Brokers cite tax credit and rising consumer confidence
with stabilizing housing activity around Washington state
KIRKLAND, Wash. (May 5, 2010) – “While the tax credit has gone away, the buyers haven’t,” observed OB Jacobi, a board member of the Northwest Multiple Listing Service. Commenting on the MLS summary report for March, Jacobi described the tax incentives, which expired April 30, with being the “lubricant the market needed,” but credits rising consumer confidence with “driving the engine now.”
Northwest MLS member brokers reported 9,438 pending sales during April, and increase of more than 36 percent from the same month a year ago. Of these mutually accepted offers, 7,368 of them were in the four county Puget Sound region – the highest volume in this area since August 2006.
Two counties, Grant and Pacific, reported a twofold increase in the number of units sold last month versus a year ago.
MLS figures show inventory is nearly equal to year-ago levels, closed sales jumped almost 51 percent, and sales prices in many areas reflect little variation during the past six months.
Commenting on the latest report, two industry leaders referred to market stability. “The home buyer tax credit did what it was designed to do; it helped with stabilizing the housing market which in turn helped stimulate economic recovery,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
“It’s exciting to see the stability of the real estate market continue to improve,” said NWMLS director Bobbie Chipman, co-managing broker for Coldwell Banker Bain-Tacoma/Puyallup. “The tax credit seems to have accomplished its purpose,” she added, noting, “It motivated home buyers to enter the market place, creating a synergy that should propel us through the summer months.”
Brokers were also upbeat when commenting on inventory and the pace of sales. NWMLS members added 12,664 new listings of single family homes and condominiums during April, up from 10,824 for the same period a year ago. At month’s end, with these additions, there were 39,999 active listings in the MLS database, about the same number as a year ago when inventory totaled 40,147 listings.
With pending sales outperforming a year ago (9,438 for last month compared to 6,918 for April 2009), the months’ supply (an industry indicator of sales velocity) is shrinking. System-wide, there’s about a 4.24 month supply, meaning at the current sales rate, if no other homes were put on the market it would take just over four months to exhaust the supply. For the four-county Puget Sound market, there is a supply of about 3.5 months.
Chipman said the current ratio of listings to pending sales speaks favorably to market growth. “Whereas listings were static compared to April ’09, the number of pending sales increased more than 36 percent.” That dynamic should keep buyers motivated, she stated.
Scott said the positive effects of the tax credit were first felt in the more affordable price ranges, accounting for about half of all housing sales. “We then saw increased sales activity move up the price points. This activity combined with the $6,500 tax credit motivated many repeat buyers to jump off the fence and make a move to their next new home. As a result, the mid price ranges saw an uptick in sales, followed by some additional sales in the upper end,” Scott reported.
NWMLS figures show big gains in the number of high-end sales. Last month, members reported 93 closed sales of homes priced at $1 million or more, improving on the year-ago total of 52 such sales. Through the first four months of 2010, the number of closed sales that fetched $1 million or more increased 65 percent from a year ago (304 versus 184 transactions).
Closed sales area-wide jumped nearly 51 percent from a year ago. Members notched 5,243 closings during April, up from the year-ago total of 3,478. Condo sales jumped nearly 74 percent last month for all counties combined. In King County, the number of condo sales nearly doubled, rising from 238 transactions to 454 closed sales.
Prices continue to show modest dips from a year ago, with the overall median price, at $261,000, down 3.3 percent from twelve months ago. Compared to January, half the counties in the MLS service area are showing increases in median prices.
In King County, the median price for last month’s sales (including single family homes and condos combined) was $340,000. That’s down $10,000 (2.86 percent) from a year ago. For single family homes, the median price on last month’s closed sales was $375,000, only $5,000 (1.32 percent) less than a year ago. The median selling price increased in MLS map areas encompassing Seattle, North King County and the Eastside.
Jacobi, the president of Windermere Real Estate Co., said the tax credit had only a moderate impact on activity during April. “We saw lots of activity among first-time buyers who knew they were not going to make the deadline for the (tax) credit, as well as an upswing in higher-end sales that did not qualify for the credits.” What that means, he says, is buyers are ready to purchase at the right price. “I can’t overemphasize the importance of pricing a home correctly,” he stated.
There are two types of homes on today’s market, according to Jacobi: Well priced homes in good condition that are selling within 30 days, and over-priced homes that will be sitting on the market a long time. He cited the example of a 2-bedroom home in Laurelhurst with a view of the lake that sold last month in two days for the asking price. “It was not an entry-level home, but it was in immaculate condition and at $717,000, was very well-priced for the neighborhood.”
Chipman echoed Jacobi’s advice. “As long as sellers remain realistic about the market value of their homes and the expectations of buyers, the strength of the market will grow.” She also reported an uptick in new construction activity as some builders have resumed buying land at reasonable prices. “If buyers want to have a variety of houses from which to choose, this is a good time for them to look,” Chipman suggested, adding, “The combination of current availability and incredibly low interest rates offers home buyers a tremendous opportunity.”
Scott agreed, saying, “Moving forward, local home buyers will continue to experience a purchase power advantage thanks to historically low interest rates and lower adjusted home prices.”
Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.
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