Coronavirus’ grip on the Seattle-area housing market may be slackening, though you couldn’t tell by looking at prices for Seattle homes that closed in May.
Stay-at-home orders kept many potential homebuyers and sellers out of the market in April, sending prices in King County — one of the initial epicenters of the coronavirus pandemic — tumbling in May for the second month in a row. In King County, median prices fell 4% year-over-year, to $672,000, according to new data from the Northwest Multiple Listing Service (NWMLS).
County prices also dropped 6% from April to May, the first time since 2014 that homes in the county have fallen in value between two months that typically bring a spring frenzy of homebuying.
The countywide drop was driven in part by a 2.5% drop from a year ago in the Seattle market, when median prices fell to $765,000. Further out, prices continued to rise — including by double digits in places like Black Diamond, Woodinville and Duvall.
Home prices reported for May, though, represent buying activity in April, “sort of the highest period of people sheltering in place,” said Seattle Windermere broker Sol Villarreal. At one point in April, nearly 40% fewer home shoppers were inking deals than in 2019.
In subsequent weeks, homebuying demand has grown, swollen in part by stir-crazy work-from-homers looking for a larger pad as Seattle-area companies warn that WFH regimes could stretch into the fall. Across the 23-county NWMLS area, pending sales, a measure of demand, have risen every week since the week ending April 5, surpassing 2019 levels in the third week of May.
That demand, coupled with the biggest inventory crunch since 2017, is generating bidding wars and all-cash offers across the Puget Sound region. Across Western Washington, new home listings are recovering from their April lows, but still remain 34% under where they were in 2019.
Inventory is especially tight in King County: Just 2,513 homes were on the market here in May, 44% fewer than were for sale last year. Options available for home shoppers in Pierce and Snohomish counties were only slightly less compressed.
Downtown apartment dwellers Fernando Turrent and partner Maria Fernanda Alonso started their house search in mid-March after “it dawned on us that we can’t really work from home in a one-bedroom apartment for the rest of the year,” Turrent said. Alonso works in marketing at aid organization WorldVision; Turrent works for Amazon, which announced in late April that employees can choose to continue working from home until October.
“I used to joke it was my Swedish prison,” Turrent said of his 750-square-foot apartment. “It’s a really nice four walls, but you’re still stuck between four walls.”
They began looking for a two-bedroom home in the competitive under-$750,000 price range in mid-March, ideally something with a backyard or “even just a little bit of green, a flower, whatever!” Turrent said.
In the past week alone, though, they’ve lost two bidding wars after offering above the asking price on homes in West Seattle and the Central District. In both cases, the winning bid offered nearly $100,000 more than the list price.
“Everything [the brokerage] went in on this week got multiple offers,” said their agent, Rob McGarty of Bushwick Real Estate. One was a midcentury modern Magnolia three-bedroom with 10 offers that sold for an all-cash $1.2 million — $225,000 more than asking.
Sales were also helped by buyers and brokers adapting to the new socially distant normal. Home showings dropped precipitously after the stay-at-home order took effect March 25. Within five days, Governor Jay Inslee amended his initial ban on in-person real-estate activities, establishing a two-person limit on people inside a for-sale home. As weeks wore on, the disruption to tours lessened.
Virtual showings never totally caught on, but brokers and home shoppers have gotten used to scheduling tours and inspections using the ShowingTime mobile app.
Recently retired cancer researcher Diane DeHart sold her three-bedroom Ballard townhome in early May for $850,000. Nineteen potential buyers booked tours via ShowingTime in the first three days the home was on the market. DeHart couldn’t be in the home while they toured, but the stay-at-home order had closed most other places she’d otherwise take her three dogs.
After one rainy evening of sitting in the car for three hours, “I thought, I can’t keep doing this,” she said. She ended up booking a room at an Extended Stay America with her dogs, where for a couple days, she succumbed to the temptation of watching prospective buyers tour her home via security camera, until one impugned her water heater.
The year-over-year price dip in King County ran contrary to trends elsewhere in Western Washington, and nationwide. Elsewhere, home prices have continued rising year-over-year, even as mass layoffs hit levels not seen since the Great Depression. Brokers attribute the market’s relative resiliency to demand and supply falling by roughly the same amount, propping prices up.
In Pierce County, median prices were up 7.2% compared to 2019, to $396,550. Snohomish county shoppers saw prices rise 3.2% from 2019, to $516,000. Kitsap, Whatcom and Thurston counties also saw price increases compared to 2019.
In all those counties, though, prices have fallen for two months straight on a month-to-month basis. Brokers say that’s a sign some inventory was overpriced before the pandemic.
“Before the pandemic, we had one million, two million-dollar homes on the Eastside,” said Dean Rebhuhn, the owner of Village Homes and Properties in Woodinville. “They languished and they had to adjust.”
Opposite trends can be seen in the condo market, which is “barely keeping its head above water,” said Keller Williams broker Danny Greco. Inventory is down just 18% across Puget Sound, but closed sales have plummeted nearly 50%, indicating supply has vastly outpaced demand. Prices have taken a 4.7% hit, year-over-year; in King County, the median price of a condo was $420,000 in May.
In the single-family market, housing-market watchers predict prices will fall nationwide by 2021 as mortgage forbearance runs out and struggling homeowners are forced to list their properties. Prices could dip for the first time in nine years by April 2021, according to analytics firm CoreLogic, which forecasts a 1.3% decline.
But for now, Greco said it feels like the market could rebound. Typically, April, May and June are his busiest months, he said. “Now, things are revving up and moving forward at the speed they might have right before that would have happened. I’m looking at July, August being possibly the most productive months.”
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