It’s a tough time to be shopping for a home around Seattle. Blame the coronavirus pandemic.
Prices are on the rise. Homes are selling faster than they have since early 2018. Bidding wars abound. And fewer homes are for sale than any time in recent memory, new data from the Northwest Multiple Listing Service show.
In King County, there were 47.5% fewer homes for sale in June than the same month in 2019. In Pierce and Snohomish counties, the plunge was similarly steep — 47.2% and 52.6%, respectively.
The drop in inventory is driving up prices and sending homes flying off the market in days. In King County, a typical home sold last month for $725,000, a 4.3% bump from last year and a 7.9% rise from May.
Meanwhile, months of inventory — a measure of how long it would take to sell all the homes on the market at the current level of demand — dipped to just over one month in King County and three weeks in Pierce and Snohomish counties. In Western Washington as a whole, demand more outmatched supply than any time in the past decade except the white-hot days of late 2017.
“It’s a little frustrating if you’re a buyer,” said home shopper JT Hrvatin, who with fiancee Delaney Johnson were recently outbid on two homes near Port Orchard. “Things don’t really stay on the market.”
One cause of the inventory crunch, said broker Aaron Gerry of Puyallup’s Main Street Realty & Management, is that some sellers are waiting to list their homes until after pandemic lockdowns have lifted and the economy has normalized. Many are taking advantage of historically low mortgage rates to refinance rather than sell.
In recent weeks, though, more sellers have put their homes on the market. While active listings stayed low, the number of new home listings in June was roughly comparable to the same time last year.
Homeowners who decide to list their homes can expect a “feeding frenzy” of demand, said Tom O’Connell, a John L. Scott broker in Lake Tapps, Pierce County. “There’s nothing around here for sale,” he said. “Every offer I write for my clients, we have to go over [asking].”
A manufactured home at 406 Bridge Street Southeast in tiny Orting — which the Tacoma News Tribune reported Monday has seen the fastest residential price growth in Pierce County — received 25 offers and sold for nearly $280,000 — $50,000 more than the asking price, listing agent Gerry confirmed.
“Part of the frenzy comes from people saying, ‘We’ve got to get a house now or we may not be able to afford it in another six months,'” Gerry said. While they’re struggling to buy a new home, Hrvatin and Johnson sold their four-bedroom Puyallup split-level for $20,000 above the asking price in just three days.
Driving demand, in part, are home shoppers able to work from home moving to greener pastures outside the Seattle metropolitan area, said John L. Scott broker Sam Mansour, a relocation specialist for Seattle-area tech firms.
“It’s an exodus,” Mansour said. His team is working with nearly 40 buyers — twice as many as normal. Many are moving out of Seattle to places including Lynnwood, Edmonds and Mukilteo.
Low interest rates are helping spur demand, even as they constrict supply. Last week’s average rate for a 30-year fixed mortgage, 3.07%, was the lowest in a Freddie Mac data series that goes back to 1971, according to a HousingWire report.
But not everyone has been able to get a mortgage. Loans for homes priced higher than conforming loan limits, around $741,000 in King County, are still restricted. On the other end of the market, first-time homebuyers with less-than-pristine credit, as well as buyers unable to make a down payment, might find it more difficult to access federal lending programs that stiffened underwriting requirements in response to the pandemic.
Around Seattle, price growth has been concentrated in more affordable South King County, where the typical single-family home sold for between $480,000 and $519,000 last month. Prices there rose as much as 8.1% compared with a year earlier.
The condo market stagnated in June. In King County, prices fell 0.2% year-over-year, to $419,000. Activity was hotter in Snohomish County, where prices rose 5.2% to $385,000.