Home Prices Still Rising in Western Washington, Defying National Trends
KIRKLAND, Wash. (Aug. 7, 2006) – Contrary to trends in many parts of the U.S., home prices in Western Washington continue to rise, even in the wake of growing inventory and fewer sales.
The latest report from Northwest Multiple Listing Service, which tracks activity in 17 counties, shows prices rose 15.5 percent for July’s sales compared to the same month a year ago. That figure – the sharpest gain for any month so far this year — includes single family homes and condominiums. For single family homes only, the increase was 14 percent, while prices for condominiums that sold last month jump 20 percent from a year ago.
Pending sales (offers made and accepted, but not yet closed) fell 13.9 percent last month compared to a year ago. Most counties reported double-digit drops.
Brokers attribute the slower sales to a combination of factors, including July’s heat wave, which brought 12 days of temperatures above 80 degrees in the Seattle area. Vacationing agents, buyers and sellers also contributed to slower activity. Uncertainty about interest rates and inventory shortages in some price ranges were also factors. In King County, for example, only about 7 percent of the current offerings of single family homes is priced under $300,000.
Noting the snapshot of the current housing market shows both prices and inventory are up compared to a year ago, J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, emphasized the importance of keeping those figures in perspective.
“One year ago, King County had only 1.7 months supply of housing inventory available; today we have approximately 2.3 months of available inventory. While this represents an increase, we are still well below the national average of 5 to 6 months. This is especially true in the markets close to the job centers where competition and demand for homes are still strong, causing prices to continue to appreciate at a steady pace,” Scott observed.
Eleven of the 17 counties in the NWMLS market area reported price hikes of 15 percent or more when comparing last month’s sales to July 2005. In the four-county Puget Sound region, Snohomish County notched the sharpest price increase at 18.2 percent.
July marked a definite change in pace from previous months, according to Northwest MLS director Dick Beeson. While many people took the month off to enjoy the sun, Beeson said the most telling statistic for Pierce County is the surge in inventory, which is up almost 53 percent from a year ago.
“It’s like a buyer woke up from a five year nightmare of no presents under the Christmas tree and discovered a tree brimming with choice gifts,” said Beeson, the broker at Windermere Real Estate/Commencement Associates in Tacoma. With an abundant selection, buyers are now picking and choosing, he remarked.
Area-wide there are about 9,000 more listings now than at this time a year ago. Five counties (Island, Kitsap, Pierce, Skagit and Thurston) reported inventory increases of 50 percent of more from twelve months ago. At month-end, NWMLS brokers represented 31,910 active listings of single family homes and condominiums; a year ago, there were 22,839 listings.
D’Ann Jackson, president of the Seattle-King County Association of Realtors® and the broker at John L. Scott’s Mercer Island office, expects the market will continue to level out. Commenting on the slower sales, she said “I think buyers who entered the market a little later this spring eight bought already or got frustrated with the lack of inventory and multiple offers.” Move-up buyers are having difficulty finding the right properties, she observed, noting some are spending more to get “at best something comparable,” and others may be waiting until after vacation to resume their search. “Lots of my agents are taking time off now as well,” she added.
“We’re still clicking along at a good pace – and I think the key for sellers right now is accurate pricing,” Jackson remarked.
Beeson is equally optimistic, even though he expects fewer sales in 2006. “My guess is we’ll be off about 10 percent from last year, which, when you add it all up, is still one of the top years in recorded history for our region.” People are still moving here, he noted, whether relocating for jobs, retirement homes or vacation property.
Economists expect a “soft landing,” for the housing boom. A recent government report showed investment in residential construction accounted for about 6.1 percent of the economy – close to a 50-year high. Even accounting for declining activity, analysts say June’s rate of home sales is 40 percent above the 20-year average.
