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A Thirteen-Year Overview of Inventory Levels- Where’s the Balance?
The two graphs here illustrate a thirteen-year overview of inventory levels in both King and Snohomish Counties, highlighting the 2007 crash. Inventory levels are measured by the months of available inventory. For example, if there were 60 homes available in July and 30 homes sold in July, you would be left with two months of inventory; meaning that if no new homes came to market, the demand of 30 homes per month would absorb the 60 available homes in two months. A buyer's market is defined by 6+ months of inventory, a balanced market, 3-6 months and a seller's market, 0-3 months. From March to June of this year we averaged 1.1 months of inventory in King County and 1.2 months in Snohomish County, both extreme seller's markets.
In King County over the last 13 years we saw three years of a buyer's market, which happened during the biggest economic downturn since the Great Depression, after the crash of the housing market in 2007. This economic fallout was a result of predatory lending practices, which created a large population of buyers who were not truly qualified to purchase a home. This oversaturated the market and then led it to its crash when those lending practices were shut down. These severe influences on the market led to quick jumps from a seller's to a buyer's market and then a buyer's to a seller's market. It only took one short year to transition from the seller's market of 2004-2006 to the three-year long buyer's market after the housing crash. Once the sub-prime lending options were shut down in July 2007, it eliminated many buyers, creating an extreme buyer's market. It also only took one short year to transition out of the downturn and back to a seller's market as the economy started to recover. It has been a seller's market in King County since May of 2012 – four years!
In Snohomish County over the last 13 years we saw four years of a buyer's market. Snohomish County was hit a bit harder by the Great Recession than our neighbor to the south, as it took longer to recover. It has been a seller's market in Snohomish County since May of 2012, except for one quarter of a balanced market in the beginning of 2014, when we saw a surge of new construction come to market due to the national builders releasing some neighborhoods they had acquired in the downturn.
Interestingly, the market shifts were brief because the downturn was so severe, which changed the market environment quickly. In order to clean up the predatory lending mistakes of 2004-2007, the market essentially had to come to a standstill and flush out all of the bad loans via foreclosure and short sales, which took five years. The only time we found ourselves in such an extreme buyer's market, was after one of the biggest economic fallouts of the last century. Once that corrected itself we quickly returned to a seller's market due to many positive factors.
Our available housing stock is affected by the limited land left to build on, a thriving job sector (especially in tech), historically low interest rates and the Greater Seattle area being a nice place to live. All four of these indicators have shrunk inventory and put upward pressure on prices. Sellers continue to enjoy great market returns, and buyers continue to fight to secure a home with a 4% interest rate, and not too far from their workplace. Additional inventory would be more than welcomed, it is very clear that we have the demand to absorb it. If you are curious about the value of your home in today's market or securing a purchase please contact one of our agents. We are always happy to help educate you on how this market can benefit your bottom line.
Market Update – Q1 2016
The 2016 real estate market is off to an extreme start! Strong buyer demand due to our flourishing job market and historically low interest rates are the driving force behind this market. Buyers often find themselves competing due to multiple offers which require seller-centric terms in order to win. Prices have continued to grow over the last two years, putting sellers in a very favorable equity position, freeing them up to make the moves they have been waiting for. Additional inventory would help slow price growth and make it less competitive for buyers, creating positive outcomes for everyone. Lending requirements remain stringent, unlike the past “up” market which created the bubble we experienced in 2008.
Scroll down for more details about the first quarter market in Snohomish County, south Snohomish County, north King County, the Eastside, Seattle Metro and south King County.
Snohomish County
More inventory is needed to quench buyer demand as we head into spring and summer.
Snohomish County ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.4 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.8 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, average and median prices were up 5% and 4% respectively in March over February! The good news is that new listings were up 25% in that same time frame. We hope to see that trend continue as we head into spring as the buyer demand is there to absorb it and it is needed to slow price growth.
South Snohomish County
More inventory is needed to quench buyer demand as we head into spring and summer.
South Snohomish County ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.2 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.7 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, average and median prices were up 5% in March over February! The good news is that new listings were up 27% in that same time frame. We hope to see that trend continue as we head into spring as the buyer demand is there to absorb it and it is needed to slow price growth.
North King County
More inventory is needed to quench buyer demand as we head into spring and summer.
North King County ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.1 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.6 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, the average price was up 2% in March over February! The good news is that new listings were up 49% in that same time frame. We hope to see that trend continue as we head into spring as the buyer demand is there to absorb it and it is needed to slow price growth.
Eastside
More inventory is needed to quench buyer demand as we head into spring and summer.
The Eastside ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.3 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.9 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, average and median prices were up 4% in March over February! The good news is that new listings were up 43% in that same time frame. We hope to see that trend continue as we head into spring as the buyer demand is there to absorb it and it is needed to slow price growth.
Seattle Metro
More inventory is needed to quench buyer demand as we head into spring and summer.
The Seattle Metro area ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.1 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.6 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, average and median prices were up 3% in March over February! The good news is that new listings were up 47% in that same time frame. We hope to see that trend continue as we head into spring as the buyer demand is there to absorb it and it is needed to slow price growth.
South King County
More inventory is needed to quench buyer demand as we head into spring and summer.
South King County ended 2015 with a larger-than-seasonally-normal surge of closed sales, leaving us with only 1.4 months of inventory based on pending sales to start the year, which is not much! The first quarter saw a frenzy of buyer activity but only a small trickle of new inventory, leaving us with only 0.8 months of inventory heading into the second quarter. This has caused days on market to shrink and list-to-sale price ratios to rise. These conditions are very favorable to sellers. In fact, average and median prices were up 6% and 3% respectively in March over February! The good news is that new listings were up 39% in that same time frame. We hope to see that trend continue as we head into spring, as the buyer demand is there to absorb it and it is needed to slow price growth.
This is only snapshots of the trends in our area. Please contact one of our agents if you would like further explanation of how the latest trends relate to you.
It’s an Amazing Time to be a Seller!
The two graphs here illustrate the amount of homes for sale and the amount of homes sold over the past two years in King and Snohomish Counties. This gives us a good look at the simple principle of supply and demand. 
We are currently experiencing one of the strongest Seller's markets in recent history. A Seller's market is defined by having three or less months of available inventory. Currently, King County has 1.2 months of inventory based on pending sales and Snohomish County 1.3. Where this particular Seller's market is unique is that it is not only a shortage of inventory creating this environment, but very high buyer demand as well. Our local job market is thriving, so much so that many people from out-of-state are relocating here to be a part of our economy and the quality of life the Greater Seattle area has to offer. Couple the healthy local economy with still historically low interest rates and the audience for homes that come to the market is huge! Multiple offers are very common and prices are increasing.
In order to get a better understanding of the market conditions we dug a little deeper and were quite surprised. We looked into the amount of new listings that came to market this January, assuming that there would be a huge deficit of new listings – we were wrong! In King County there were only 111 less listings (-4%) that came to market this January compared to last January, and only 16 less listings (-1%) in Snohomish County. Yes, fewer homes are coming to market, but the high buyer demand has eaten up any inventory carryover month-to-month, leaving us with 30% less homes to choose from compared to the year prior – hence the very low months of inventory. We are coming close to selling out of homes each month and new inventory is required to create more market. It is sort of mind blowing! The good news is, if you look at the graphs above you will see a seasonal uptick in inventory in the Spring and Summer months, and that is needed to meet demand. If you are considering putting your home on the market this year I would advise the sooner the better, as buyers did not hibernate for the winter and will not be worried about flowers blooming in your front yard. Sellers that beat the Spring increase in listings will enjoy a larger audience due to less competition. If you’re a buyer, it is overwhelmingly important that you are aligned with an agent that knows how to win in this market. Terms, negotiations, communication and market knowledge is what sets a highly capable selling agent apart and is required to prevail.
If you have any curiosities or questions regarding the value of your current home or purchase opportunities, please contact any of our agents. It is always our goal to help keep you informed on all things real estate, and help you manage these investments.
Home Price Affordability Driven by Commute Times
Close proximity to the work place is often near the top of a buyer’s list of preferred features. 2015 proved to be the year that commute times to major job centers widened the price divide between key market areas in the Greater Seattle area. Seattle proper has always been more expensive than its neighboring suburbs, but the most current prices tell a tale of two different markets. In 2015 the average sales price for a single-family residential home in the Seattle Metro area was $632,000! In South Snohomish County (Everett to the King County line) the average sales price for a single-family residential home in 2015 was $433,000 – 46% less than Seattle Metro. Further, if you jump across Lake Washington to the Eastside, the average sales price for a single-family residential home in 2015 was $787,000 – 19% more than Seattle Metro! In December, pending sales in Snohomish County were up 12% and closings were up 29%, whereas in King County pending sales were down 9% and closings were up only 4%. We believe this is a result of more inventory choices in Snohomish County, as well as lower prices, new construction, lower taxes, strong school district options and manageable commute times. Newer transit centers and telecommuting have also opened up doors to King County's little brother to the north.
If you are curious about possible commute times, you can search for properties here on our website based on commute times, which is a feature provided by INRIX Drive Time. No matter which neighborhood you are interested in learning about in either King or Snohomish County, any of our agents would be happy to provide a 2015 re-cap of that market. 2015 was an outstanding year in real estate and we are looking for that to continue in 2016. We hope to see more homes coming to market due to the market's strong price position, which should help to increase inventory levels, in turn helping temper price growth and giving buyers more options.
How Much is Your Home Worth?
A Look at Local Home Value Growth Since 2012
Since 2012, home values have grown by around 10% each year, resulting in substantial return in pricing. Below are some examples of actual homes sold in 2012 and again in 2015 that were not remodeled or significantly improved in between sales. These examples show the return in home values that we have experienced since the economic downturn. We pulled these examples to show you actual pound-for-pound market data versus the statistical percentages often quoted in market updates. We think these examples are pretty telling and quite exciting!
As you can see in the current economic update from Matthew Gardner, inventory has been a challenge. Many folks have been waiting for their current home values to return in order to make big moves involving their retirement, upgrading homes, investing or even buying a second home. If you are one of those people, we hope these examples provide you insight on the increase in home values and how they might pertain to you. As we head into the New Year, if you'd like a Comparable Market Analysis (CMA) on your home so you have a better understanding of your home's value, any one of our agents would be happy to do that. This would be an important component in charting your 2016 financial goals, and what a great time of year to gather that information.
3 bedroom 3200 sq ft Edmonds home: |
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Sold in August 2012
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Sold in July 2015
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$185,050 INCREASE IN HOME VALUE: 32%! |
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4 bedroom 2100 sq ft Bothell home: |
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Sold in February 2012
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Sold in February 2015
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$114,872 INCREASE IN HOME VALUE: 36%! |
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3 bedroom 1400 sq ft Shoreline home: |
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Sold in June 2012
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Sold in March 2015
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$102,250 INCREASE IN HOME VALUE: 33%! |
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3 bedroom 1800 sq ft Lynnwood home: |
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Sold in December 2011
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Sold in May 2015
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$95,000 INCREASE IN HOME VALUE: 43%! |
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We are currently working on more examples in surrounding communities… check out our Price Appreciation Study for more. And contact any one of our agents for a Comparable Market Analysis on your home.
Market Update – Q3 2015
Snohomish County
Seasonal patterns are returning after the market’s fall and recovery
The graph above shows a two-year history of the market, where we have clearly seen a surge of inventory from March to August. In fact we saw a 48% increase in inventory during this time period. While that is a welcome increase, inventory growth was down 1% from the year prior, all while closed sales were up 18%! Months of Inventory based on pending sales has held steady at an average of two months over the last year. Due to demand outweighing supply we continue to see above-normal price growth, with both median and average prices up 9% complete year-over-year.
South Snohomish County
Seasonal patterns are returning after the market’s fall and recovery
You can see in the graph above a clear surge of inventory came to market from March to August. In fact we saw a 53% increase in inventory during this time period. While that is a welcome increase, inventory growth was down 5% from the year prior, all while closed sales were up 19%! Months of Inventory based on pending sales has held steady at an average of two months over the last year. Due to demand outweighing supply we continue to see above-normal price growth, with both median and average prices up 9% complete year-over-year.
North King County
Price increases are strong due to high demand and low inventory
All indicators, such as sold median price, sold average price and sold price per square foot point to a 10% increase in prices complete year-over-year. The median price in North King County this September was $555,000 and the average was $609,000. Average days on market have shrunk to as low as 22 days this last month, and the list to sale price ratio was 101%. Lack of supply and high demand is the gas in this market’s engine. Months of inventory based on pending sales finally crested one month after a small surge of additional inventory in the third quarter.
Eastside
Seasonal patterns are returning after the market’s fall and recovery
The graph above shows a two-year history of the market, where we have clearly seen a surge of inventory from February to August. In fact we saw a 44% increase in inventory during this time period. While that is a welcome increase, inventory growth was down 45% from the year prior, all while closed sales were up 10%! Months of Inventory based on pending sales has held steady at an average of 1.5 months over the last year. Due to demand outweighing supply we continue to see above normal price growth, with both median and average prices up 9% complete year-over-year.
Seattle Metro
Price increases are strong due to high demand and low inventory
All indicators, such as sold median price, sold average price and sold price per square foot point to an 11% increase in prices complete year-over-year. The median price in the Seattle Metro area this September was $556,000 and the average was $639,000. Average days on market have shrunk to as low as 22 days this last month, and the list to sale price ratio was 101%. Lack of supply and high demand is the gas in this market’s engine. Months of inventory based on pending sales finally crested one month after a small surge of additional inventory in the third quarter.
South King County
Price increases are strong due to high demand and low inventory
All indicators point to strong price increases with median price up 11%, average price up 8% and average price per square foot up 8% complete year-over-year. The median price in South King County this September was $335,000 and the average was $358,000. Average days on market have shrunk to as low as 36 days this last month, and the list to sale price ratio was 99%. Lack of supply and high demand is the gas in this market’s engine. Months of inventory based on pending sales finally crested 1.5 months after a small surge of additional inventory in the third quarter.
This is only snapshots of the trends in our area. Please contact one of our agents if you would like further explanation of how the latest trends relate to you.
A Check-up on Prices & Appreciation
As we finish up the 2015 summer selling market and head into fall it is a good time to take a look at where we are at regarding appreciation. The two maps below are from CoreLogic, a global real estate data analytic company. According to the top map, Washington has seen 8.9% in appreciation over the last 12 months. When I pull those same numbers for King county the appreciation rate is 8.5% and Snohomish county is 9.2%. Appreciation has continued to be strong, but it has tempered a bit compared to the previous year, which is a good thing. The biggest driver of the strong appreciation rates is high demand and low inventory. Our robust local economy has provided a lot of opportunity for buyers, and they are out there with force. Inventory levels continue to not provide enough selection to support the amount of buyers in the market. If you look at the map on the bottom you will see how today's price levels relate to peak prices from 2006/2007. Washington State is 3.1% from the peak, which means that many folks are at healthy equity levels. Surprisingly, not everyone knows this, and I think that is why we may not be seeing the amount of inventory that would better support the demand in the market and would slow appreciation levels to more traditional (and sustainable) rates of 3-5% a year.In fact, according to a Fannie Mae survey 23% thought they were in negative equity positions when only 9% where. Further, only 37% surveyed thought they had less than 20% equity when 69% actually did! Those are big discrepancies that could be crippling to a productive decision on what to do with your real estate. If you or someone you know is ever curious about your equity position please do not hesitate to contact us to get a clear picture. Any of our agents would be happy to do a comparative market analysis (CMA) for you to help keep you informed on your biggest asset, your home.
