It’s good times for Sellers, but not so good for Buyers. King County’s median single-family-home price now is within sight of the 2007 peak… at $480,000 median price, it’s only $1000 shy of the peak. All across Puget Sound region, single-family-home median prices posted strong annual gains.
Both on the Eastside, the region’s most expensive sub-market, and in North King County, the median price increased 6% from March of last year to $654,650 for the Eastside, and $416,000 for North King County.
In the four-county region, pending sales — mutual deals that haven’t closed yet — hit their highest level in any April in at least 15 years with more than 8,670 pending sales.
An historic moment in area home sales
April was the second month in a row that King County had less than a month’s inventory of homes for sale — a scenario that hasn’t been seen since January 2003 according to the Seattle Times.Snohomish, Pierce and Kitsap counties also report inventory at historical lows as buyers priced out of King County look elsewhere for affordable homes. Pierce County is the favorite with median prices 52% lower than King County.
With the number of homes for sale down 17.7%, today’s market is highly skewed to the Seller side. An inventory of 5-6 months considered a ‘balanced market’ between sellers and buyers. As a result, home prices are moving up faster than the long-term average annual gain of about 4% with the experts not expecting any loosening up through the spring of 2016.
Why our rapid uptick in home sales?
The primary mover in our rapid rise in home prices is the area’s strong job growth coupled with the very real concern about rising interest rates that can heavily impact a buyer’s home affordability range. Also impacting areas close to major job centers, e.g., Seattle, Bellevue, is the lack of buildable land for new home construction.
Premium prices in the face of a record low inventory of homes for sale prompts ‘bidding wars’ and heavy traffic at Open Houses. Homes are commonly selling for above their asking price, sometimes so far above that the home won’t appraise at sale value for a mortgage loan. Thus, buyers need to have enough cash to make up the difference and are commonly asked to provide ‘proof of funds’ before their offer is considered by a Seller.
Another ‘bubble’ blowing?
The annual price gains and bidding wars may echo the bubble years, but there are two crucial differences: there’s no overbuilding like there was prior to 2007, and, thanks to lending reform, today’s buyers are truly qualified for their loans.
The situation is not expected to change anytime soon. Paraphrasing one local leader — housing is in a pressure cooker and it’s going to be here for awhile.