After eight months of sliding prices, King County’s housing market has picked back up again. So should we expect the spring home-shopping season to be another nightmare for buyers?
Predicting the future of real-estate values is always difficult (see: past booms, busts). But the data and observations from the market can give us a decent sense of what’s to come — and it’s not looking like we’ve returned to a lopsided sellers’ market, at least not yet.
First, in case you’re just joining us on “As The Housing Market Turns,” a look at what’s happened on previous episodes:
After rocketing up for six years, the median price of a single-family house in King County fell $116,000 from May to January — a 16 percent drop that marked the second biggest eight-month decline on record, behind only the peak of the housing bust that began in 2008. But then in February, prices rose $45,000 — the biggest one-month increase ever, in dollar terms.
If the market follows its normal seasonal path, things are about to get worse for buyers. Over the past five years, prices shot up an average $60,000 from this time of year through the summer.
But the typical seasonal fluctuations aren’t as rock-solid as they used to be. Just take a look at what’s happened recently.
During that span last year when prices dropped $116,000? The normal seasonal decrease during that time frame, in prior years, was just $8,000. And last month’s $45,000 jump? That was more than triple the average gain for February.
Still, it’s likely prices will rise again in spring — they almost always do; even during the recession and its aftermath, prices stayed flat in the spring some years and grew slightly in others. The question is how much prices will go up.
Is it really a hot market again?
What’s clear is that despite the bounce back in prices last month, we’re not back in the wildly unbalanced market from years past, when sellers had all the power, and buyers had none.
Compared to a year ago, when Greater Seattle was the hottest housing market in the country, King County in February was a much calmer market:
- The number of houses on the market has doubled, entirely because more homes are sitting unsold.
- The time it takes the median home to sell has grown from eight days — back when we were among the fastest-moving markets in the country — to 38 days now, which is only slightly faster than the national average.
- The typical home sells for 1 percent below the list price now, compared to 4 percent above the list price a year ago.
- Redfin said its agents reported 11 percent of home sales featured bidding wars, down from 79 percent at this point last year.
Even the recent price uptick might be at least partially a mirage. Prices on the Eastside actually went down a bit last month while home values in Seattle and South King County did not rise as much as the countywide median. How could that be? The mix of homes that sold changed — more homes sold in pricier parts of the county, skewing the overall countywide number higher.
At the same time, more condo construction has helped triple the number of condos on the market in the past year, helping push prices down 8 percent in that span. That’s helped relieve some of the competition among buyers of smaller single-family homes, and condo construction is set to pick up this year and next.
Predicting the market
Daryl Fairweather, chief economist for Seattle-based Redfin, studied those numbers and came to the conclusion that 2019 will likely be a calm year without any big price increases.
“I think in the long run we will see Seattle’s housing market continue to appreciate, and it will in the long term continue to be a sellers’ market,” she said. “But in the short term I think there’s going to be a temporary period where it will be more favorable to buyers.”
Fairweather said the market fundamentals for King County over the long run are solid — led by the continued surge in high-paying jobs here — but prices simply rose too much, too fast to be sustainable.
“You can’t have double-digit price growth every year forever. Eventually there aren’t going to be that many buyers to fulfill that,” she said.
Usually a decent indicator of future prices is pending sales — which refers to someone who has agreed to buy a home but the sale hasn’t closed yet. It usually takes at least a month for a sale to close, and prices aren’t recorded until then.
Indeed, pending sales shot up for the first time in a while in January, leading some — like Redfin — to predict higher prices were on the way. Lo and behold, that’s what happened in February.
The pending sales column for February went back into the red, but that doesn’t mean much. Remember all that snow? It temporarily wreaked havoc on the market; Redfin reported home showings plunged 32 percent in the first half of February compared to the same period last year, but home showings have since bounced back to normal.