As sales reached a record breaking speed in May, home-buyers were left with the same old song and dance: inventory levels down, home prices up.
“Low inventory coupled with the huge number of buyers has our market moving at a record pace,” said former MLS Board Member Ken Anderson. “Well-priced homes are selling in an average of just 12 days – a full month faster than the peak of the market in 2006,” he continued.
According to data from the S&P/Case-Shiller Home Price Indices, Seattle has one of the fastest-rising home markets in the nation, second only to Portland. Demonstrating a year-over-year home price increase of 10.8%, Seattle outpaces the national average (5.2%) by more than double.
Outlying markets are seeing greater appreciation as buyers search outside of King County in pursuit of a more affordable option. The median home price in Pierce County and Snohomish County surpass the national median home price of $239,700 by more than $100,000, with $359,950 and $389,950 respectively. King County is at the top of the chart with a median home price of $560,000.
Not only have home prices increased dramatically in the last year, they are selling at record speeds frequently above asking price.
According to Redfin, 75% of homes region-wide have received multiple offers this year, with 56% of homes selling above asking price.
Fueled by substantial population growth and an increasing number of qualified buyers, competition for homes is extremely stiff and buyers must act fast if they hope to secure the home of their dreams or any home at all.
“We are still seeing 80 percent of the homes coming on the market in King County sell within the first 30 days; many within the first week. A healthy/normal market would have 30 percent selling in the first 30 days.” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
Tied with Portland, Seattle has an average of 8 days on market; five times faster than the national average.
Although May saw an increase in listings, pent up buyer demand and an influx of new buyers leaves inventory at extremely low levels. Described as one of the toughest homebuying markets in history, the Northwest Multiple Listing Service reports only 1.76 months of inventory across all of the 23 counties it serves. Supply is extremely scarce in Snohomish County and King County where inventory levels are just above 1 month. Pierce County isn’t far behind with 1.6 months of inventory.
From a different perspective, inventory levels can be assessed by calculating the absorption rate. This rate depicts how quickly a market’s inventory will be purchased. Seattle has an average absorption rate of 100.4%. This number is staggering considering a balanced market has an absorption rate of approximately 20%.
In this soaring seller’s market it may seem surprising that more homeowners haven’t listed their home. Many fear selling their home will leave them hard-pressed to find another.
This begs the question, what’s on the horizon for Puget Sound real estate?
“There’s no reason to believe that this is going to stop anytime soon,” said Peter Orser, director of the University of Washington’s Runstad Center for Real Estate Studies.
With zero signs of a market slow-down, the saying “what goes up, must come down” doesn’t always ring true.
*Data sourced from the NWMLS