King, Snohomish and Pierce counties all set record home prices in April, and brokers don’t anticipate any relief in sight as the supply of homes available continues to dwindle.
Seattle has set a record for home prices for the third straight month, with the typical house cost nearing three quarters of a million dollars. On the Eastside, the median home is approaching $900,000 for the first time after rising $150,000 in just a year, the biggest jump ever. And Snohomish County home prices are rising at their fastest pace in four years.
Monthly home sales figures released Thursday showed the greater Seattle real estate market — already the hottest in the country — somehow keeps picking up even more steam. And real estate agents don’t anticipate any relief in sight as the spring rush for homes heats up, all while a historically low number of people are putting their houses up for sale.
From Tacoma to Snohomish County and everywhere in between, April saw record prices for homes as a plummeting number of houses for sale drove up competition for frustrated buyers. Even by Seattle standards, the price increases this month were especially substantial.
King County median home prices in April surpassed $600,000 for the first time, growing 15.7 percent compared to a year ago, the fastest growth in about a year. The new median house price is $625,000, more than double the price at the bottom of the market in early 2012.
It’s much worse in the hottest areas, the figures from the Northwest Multiple Listing Service show.
Seattle’s typical house sold for a record $722,250 in April, less than three years after crossing the $500,000 threshold. Seattle median prices climbed $22,000 just in the past month.
And the Eastside reached an all-time high of $880,000, up a scorching 20 percent in the last year, the biggest jump since 2013. The typical Eastside house cost grew $150,000, the largest dollar increase on record, which dates back 11 years, and almost assuredly the biggest in history.
Carrie Foley, managing broker with Berkshire Hathaway HomeServices Northwest Real Estate, said that even for a first-time buyer looking for a smaller house, the typical cost around the region is near half a million dollars.
“I think that’s just going to become the new norm. There are no signs of it slowing down,” Foley said, adding buyers are increasingly waiving inspections and contingencies to get their offer accepted, or looking in further-out, once-cheap areas like Marysville or Lake Stevens.
“Some buyers are even coming out and saying ‘I am willing to buy X dollars over appraised value just to close the transaction.’ It’s really shocking what buyers have had to do to bend over backwards to get their offer chosen,” she said.
A fundamental problem continues to be the few number of homes available, forcing buyers to compete and bid up prices — and the problem is only worsening. Those who lose bidding wars often get increasingly desperate and raise their offers for their next prospective house, creating a cycle that forces prices up even higher across the board.
The number of houses on the market, which reached an all-time low this winter before rising a bit for the normal spring rush, plummeted 27 percent compared to a year ago. Inventory is the lowest recorded for any spring month, usually the time of year when buyers have lots of options.
In April 2011, King County had nearly 8,000 houses for sale. Now it has less than 1,900.
Fewer people are putting their home on the market because they don’t want to turn around and have to buy at inflated prices, unless they’re moving away or downsizing. At the same time, brokers say buyers are “over-confident” that they can sit on their houses and sell later because prices keep going up.
In a news release accompanying the new figures, top brokers from around the region were about as frustrated a bunch as they’ve been during the current boom.
George Moorhead, designated broker at Bentley Properties, said it was the worst market for buyers, and for sellers who need to turn around and buy again, that he’s seen in his 24 years in the industry. J. Lennox Scott, chairman and CEO of John L. Scott, said the market was “wreaking havoc for homebuyers.” OB Jacobi, president of Windermere Real Estate, said “we have a long way to go before we see a balanced housing market again.”
And then there’s that B word everyone keeps talking about.
“My fears of a newly-developing bubble have not diminished,” said Diedre Haines, principal managing broker in South Snohomish County for Coldwell Banker Bain. “Prices are beginning to increase at unhealthy levels.”
But Foley said the continued population growth coupled with the lack of new homes makes her think the higher prices are here to stay.
“Everyone’s asking, ‘Is this a bubble?’ For everything we can see, economists are saying we are not going to experience a bubble in the Seattle area,” Foley said. “We cannot support this increasing population, so real estate prices are going to continue to climb.”
Even condos are getting more expensive. In King County, the median condo cost $370,000 in April, up 14.4 percent from last year. Five years ago, the average buyer could get the median single-family house for that money.
“The end game for the rest of 2017 is clear: more scarcity, more angst by buyers, more reluctance to sell among sellers because they can’t find their next home,” Dick Beeson, principal managing broker at RE/MAX Professionals in Gig Harbor, said in a statement.
If there is any glimmer of hope for buyers, the number of pending and closed sales both dropped on an annual basis, the first time that’s happened in 12 months. In the past, home sale drops have turned out to be a temporary blip, but if the trend continues this time, it could signal a drop in demand.
And Scott, for one, thinks this month’s numbers might look a bit worse than they really are. He noticed more homes selling in higher-priced regions and fewer in low-cost areas, skewing the numbers and driving the overall median prices higher.
Hot low-cost markets
Only one neighborhood had a decrease in prices from a year ago: the Central Seattle/Capitol Hill area is $5,000 cheaper than a year ago.
Among the hottest areas, all increasing more than 24 percent in the past year: The central Eastside between Interstate 405 and Sammamish, southeast Seattle and the Skyway area.
The Kirkland-Bridle Trails area topped the $1 million mark, joining Mercer Island ($1.5 million) and West Bellevue ($2.2 million) as the only areas where the median house costs seven-figures.
Outside of King County, homes are cheaper but the market is just as hot, as people look to drive further out for cheaper options.
Snohomish County’s new record home price is $440,000, having soared 17.3 percent in the past year, the fastest growth since 2013.
Pierce County, which surpassed its pre-recession home price record for the first time in March, saw its market inch up again in April. The typical house there costs about $297,000, up 10 percent from a year ago.
In Kitsap County, prices grew 10.3 percent, to about $298,000, after an unusual lull last month.
Overall, prices have been rising faster here than any other metro area in the country for the last six months, according to the Case-Shiller home price index. And Washington as a whole has the hottest real estate market of any state in the country: it’s the only state where home costs are rising at a double-digit rate, according to CoreLogic.
At the same time, Seattle is among the most intense rental markets in the United States, with rents soaring 57 percent in the last six years, preventing some renters from saving up enough to buy a house. For the typical King County home, a 20 percent down payment requires savings of $125,000.