed to help first time home buyers that have low debt, strong income and high credit scores,” he remarked. Stenvers, the office managing broker at John L. Scott in Bellingham, said these programs should help consumers benefit from a loosening of lending guidelines, leading to more closed applications and fewer failures of existing transactions. “Now is a great time for buyers and investors,” he exclaimed.
Looking ahead, several MLS directors expect the recovery to continue:
- George Moorhead: “We are seeing some well-deserved price stabilization, and consumer confidence has been on the rise since first quarter.”
- Frank Wilson: “To have this kind of market momentum going into 2013 is very exciting. Provided we don’t fall off a ‘fiscal cliff’ we should have a good year in real estate.”
- Darin Stenvers: “Buyers should be considering their purchase as an investment. If they see a home that fits 75-80 percent of their criteria they should strongly consider that purchase and pull the trigger. Foot dragging or shooting out lowball offers is leaving many empty handed.” Noting “the perfect storm has been brewing,” Stenvers said existing homes sales are on pace with 2003-2004 ( pre-bubble) volume “but we are enjoying interest rates that are 1.25 to 2 percent lower.”
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.