KIRKLAND, WA, August 6, 2009 – Most numbers are "moving in the right direction," close-in Seattle neighborhoods are definitely coming to life and move-up buyers are re-entering the market were among observations by brokers when asked to comment on the latest activity report from Northwest Multiple Listing Service.
The report shows July's pending sales increased from a year ago, as did closed sales, and inventory continues to shrink. Prices on sales that closed during July still lagged figures of a year-ago (down about 10 percent area-wide) and NWMLS members said last month's record-setting temperatures "absolutely impacted showings and sales."
July's unseasonably hot weather curtailed activity for several showings and open houses, as brokers and agents said buyers and sellers postponed tours, saying it was just too hot.
"The hot July weather aside, the variable results we saw in July reflect what we'd typically expect from a recovering housing market – a few steps forward for some areas, a step back in others," said Ron G. Sparks, managing vice president of Coldwell Banker Bain. Whereas comparisons to a year ago reflect some substantial gains, on a month to month basis we're probably going to experience some "spongy" results for a while, he explained.
For example, brokers reported 7,279 pending sales (mutual acceptance of a purchase and sale agreement) last month, up from the year-ago total of 6,350 sales for a 14.6 percent gain. Compared with June, the volume slipped about 5.9 percent, dropping from 7,733 to 7,279 transactions.
In the four-county Puget Sound region (King, Kitsap, Pierce, and Snohomish), July's pending sales of single family homes and condominiums jumped 21.2 percent from twelve months ago, but dipped 6.9 percent from the previous month. Nonetheless, last month's 5,551 pending sales for the region marked the second-highest monthly total since August 2007.
Pending sales of condos (excluding single family homes) rose nearly 12.5 percent last month from a year ago. That continued June's modest gain of 1.3 percent, when 22 months of negative year-over-year comparisons ended. Last month's increase was the first double-digit gain since February 2007.
"I'm excited to see the continued increase of pending sales because these figures are the lead predictor of buyer behavior," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. "The rise of pending sales over the past few months is the best indication we have of what's to come and I am encouraged by what we're seeing," he added.
Brokers say first-time buyers who are motivated by a looming deadline for the tax credit are propelling activity. "There seems to finally be a feeling of urgency to take advantage of this program before it goes away," remarked NWMLS director Meribeth Hutchings, broker/owner of Windermere Real Estate/ Lake Stevens.
In an effort to keep agents and their clients focused on the time remaining for the $8,000 tax credit opportunity, Sparks said his company has a clock prominently displayed on its internal website that ticks down the days, minutes and seconds until the midnight deadline on Nov. 30. He also commented on the secondary benefits of the credit. "My daughter just closed on her first home, and she intends on using the tax credit for household items she'll need as a new homeowner. She's excited to buy her first lawn mower…good for her, good for housing, and good for the economy," he stated.
Commenting on the tax credit, NWMLS director Dick Beeson said first time homebuyers are "getting it. All they talk about is the $8,000 tax credit and how good interest rates are."
Beeson, the broker/owner of Windermere Commencement Associates in Tacoma, said with the exception of prices, the numbers are all moving in the right direction. "Inventory is adjusting down, even though it is summer, pending sales are moving up, and even more importantly, closed sales are above last year." Those numbers are a sign of a "modest, modest recovery," according to the 30-year veteran of the real estate profession.
NWMLS members added 11,481 new listings to inventory during July, 1,612 fewer than during the same month a year ago. At month end, there were 42,310 active listings of single family homes and condominiums in the MLS database, down 18 percent from a year ago. Twelve of the 19 counties in the MLS reported double-digit shrinkage in inventory.
MLS brokers reported a system-wide total of 5,527 closed sales for the month of July, an increase of 256 transactions from a year ago for a 4.9 percent gain. The median selling price for those closings was $279,000, down 10 percent from the year-ago price of $310,000. Among the 19 counties served by NWMLS, the price changes from a year ago ranged from a 25.1 percent increase in Okanogan County to a 17.8 percent decline in Cowlitz County.
For the four-county Puget Sound region, the median selling price for last month's completed sales of single family homes (excluding condos) was $314,000, about 13.5 percent less than the year-ago price of $363,000.
"After almost two years of relative calm, the close-in Seattle neighborhoods have definitely come to life in a major way," remarked Mike Skahen, owner/broker at Lake & Co. Real Estate, Inc., in Seattle and a member of the NWMLS board of directors. He described open house traffic as "very strong" with a typical home drawing 20 to 50 buyers.
Multiple offers are once again becoming common on well-priced quality listings, according to Skahen. Although noticeable during the past few months for homes priced under $450,000, he said there are now instances of competition at higher price ranges. A recent listing of a Wallingford bungalow priced at $550,000 drew eight offers, which Skahen said is a "good indication the trade up buyers have finally decided that prices have bottomed out, so after waiting too long they are now competing for fewer listings."
Skahen also said the tax credit has created such strong demand for starter homes that those sellers now realize they actually gain more by trading up in this market because they save more on their trade-up home and there is good demand for the home they're selling.
Skahen also said the tax credit has created such strong demand for starter homes that those sellers now realize they actually gain more by trading up in this market because they save more on their trade-up home and there is good demand for the home they're selling.
On a cautionary note, Skahen said there is very likely to be a shortage of homes and townhouses in some Seattle neighborhoods by next year. "New construction has almost ground to a halt because builders can't get prices that even cover construction costs," he reported.
Hutchings, whose office is in Snohomish County, said they're also seeing move up buyers re-entering the market. "They understand even if their current home has lost value, their new home will also offer them a greater savings. That, along with low interest rates, make it a great time to buy up," she emphasized.
Beeson said the transition from a buyers' market to a sellers' market is occurring in, "of all places," the foreclosure market. "Banks are pricing many homes slightly under market value and watching multiple offers come in, bidding up the price. What a change that is," he exclaimed, while noting he hopes the next wave of foreclosure homes coming on the market later this year will finally flush out the remaining inventory and "we'll get back to a more normal market."
Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes approximately 27,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties in western and central Washington.
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David J Edwards
Real Estate Agent & REALTOR
The David J Edwards Team
Keller Williams Realty Southeast Sound
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