The median Seattle single-family house cost $625,000 in August, up 8.7 in the last year and up 79 percent in the last five years, according to new home sale figures released Wednesday. But the growth rate has started to slow a bit.
Even with another hint of a late-summer cooling in home prices, the Seattle area real-estate market has still gotten so intense there often aren’t enough inspectors and appraisers to keep up with the demand. That’s creating extra risk and cost for homebuyers desperate to get an edge in bidding wars.
At best, the staffing shortage can cause a home sale to be delayed by a few weeks, or buyers might pay hundreds of dollars in “rush” fees to expedite the process, real-estate professionals say. At worst, a forgone inspection could cause buyers to discover huge damages after the purchase, or a mistake or dispute in the appraisal process could jeopardize the sale.
“You get a lot of panicked phone calls (for inspectors): ‘Do you know anybody? We’ll take anybody with a pulse,’” said Dylan Chalk, who owns Orca Inspection Services. “It worries me — whenever we get these bull markets, there’s a huge pressure to lower the quality of a home inspection to make it quicker and cheaper.”
It’s the latest point of stress for buyers in a frenzied housing market. The median Seattle single-family house cost $625,000 in August, up 8.7 percent in the last year and up 79 percent in the last five years, according to new home-sale figures released Wednesday.
Still, that’s actually cheaper than at any point in the spring and summer, and the annual growth rate is the slowest in nearly a year, if that’s any solace to buyers.
Across all of King County, the median house was $550,000 in August, up 10 percent in the past year, the Northwest Multiple Listing Service data show. The total number of homes for sale in the county held nearly level for the second straight month after two years of steep declines, which had helped drive up prices.
In Snohomish County, prices surged 9 percent compared with a year ago; they rose 11.8 percent in Pierce County and 15.2 percent in Kitsap County.
About three-fourths of homes listed in Seattle now spark bidding wars, and most are sold within a week or two — ranking Seattle among the most competitive markets in the nation. That’s left buyers with few choices, and some are skipping inspections altogether or paying up to $1,000 for rushed reviews and appraisals.
“Houses can be in filthy condition — rot infested with mold — and the buyer’s response, is, ‘Yeah, but can I buy it?’??” said Richard Hagar, owner of American Home Appraisals, and also an agent. “So there are people who will not have inspections. Or (after buying), they will discover things — cracked foundations and things like that.”
Adam Conway, who bought a house in Issaquah in June for his two kids and girlfriend, said his busy appraiser made a big mistake — lowballing the square footage of their new home — and took several weeks to find time to visit the home again to correct it.
The mistake initially caused the appraisal to be so low the bank wouldn’t approve the home loan. And the delay, which coincided with the end of the lease on their previous home, forced them to live out of a U-Haul truck for several days. Eventually, the error was fixed, and they got the house after several stressful weeks.
“It was miserable,” Conway said. “You’re basically at the mercy of the appraisers and the inspectors.”
Mark Corcoran, a Windemere broker at Green Lake, has seen an average delay of about two weeks because of the appraiser and inspector shortages.
“There’s a lot of people frustrated about the whole process right now,” Corcoran said.
Even when they can find help, it can be stressful. Corcoran says some interested buyers will pay $500 for a pre-inspection, only to get outbid and see that money go down the drain, then repeat the process until they’re out thousands of dollars.
He’s had three recent home appraisals come in under the value that the seller and buyer agreed on, which could lower the mortgage loan the buyer was relying on and cause the sale to fall through.
Inspectors, who first check out the home before a purchase, and appraisers, who come in later to give banks a home value figure before a mortgage can go through, say they are booked weeks in advance.
“Gosh. The demand is incredible,” Joseph Hasson of Hasson Appraisal Services. “I turn down over 50 percent of the work that comes to me.”
Hagar said he gets about four requests per day for an appraisal that starts at $700, up from about one per day several years ago. He does have a $200 rush fee.
“And I’ll try to put you ahead of all the other rush fees,” he said.
Even though the number of local homes being sold is low by historic standards — partly a symptom of existing homeowners not wanting to buy a new home at elevated prices — the demand for inspectors is up because homes usually get offers from several potential buyers, each one using their own inspector.
“There might be 10 home inspections on a single house, which is crazy,” Chalk said.
Also, appraisers and inspectors say new state rules instituted after the recession have made it harder to get into both fields, weeding out part-timers and discouraging new people from applying.
Appraisers, for instance, now must have a four-year college degree — a new requirement as of last year — along with 200 classroom hours to become certified. Inspectors need 160 hours of training and to pass an exam.
“People are just not getting into the business,” Hasson said.
Latest data
Looking at the monthly home-sale data out Wednesday, it’s too early to say whether the slowed growth in home prices is here to stay: Over the last several years, it hasn’t been particularly unusual to have a one-month slowdown.
Last October, for instance, annual home-price growth in Seattle slowed to 7.8 percent, before soaring nearly 20 percent the next month. In July 2015, house values rose by less than 6 percent, before the year-over-year growth rate nearly tripled the next month.
But the recent increase in the number of sales and the flat inventory suggest the scales are starting to tip every so slightly back in buyers’ favor, agents say.
A few areas of King County even saw better news for buyers: Enumclaw prices dropped compared with a year ago, while costs were essentially flat in Auburn and Mercer Island.
Still, other parts continue to boom: West Bellevue, Jovita/West Hill Auburn, and Lake Forest Park/Kenmore lead the pack with prices surging by 25 to 26 percent compared with a year ago.
As people look for more affordable options, condo prices continued to rise faster than house costs.
Coldwell Banker Bain said a recent condo open house in South Lake Union drew more than 100 visitors. And on First Hill, the managers of the new Luma condo building announced Wednesday the high-rise would open later this month with 85 percent of the 168 homes already sold.
The median King County condo cost $335,000 last month, up 12 percent in the past year. But that growth rate, too, slowed from the increases seen earlier in the year.
And there are continued signs of a spillover effect in neighboring, less expensive jurisdictions.
Snohomish County last month saw its biggest annual price gain since January, although the median house price of $400,000 fell just sort of the record heights reached a month prior.
Kitsap and Pierce counties remain just below their record prices set in 2007, but in a reversal from recent months, each saw home prices rise faster than Seattle and King County.
Kitsap County led the four-county region in annual home-price growth for the first time this year, and is now just a couple hundred dollars short of its median home price reaching $300,000 for the first time in nearly a decade.