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Improving housing inventory, rising costs may bring some "normalcy" to Western Washington market

Latest Press Release - April Statistical Data

KIRKLAND, Washington (May 5, 2022) - Rising interest rates and inflation, coupled with slight improvement in inventory, may bring some normalcy to Western Washington's frenzied housing market suggest some brokers with Northwest Multiple Listing Service.

"The Puget Sound housing market has shifted down several levels of hotness in most areas and is more in alignment with the strong market we saw pre-pandemic," stated J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

Commenting on a new Northwest MLS report summarizing April activity, Scott noted a "slight increase" in unsold properties, adding, "Not all homes are selling within the first week on market." He believes the "intensity adjustment means multiple offers will not be as commonplace as they've been in the last two years." He also indicated premium pricing (above asking price) is softening as well. He expects the "normal seasonality in the real estate market will be more pronounced, bringing a bit of normalcy to home buyers and sellers," but believes there will still be an "elevated buyer focus on each new listing."

Last month's sales of single family homes and condominiums across 26 counties in the report had a list price to sales price ratio of 107.8%, which was down from March when it reached a 12-month peak of 108.2%. A year ago, the ratio was 106.6%.

The latest MLS report showed a mix of positive and negative numbers.

Member-brokers added 11,681 new listings of single family homes and condos during April, the highest number since last July when 12,916 listings were added, prompting some upbeat comments: "Did you hear that? It's the sound of happy buyers in all areas other than King County celebrating last month's jump in active listings as it means they now have more homes to choose from," proclaimed Matthew Gardner, chief economist at Windermere Real Estate.

Only two counties, King and Jefferson, had year-over-year drops in inventory. "Unfortunately for King County buyers, the area is still desperate for inventory and competition is as fierce as ever," remarked Gardner.

At month end, the selection of homes and condos in the database totaled 6,514, the highest level since September 2021 when there were 7,757 total active listings.

Notably, the number of new listings (11,681) surpassed the number of pending sales (9,760), to help boost inventory. Pending sales were down about 7.8% from a year ago and down 3% from March.

Commenting on April's improvement in total inventory compared to a year ago, James Young, director of the Washington Center for Real Estate Research at the University of Washington, suggested "This is evidence that interest rates are having a cooling effect on some parts of the suburban market and along the I-5 corridor."

Young also noted a sharp decline in condo inventory in King County from a year ago - down about 35% countywide, with even greater shrinkage in Southwest King County (-49%) and the Eastside (-42%). With limited selection, sales in those areas also plunged, while prices increased. For condos system-wide the median price on last month's sales was $485,000 (up 15.5% from a year ago); in King County, where more than 60% of sales occurred, YOY prices rose 12.6%, from $460,000 to $518,000.

Area-wide prices for single family home sales (excluding condos) in King County also increased, climbing nearly 20% from a year ago, from $830,000 to $995,000.

Closed sales of homes and condos slid from year ago, from 8,791 to 8,344 for a drop of around 5.1%.

"We are starting to see signs of impact from the significant rise in mortgage rates earlier this year, such as an increase in active listings and months of inventory creeping higher, but the full impact will likely not be felt for a few months," said Matthew Gardner, chief economist at Windermere Real Estate.

Commenting on growing inventory of single family homes (up 27% from a year earlier), Young suggested higher priced homes requiring a mortgage "are feeling some heat from recent interest rates."

The NWMLS report shows there was about three weeks (.78 months) of inventory of single family homes and condos combined at the end of April. By this metric, that is the highest level in nearly 18 months. MLS data show there was .80 months of supply in October 2020.

Despite the improving inventory, and in spite of rising interest rates, brokers report brisk activity and are not seeing prices ease much.

"One thing that has not been impacted by rising financing costs is home price growth," Gardner said, pointing to double-digit gains in nearly every county, "including a whopping 27% in Snohomish County, the highest by far in the four-county Puget Sound region."

Dean Rebhuhn, owner at Village Homes and Properties, echoed Gardner's observations. "Even with rising mortgage rates, inflation and high gas prices, the housing market remains strong with prices continuing to increase," he commented, adding, "Inventory is improving in most counties giving buyers more choices and making sellers a little more flexible in considering financing and inspection contingencies." Rebhuhn also reported demand continues to create multiple offers on homes in key locations and on median priced properties.

Gary O'Leyar, designated broker/owner at Berkshire Hathaway HomeServices Signature Properties, also commented on rising rates, suggesting they could present more opportunities for hopeful buyers that have been shut out of the previous market. "It may seem contrary to good news for prospective home buyers, but the increase in interest rates may have a positive side. We are seeing signs that the peak 'zeal' of the competitive offer frenzy may be leveling off a bit. While we might have seen 10 offers on an active listing, now we may see only five, or sometimes fewer."

O'Leyar is not expecting a dramatic change in the regional market but believes there could be a "leveling off" from the double digit-plus year-over-year appreciation.

Another industry leader, John Deely, also reported high demand, saying increases in interest rates "haven't appeared to cool off the market quite yet." Deely, executive vice president of operations at Coldwell Banker Bain, pointed to statistics for single family homes, noting total residential inventory in April was up in every county served by NWMLS except Jefferson - "and up by double digits in every county except three: Clark, Jefferson and San Juan."

"Median prices on single family homes have been skyrocketing so far this year with prices for sales in King County just shy of $1 million in April," he remarked, noting that figure reflects an increase of more than 28% (+$220,000) since January.

Brokers in Kitsap County report robust activity in all areas. "Kitsap sales remain brisk as we increase inventory and sales," reported Frank Leach, designated broker-owner at RE/MAX Platinum Services.

Open houses are attracting "huge turnouts," with accepted offers averaging 6.2% over asking prices.

The MLS report shows listings of homes and condos in Kitsap County are up nearly 36% from a year ago. Pending sales improved 6.9% YOY, with closed sales climbing 9.4%. The median price has increased more than 15% from twelve months ago, from $485,000 to $558,500.

Leach said new construction in Kitsap County is "racing forward" in all residential sectors. He described land sales as "flying off the shelf," but detected a softening of condo prices (down about 10% YOY) as inventory improved to 1.5 months of supply at month end.

Young singled out the South Puget Sound region encompassing Lewis, Mason, and Thurston counties as showing some of the best values in median house prices. NWMLS figures show the median price of sales during April in Lewis County was $389,000; in Mason County it was $420,000; and in Thurston County it was $510,000. "It will be interesting to see how interest rates influence these markets as the search for value among first time buyers continues," he remarked.

With mortgage interest rates drifting upward in anticipation of the Federal Reserve's hikes in its baseline interest rate, some brokers recommend quick action by prospective home buyers.

"We will not likely see interest rates back to 3%. Never before has it been more important to get pre-approved and get serious about finding a home as now," stressed Leach.

"Owning real estate is a hedge against rising inflation," emphasized Gardner, the Windermere economist. "Homeowners with a fixed rate mortgage will always have the same monthly payment, even as other costs rise," he explained.

Lawrence Yun, chief economist at the National Association of REALTORS, noted affordability "greatly worsened" in the first quarter of 2022, pointing to sustained price appreciation and higher mortgage rates. NAR reported the monthly mortgage payment on a typical existing single family home with a 20% down payment rose $319, or 30%, from one year ago, to $1,383.

Yun said price declines are "unlikely," but he expects "more pullback in housing demand as mortgage rates take a heavier toll on affordability. Declining affordability is always the most problematic to first-time buyers who have no home to leverage, and it remains challenging for moderate-income potential buyers as well."

Northwest Multiple Listing Service is a not-for-profit, member-owned organization that facilitates cooperation among its member real estate firms. With more than 2,500 member firm offices and 32,000 brokers across Washington state, NWMLS (www.nwmls.com) is the largest full-service MLS in the Northwest. Based in Kirkland, Washington, its service area spans 26 counties, and it operates 21 local service centers.

Single Fam. Homes + Condos

LISTINGS

PENDING SALES

CLOSED SALES

MONTHS OF INVENTORY

New Listings

Total Active

# Pending Sales

# Closings

Avg. Price

Median Price

This month

Same mo., year ago

King

4,199

2,108

3,356

3,060

$1,130,168

$880,000

0.69

0.65

Snohomish

1,804

822

1,489

1,284

$882,596

$800,000

0.64

0.49

Pierce

1,773

871

1,580

1,413

$628,415

$564,000

0.62

0.47

Kitsap

564

304

483

430

$703,519

$558,500

0.71

0.57

Mason

160

104

143

99

$485,918

$420,000

1.05

0.89

Skagit

235

168

199

147

$646,267

$592,500

1.14

0.87

Grays Harbor

183

201

181

135

$383,813

$355,500

1.49

1.00

Lewis

164

130

141

123

$412,444

$389,000

1.06

0.77

Cowlitz

165

102

170

121

$403,495

$385,000

0.84

0.59

Grant

122

95

128

105

$364,202

$349,900

0.90

0.91

Thurston

600

278

546

413

$557,967

$510,000

0.67

0.49

San Juan

51

68

31

18

$1,038,058

$817,000

3.78

1.91

Island

207

115

174

136

$738,164

$567,500

0.85

0.62

Kittitas

123

92

81

51

$841,791

$535,000

1.80

1.05

Jefferson

75

49

57

41

$666,180

$598,000

1.20

1.16

Okanogan

79

97

55

39

$384,990

$371,500

2.49

2.59

Whatcom

473

294

367

267

$622,064

$585,000

1.10

0.86

Clark

118

56

103

82

$555,475

$500,000

0.68

0.60

Pacific

83

86

67

50

$340,880

$317,000

1.72

0.66

Ferry

19

26

7

7

$261,900

$255,000

3.71

2.67

Clallam

100

88

95

86

$496,812

$420,500

1.02

0.98

Chelan

127

125

92

90

$713,911

$604,000

1.39

1.30

Douglas

61

47

60

43

$506,689

$449,900

1.09

0.59

Adams

18

20

23

8

$280,410

$297,728

2.50

1.00

Walla Walla

88

66

67

49

$429,856

$381,000

1.35

0.83

Columbia

13

12

9

5

$268,800

$267,000

2.40

1.60

Others

77

90

56

42

$477,261

$438,110

2.14

2.25

Total

11,681

6,514

9,760

8,344

$833,354

$659,950

0.78

0.64

4-county Puget Sound Region Pending Sales (SFH + Condo combined)

(totals include King, Snohomish, Pierce & Kitsap counties)

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2003

4746

5290

6889

6837

7148

7202

7673

7135

6698

6552

4904

4454

2004

4521

6284

8073

7910

7888

8186

7583

7464

6984

6761

6228

5195

2005

5426

6833

8801

8420

8610

8896

8207

8784

7561

7157

6188

4837

2006

5275

6032

8174

7651

8411

8094

7121

7692

6216

6403

5292

4346

2007

4869

6239

7192

6974

7311

6876

6371

5580

4153

4447

3896

2975

2008

3291

4167

4520

4624

4526

4765

4580

4584

4445

3346

2841

2432

2009

3250

3407

4262

5372

5498

5963

5551

5764

5825

5702

3829

3440

2010

4381

5211

6821

7368

4058

4239

4306

4520

4350

4376

3938

3474

2011

4272

4767

6049

5732

5963

5868

5657

5944

5299

5384

4814

4197

2012

4921

6069

7386

7015

7295

6733

6489

6341

5871

6453

5188

4181

2013

5548

6095

7400

7462

7743

7374

7264

6916

5951

6222

5083

3957

2014

5406

5587

7099

7325

8055

7546

7169

6959

6661

6469

5220

4410

2015

5791

6541

8648

8671

8620

8608

8248

7792

7179

6977

5703

4475

2016

5420

6703

8130

8332

9153

8869

8545

8628

7729

7487

6115

4727

2017

5710

6024

7592

7621

9188

9042

8514

8637

7441

7740

6094

4460

2018

5484

5725

7373

7565

8742

8052

7612

6893

6235

6367

5328

4037

2019

5472

4910

7588

8090

8597

8231

7773

7345

6896

6797

5788

4183

2020

5352

6078

6477

5066

7297

8335

8817

9179

8606

7934

6122

4851

2021

5216

5600

8002

7716

8674

8824

8049

8586

7880

7405

6022

3943

2022

4405

5560

7312

6908









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