With the current market conditions, what with rising mortgage rates and decreasing unemployment, more and more buyers are entering into what is already an “extremely competitive housing market” (OB Jacobi, president of Windermere Real Estate Company).
Jacobi noted that interest rates for 2013 reached a new high around mid-June, resulting from an improving U.S. economy. Also, with Seattle’s unemployment rate now below 5 percent, even more pressure on the housing market is expected, as more workers move into the area.
Not only is the number of buyers increasing, but the number of offers per house is as well. Frank Wilson from the Northwest MLS board recommends that sellers discuss strategy with their broker regarding multiple offers. He also suggests that buyers should consider writing offers that may be above the listing price and include an escalation clause, in case multiple offers do occur. During June, 7,318 people proudly took ownership of a new home. This compares to the 6,214 closed sales during June a year ago, making a 17.8 percent increase.
Prices are also continuing to rise. According to Northwest MLS, the median price for last month’s closed sales area-wide was $279,950, around 9.8 percent higher than the $255,000 of last year. Kittias, Snohomish, and King counties reported double-digit price gains on sales of condos and single family homes (17 percent, 14.4 percent, and 10.1 percent respectively).
Prices of single family homes increased more than 8 percent, while condo prices rose 17.3 percent. In King County, the price of June’s closed sales on single family homes rose 12.5 percent from last year (from $380,000 to $427,500).
While the prices and number of buyers increase, inventory shortages persist, leading to even more stress in the marketplace for buyers. Members of MLS added 10,806 new listings to the database in June, while at month end, inventory was at 23,581 listings. This number is down 11.2 percent from the 26,545 month end listings a year ago.
Mike Skahen, who has been in real estate since 1976, states that he has never seen a “hot market” quite like this one. There is intense competition for anything priced well, creating a stressful market for buyers. Due to this competition, buyers are doing pre inspections before they make their offer, so that it is not subject to inspection later. Often, they are “waiving financing and risking low appraisals where they have to make up the different in cash,” states Skahen.
More properties are needed to fulfill this current demand. To most individuals, now looks like the ideal time to purchase a home, before prices rise further. Therefore, they are jumping into the marketplace, leading to even more buyers, more competition, and a greater need for available properties.
Numbers and statistics: NWMLS.