If current trends hold, spring may bring a return to the housing market frenzy of two years ago, brokers say, spelling bad news for affordability around Puget Sound.
In December, buyers had fewer homes to choose from in King County than any time since February 2018 — back in the days of bidding wars, weeklong listings and double-digit price growth.
To some extent, seasonal factors are at play: Housing markets generally contract in December.
What makes this more than a seasonal trend is how quickly buyers are snapping up those homes that are on the market, said J. Lennox Scott, CEO of John L. Scott Real Estate. Historically low mortgage rates and predictions of job growth in 2020 appear to be driving demand.
Especially among homes priced under $1 million, which make up 81% of sales, “we’re at what I call multiple-offer everything. We’ve entered an instant-response market,” Scott said. “We’re approaching the level of hotness we were at in late 2017.”
Price growth isn’t quite at the eye-boggling levels of 2017 and early 2018, but spurred by a crunch in inventory, it’s higher than winter buyers might expect.
In King County, median home prices rose in December by 5.63% compared to last year, to $675,000 — a 2% increase over last month, new data from the Northwest Multiple Listing Service shows.
Snohomish County also saw faster price growth than in previous months. There, prices rose 8.51% year over year, to $510,000.
And in Pierce and Kitsap counties, prices also rose — by 9% in Pierce County, to $375,000; and 10.5% in Kitsap County, to $380,000.
Markets are particularly tight in South Puget Sound, where price hikes are so steep that some longtime residents report they’re hounded by demand from home buyers and flippers, and are having trouble paying property taxes on homes that suddenly are valued at twice what they were purchased for.
“Everywhere you look around here, the inventory has kind of gotten the life sucked out of it,” said Dick Beeson, the principal managing broker of RE/MAX Northwest, in Gig Harbor.
Fewer homes were on the market in Pierce, Kitsap and Thurston counties last month than at any time in the past 10 years.
Those counties also all charted fewer months of inventory — a measure of how long it would take to sell all the homes currently on the market — than any time in the past five years, indicating rapid sales activity.
On the tree-lined streets of turn-of-the-century Craftsman homes in places like Tacoma’s North End and University Place, and Gig Harbor, prospective buyers are finding short shrift.
A mere 12 homes in the North End have gone on the market in the past 30 days, said RE/MAX agent Brandon Hjelseth. One five-bedroom, $725,000 North Tacoma home his clients toured had two offers within two days after it was listed Dec. 31.
“Between multiple offers, low interest rates and so many people moving here, we’re going to see quite a bit of appreciation over the next few months of the year,” Hjelseth said.
And around the region, sellers should be prepared for difficulty in finding a new home after their property flies off the market, agents say.
Tacoma agent Jasmyn Jefferson, the branch manager of Windermere Professional Partners, said she trains her staff to make sure sellers have a “plan B” to cover what happens after they sell their home in an “uncomfortably tight” market.
“Some of that conversation has to do with short-term rentals,” she said. “Is there an opportunity for [sellers] to move in with family members for 3-6 months? That helps locate another property without such a tight time crunch.”
Seattle, where prices dipped by 1.6% to $739,000 compared to the same time last year, also saw an inventory crunch — but everywhere else in King County was harder-hit.
Towns in southern King County, including Federal Way, Des Moines and Burien, had one-quarter the inventory of last year. Meanwhile, home prices in those more affordable neighborhoods are up by as much as 18% compared to 2018, to a median $409,950.
But tony Eastside markets, where home prices far exceed those in Seattle, also tightened.
“All the announcements for future job growth have been coming in,” Scott said. “Buyers are anticipating shortage of inventory continuing down the line.”
In the Overlake and West Lake Sammamish neighborhoods, close to the Microsoft campus and new Amazon construction, year-over-year inventory was down by 65.2% and median prices were up by 27.8%, to $1,072,550.
Amazon alone is looking to hire some 10,000 people in the Seattle area this year, the majority for new positions.
Nor was the condo market spared, with the Eastside again taking the brunt of the blow: Condo inventory there was down 51.5% year-over-year.
Prices, though, remain largely stable in the condo market. In King County, prices rose 0.15% over last year, to $405,250.
Not that those rates give much relief for priced-out home shoppers: $400,000 is about how much a typical house in King County cost, five years ago.