More buyers chased a vanishing number of homes for sale in April, pushing the median price of King County homes sold to $400,000, the market’s highest level since December 2008.
April’s median price was 11.1 percent higher than a year ago and 2 percent higher than the previous month’s median price, the Northwest Multiple Listing Service reported Monday.
Experts said the shrinking inventory — there were 3,221 single-family homes for sale, 35 percent fewer than a year ago — was the main factor driving up prices. The ratio of listings to pending sales, a closely watched gauge, indicated about one month’s supply.
The trend was similar in Snohomish County, where the median home price was $295,000, up 15.5 percent from April 2012. Regionwide, the MLS said pending sales reached the highest level in six years.
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The supply-demand imbalance is sparking demand for new construction, which dried up during the Great Recession amid a glut of foreclosed houses and tighter underwriting by banks.
In Bellevue’s new Belvedere subdivision, for example, 28 of the 81 lots for million-dollar homes have sold in the past 18 months.
“They’re selling twice as fast as we expected,” said Eric Campbell, president of Kirkland-based CamWest. “It all comes down to the scarcity of available homes.”
While builders are trying to deliver more homes, the inventory would grow faster from more homeowners listing their property for sale and banks releasing more foreclosed homes, said Glenn Crellin, associate director for research at the University of Washington’s Runstad Center for Real Estate Studies.
The double-digit percentage gain in home prices is triple the inflation rate and isn’t sustainable in the long run, Crellin said.
“We need inventory for the market to really stabilize,” he said.
Bidding wars are more common, even the norm for short sales, said Richard Eastern, CEO of Bellevue-based Washington Property Solutions, which specializes in that market. A short sale is when a bank agrees to let the homeowner sell a property for less than the amount owed on the mortgage.
Eastern recently sold a short-sale property for a client for $50,000 over the asking price. The property received 12 offers.
With prices rising since hitting bottom at $308,125 in KIng County in February 2012 and more government scrutiny of foreclosures, banks appear to be more eager to do short sales, too.
In the first three months of this year, there were 32 percent more short sales in King County than in the same period last year, Eastern said. Snohomish County saw a 56 percent increase, and Pierce County, 77 percent.
“Banks are more predisposed to doing a short-sale than they are going through an expensive foreclosure process, and the banks are better at it,” Eastern said.
Still, it’s tough out there for buyers and their agents.
Eastside broker Mike Chaffee said he represents a buyer who wants a house that will ensure her son attends popular Newport High School in the Bellevue School District. His buyer is well qualified, with a 30 percent down payment.
They’ve been looking for a year.
At homes in the neighborhood, Chaffee has sprinkled fliers with unsolicited offers for “top market value,” vowing to close a deal in 30 days and save the seller money on closing costs. Chaffee said it’s an example of how buyers are getting creative.
“I’m doing my best to get this buyer a house,” he said. “If I can do it without 10 other people putting in an offer, it relieves a lot of stress on the situation.”
Two people responded to the flier: One wanted $50,000 over what the house was worth, Chaffee said, while the other asked for $100,000 over the house’s market value.
His buyer didn’t bite.
Low appraisals are making it tougher for some pending sales to close, causing many buyers to include a contingency in their offers: If a house for sale for $500,000 appraises for, say, $475,000, more buyers are willing to pay the $25,000 shortfall out of their pocket to close the deal Chaffee said.
While some brokers view low appraisals as holding back home sales, appraisers blame the record-low inventory of homes for sale. They have trouble finding true comparables.
Richard Hagar, president of American Home Appraisals on Mercer Island, said his firm recently was asked to value a home in King County and couldn’t find a comparable within 10 miles of it.
“It’s probably the most difficult time to appraise in my entire appraisal career,” he said.
The tight inventory won’t disappear overnight, explains CamWest’s Campbell.
Lots of builders were wiped out financially by the Great Recession, and the survivors have a tough time getting loans. CamWest sold to national giant Toll Brothers in 2011 to get better terms on capital than going to banks, Campbell said.
But now he can’t find enough skilled workers to build homes because so many left the battered industry for jobs in other fields or other places.
Labor costs are higher, and CamWest passes those on to homebuyers.
“Right now I’m over a year out from being able to deliver,” Campbell said.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org. On Twitter @sbhatt