Seattle Housing Inventory

Normally we see a pretty nice little bump in inventory in September, however, I’m not entirely sure that’s going to happen again!  We saw a HUGE run up in Seattle inventory between April and late June (about an 80% increase in inventory during that time), however, since peaking in August we’ve been on a pretty sharp decline in overall inventory levels.  That doesn’t mean things won’t start hitting the market in late September like they normally do, this early decline in inventory is merely representative of the gigantic build-up of buyers still looking for a home, and refocusing on their search now that Summer and Labor Day are over.

With the recent decline in overall inventory, we’ve also seen the median priced home in Seattle tick back upward from $699k in late August, to $722k this past week.  Please note, the Seattle median price home peak for the year was set in mid May at $777,475.  It will be interesting to see whether or not prices continue to increase throughout fall and winter, and then increasingly so next spring; versus what normally happens where prices remain steady until January when they start skyrocketing. 

In the end, it looks like the stage is being set for an even more competitive market next year with inventory levels plummeting earlier than normal as Fall’s buyer-pool snatches up homes more fiercely than ever before. 

Happy Investing!

Today's market report courtesy of Kyle Bergquist, Guild Mortgage

No Holiday Breather

NWMLS Monthly Press Release

Real Estate Brokers Expect No Holiday Breather

Pending sales of homes hit an all-time high for the month of November according to the latest statistics from Northwest Multiple Listing Service. The report covering 23 counties around Washington state also shows the number of new listings added during the month plunged to the lowest level in 11 months, prompting MLS leaders to predict a busy winter for residential real estate as buyers compete for the smallest inventory since March.

Figures for November show a 13.2% drop in inventory of single family homes and condominiums, a9.4% gain in pending sales, a 31.3% spike in closed sales, and an 11% increase in prices compared to the same month a year ago.

Pending sales (mutually accepted offers) totaled 8,217, and eclipsed the number of new listings (5,779) by 2,438 units. That imbalance depleted total inventory, dropping the number of active listings to 13,303, down 13.2% from a year ago.

The median price on last month’s closed sales of single family homes and condominiums area-wide was $342,000, up 11% from the year-ago figure of $308,000. August was the only other month this year with year-over-year double-digit appreciation for prices area-wide.

Prices for single family homes (excluding condos) rose 10.9 % from a year ago to $350,500. King County reported the highest median price for single family homes at $550,000 (up 10 % year-over-year).



Happy Investing!

New Highs for Seattle Real Estate

Median list price in Seattle proper is now almost $730,000. Just think, last year around this time median list price was around $550,000. For all you non-math majors out there, that's a 32.72% increase year over year. Good grief.

Despite the ridiculous appreciation rates over the last couple years, Zillow still ranks Seattle as being in the top 10 for home-ownership nationwide.

Yet despite the appreciation rates of single family residences in Seattle, condos have not appreciated at the same rate over the last year, and therefore there are opportunities for new homeowners to stake their claim in the Seattle housing market. If you've driven around Seattle lately you know that there are plenty of new apartment buildings going up to accommodate the influx of tech transplants. With all the apartments being built, condo prices have remained a little more in check than single family homes. Reason being: The cost to purchase a condo needs to be similar to the cost of renting, because renting an apartment and buying a condo essentially provide the same standard of living. Given this, you cannot have skyrocketing rents and declining condo pricing, or vice versa. Single Family Homes are making all the headlines, but for those of you just looking to make a place your own, check out a condo...not quite the same story in the condo market as the SFR market.

Happy Investing! 

Today's blog courtesy of Kyle Bergquist, Guild Mortgage

 

Zillow Summit

I attended my third Zillow Premier Agent Summit yesterday at the Washington State Convention Center. Zillow has been one of my primary marketing tools, ever since it began the Premier Agent program. I receive both buyer and seller leads from it in my hottest zip code choices. Reviews are critical to my success as a Zillow agent. If you are a faithful reader of this blog, a tenant or client of mine, do me a favor and write a nice review here!

One thing that has always impressed me about the Summits is the accessibility of Zillow's top leadership. Zillow CEO Spencer Rascoff always opens the Summits with his overview of the strides that Zillow has been making recently. Zillow is now just one brand of the Zillow Group, the nation's largest real estate online marketplace, with acquisitions of Postlets, Easy Street, Trulia, and most recently Naked Apartments. Zillow has invested heavily in mobile applications, and that has paid off handsomely, as 2/3 of all real estate searches are now made online. Zillow is the number one real estate website both nationally and locally, here in Seattle.

Zillow has also invested in television advertising, and partnerships with other impressive real estate media such as HGTV and Leju, the largest Chinese real estate website. So Zillow's marketing directs a lot of both national and foreign investment to its websites and to its premier agents. Zillow is fueled by leads from numerous national brokerages and over 400 Multiple Listing Services - but surprisingly, not the NWMLS which is located in its own home town.

The Summits provide a lot of opportunity for networking, for learning more about agent tools and resources, for hearing from other brokers, and for getting a Zillow update on the health of the national and local real estate markets.

Zillow's senior economist Dr. Skylar Olsen presented the following stats about the housing market: Nationally, the housing market is within 6.4% of peak housing values; in the three-county Seattle metro area, we are just 3% below the 2007 peak. Housing prices within Seattle proper saw a 13% increase in just the last 12 months. This is a very hot seller's market, with unusually low inventory - and Olsen listed several reasons for this phenomenon. She believes that new construction will help resolve the inventory imbalance, albeit slowly.

At the moment, homeowners in Seattle are spending 22% of their income on mortgage payments, while renters are spending 32% of their income on rent. One could argue that mortgages are more affordable than they have been for many years (but I am not convinced). 22% of all first-time homebuyers are using gifts of funds to come up with the necessary down payment to purchase a home. And lower-income, working class households are willing to live further out in an effort to find housing affordability. In Seattle, this may mean living over 20 miles from their job locations for 21% of all local commuters!

The median home price in Seattle now stands around $530,000.

According to Olsen, some of the best "buyers markets" in the Puget Sound are in locations like Spanaway, Orting, Puyallup and Gig Harbor.

Savvy real estate investors will want to pay attention to these trends. Thank you, Zillow, for sponsoring yesterday's Summit!

Happy Investing!

NWMLS Stats

Depleted inventory is contributing to “overwhelming” traffic at open houses, shifts in strategies for both buyers and sellers, and escalating prices, according to officials with the Northwest Multiple Listing Service.

The latest figures show a drop of nearly 28 percent in the number of active listings in the MLS database compared to a year ago. Members added 6,670 new listings during the month across 23 counties in the MLS service area. That’s down nearly 4.6 percent from twelve months ago. At month end, members reported 12,357 active listings, which compares to 17,082 at the end of January 2015.

Measured another way, there is just under 2.5 months of inventory which compares to 3.8 months the
MLS reported for January 2015. Supply was especially tight in King County, at 1.4 months of inventory, and Snohomish County, with just under 1.6 months.

Condo inventory (excluding single family homes) fell sharply, from 1,793 active listings a year ago to last month’s total of 1,145 at month end, a plunge of 36 percent. In King County, the inventory of condos dropped 42 percent.

For the area overall, there is just 1.7 months of condo inventory, with Snohomish County reporting the tightest supply (1.1 months) followed by King County (1.2 months).I have a current listing for a one-bedroom condo in Lake Forest Park for $165,000 (see last week's blog). We have already received one offer, and there seems to be quite a bit of interest in it.

The inventory shortage took a toll on last month’s sales. The number of pending sales (mutually accepted offers) fell about 5.3 percent area-wide during January, although half the counties in the report tallied increases compared to a year ago. The 5.3 percent drop marked the first negative change in year-over-year comparisons since April 2014.

Member brokers reported 7,253 pending sales last month, down from 7,658 for the same month a year ago.

A strong fourth quarter in 2015 is reflected in January’s closed sales of single family homes and condos (combined), which rose 11.6 percent from a year ago. Members reported 4,985 completed transactions; a year ago, they tallied 4,467 closings. The year-over-year median price on these sales increased 7.5 percent, rising from $279,000 to $300,000. Ten counties reported double-digit gains.

Single family home prices (excluding condos) jumped 7.6 percent from a year ago for the area overall.

For the four-county Puget Sound region, the median price for a single family home rose 12 percent, from $325,000 a year ago to last month’s figure of $363,975. Snohomish County reported the largest increase at 16.6 percent. A comparison of prices by county shows King County tops the chart with a median sales price of $490,970, up 11.2 percent from a year ago.

Condo prices spiked 16.3 percent from a year ago, rising from $219,900 to $255,750. Which is why the Lake Forest Park condo listing is such a bargain.

And bargains are hard to find in this market...

Happy Investing!

Record-breaking Home Sales

Members of Northwest Multiple Listing Service reported 88,331 closed sales during 2015, outperforming the prior year’s volume of 77,276 transactions for a 14.3 percent increase.

Measured by dollars, last year’s sales of single family homes and condominiums were valued at more than $34 billion. Compared to 2014, that dollar volume represents a gain of nearly 23 percent.

Last year’s completed sales included 75,975 single family homes (about 86 percent of the total) and 12,356 condominiums. The total units and dollar volume surpassed the previous highs during 2007 when members registered 82,197 sales valued at $32.3 billion.

Year-over-year prices for single family homes (excluding condominiums) increased almost 8.5 percent system-wide, rising from $295,000 in 2014 to last year’s median price of $320,000. Condo prices jumped 13.3 percent, from the 2014 figure of $225,000 to last year’s median selling price of $254,900.

During 2015, the average area-wide supply, as measured by months of inventory, fell to 2.4 month, down from the previous year’s figure of 3.5 months. King County had the lowest level, averaging only 1.3 months of supply. Industry analysts tend to use a 4-to-6 month range as an indicator of a balanced market, favoring neither buyers nor sellers.

Among other highlights in its annual compilation of statistics, Northwest Multiple Listing Service reported:

• About 46 percent of last year’s single family home sales had three bedrooms, while the vast majority of condos (73 percent) had two bedrooms or fewer.

• The median price for a 3-bedroom home that sold in 2015 was $283,250, about 7.9 percent higher than the previous year’s figure of $262,500. 

• Of the condo sales, about six of every 10 (61.9 percent) were located in King County, primarily in Seattle or on the Eastside. That ratio matched the figure for 2014.

• Newly built condos fetched higher prices than single family homes. Last year’s sales included 8,548 newly built single family homes that sold for a median price of $425,000, and 1,018 condos that sold for a median price of $449,950.

Structural Shifts in Housing

BloombergTV Asks: Is U.S. Housing on Solid Ground? In Conversation with Marcus & Millichap’s Hessam Nadji:

	Why construction levels are falling short of housing demand
	Will renters buy houses, or has there been a structural shift?
	How millennials' housing preferences are reshaping the market
	Key housing market gauge suggests economic expansion should continue
	Apartment investments - why investors still see opportunity

Watch the interview here.

Lots of interesting new trends in the housing market! And what does this mean for Seattle?

Forbes lists the Seattle market as the 16th most overpriced city in 2015:
Seattle, Wash. MSA: Seattle-Bellevue-Everett, WA
Median Income: $86,027
Q4 2014 median sales price: $360,000
Housing affordable at median family income: 51.2%
Cost Above National Average: Groceries: 5.8%; Utilities: -4.1%; Transportation: 9.8%; Health: 18.7%; Misc.: 8.9%

As of this date, it looks like the Socialist incumbent on Seattle City Council has won re-election, based on her platform of affordable housing, rent control and living wages. Savvy investors will want to follow these trends to see how they play out in the real estate market.

Happy Investing!

Expired Listings

Many real estate investors like to look for expired listings, those properties that have not sold in this hot Seattle housing market. How to find the right one? Let's look at some stats.

614 listings expired on the NWMLS at the end of October. 98 were in King County; 33 were in Seattle.

11 of those in Seattle were rental listings. Of the remaining 22, five were condominiums. The median asking price of the remaining 17 expired Seattle listings was $600,000 for a four-bedroom, 2.5-bath house with 2460sf ($243.90/sf). The houses that sold in the past two weeks were priced lower at $549,500 for a more popular three-bedroom, two-bath size of 1850sf.

Only three of the five expireds in Seattle has three bedrooms, and only one of the five is owned free and clear. Eight of the 22 have a square footage within 500sf of the median size of the sold comps. Two of these are owned free and clear. One was priced over $700,000 and the other was just over $400,00.

Can you see how an investor, looking for free and clear property could quickly narrow down the list of possibilities? Pricing and location will make a difference to the offers on each. These two homeowners may or may not be willing to entertain a reasonable offer, but these are the ones that an investor might want to consider.

How would an offer be structured?

There might be several scenarios. Option one might be a full price offer without the seller having to pay real estate commissions, with 0% down and payments spread out in equal installments over thirty years. Option two might be a reduced price, with some small down payment, and the balance over thirty years. Option three might be a lower price, with a down payment and the balance with interest over thirty years. And the fourth option might be either all cash or a still-lower price amortized over thirty years.

Play around with it, and see what works for your Seller.

Happy Investing!

Huge Price Gains

I reported in an earlier blog this week that Seattle median home prices reached $560,000 in August of this year. Metro King County's median price was $500,000.

Two years earlier, according to a Zillow report from September 2013, the peak Zillow Home Value Index (basically, median home price) for a Seattle metro home was $379,200. This is more than a 32% increase over a two year period.

These price points make it very difficult for investors and first-time home-buyers to acquire property, even with current low interest rates. Affordability is such an issue in the Seattle area, that it is a major part of the local political discussion.

Bubble prices, anyone?

Happy Investing!

Seattle Median Home Prices

Single family homes in King County sold in August for a median price of $499,950, just below the figure of $500,000 the MLS reported in June, believed to be an all-time high for the monthly reports. Year-over-
year prices for this market segment jumped 14.4 percent.

The median home price in the city of Seattle was $560,000 for a 3 bedroom, 2 bath house, which sold in just 8 days on market.

In King County, the volume of condo sales was up nearly 21.7 percent. Median prices increased 19.7 percent from a year ago, rising from $249,950 to $299,250.

Bubble prices?

Happy Investing!

Seattle Housing Inventory

There are currently 682 active listings for single family homes for sale in the City of Seattle. 384 of these have been on the market for more than 30 days, which means that 44% of current listings have been on the market less than 30 days.

There have been 757 sales of single family homes in Seattle in the last 30 days, greater than the entire inventory that is currently available in all price ranges. 301 homes sold in the last two weeks. Of these, the median home price was listed for $525,000 and sold for $585,000. Half of these homes sold in less than seven days.

Are we in a bubble, Seattle? What do you think?

Happy Investing!

King County Real Estate Trends

The top 5 areas within King County* that have had the greatest numbers of real estate transactions in the first half of 2014 are:


1)Kirkland/Redmond with 911 residential resale transactions
2) West Seattle at 765
3) Bellevue with 732
4) South Seattle with 711
5) Kent with 673

Adding together the Seattle neighborhoods of Ballard (49), Capitol Hill (38),Leschi and Madrona (118), Green Lake/ U District (645),Madison Park (140), Magnolia(164), Mt Baker (157), Northgate (193), Queen Anne (142), South Seattle and West Seattle yields a total of 3122 transactions. This makes the City of Seattle the greatest in terms of numbers, but breaking the stats down by neighborhood allows us to see which areas of Seattle are most active. Seattle represents 29% of all residential sales in King County in the first half of 2014.

In terms of median prices for house sales in the first half of 2014, the top 5 areas in King County are:
1) Mercer Island at $1,100,000
2) Madison Park at $904,300
3) Capitol Hill at $813,750
4) Queen Anne at 795,000
5) Magnolia at $695,000

All of these areas were well above the King County median house price of $420,000.

The 10 least expensive places to buy a single family house in King County in 2014, based on median house prices, were:
1) East County at $200,000
2) Seatac at $224,500
3) Auburn at $233,489
4) Federal Way at $245,000
5) Normandy Park at $255,600
6) South Seattle at $256,000
7) Milton at $257,500
8) Kent at $259,500
9) Enumclaw at $260,000
10)Tukwila/Burien at $265,500

These areas have seen a 13% average appreciation in price compared to the same period in 2013; while King County as a whole has appreciated an average of 6%. The trend is clear, that as house prices increase, home buyers and investors look for value in less expensive areas of King County.

Happy Investing!

*Data from Data Data Inc.