Value Hunters drive housing market in WA State.

“Value-Hunters” seizing opportunities to buy more affordable homes
around Western and Central Washington

KIRKLAND, Wash. (Sept. 3, 2010) – Value is what’s selling in the current housing market, according to members of Northwest Multiple Listing Service. Commenting on the MLS report summarizing August activity, directors agree conditions continue to favor buyers, although one industry official cautioned a looming change in mortgage insurance premiums could erode purchasing power.

Members reported 6,037 pending sales last month, the highest volume of mutually accepted offers since April when buyers scrambled to beat a tax incentive deadline. Last month’s volume was down nearly 20 percent from the same month a year ago when members reported 7,539 pending sales, but the total was up 8.4 percent from the number of transactions (5,571) notched during July.

“It is solidly a buyer’s market,” observed NWMLS director OB Jacobi, general manager of Windermere Real Estate Company. “The market is good for sellers who price their homes correctly,” he stated. “Homes that are priced right from the start, at every price range, are selling quickly and for very close to asking price. In this market, it's critical to price a home well from day one. If sellers plan to start high and gradually go lower, they'll price themselves out of the market.”

Prices on last month’s closed sales of single family homes and condominiums (combined) were down slightly (2.35 percent) from a year ago. The median sales price for last month’s 4,211 completed transactions across the 21 counties in the MLS system was $269,450. That compares to a year-ago median price of $275,945.

For single family homes (excluding condos) the median price was $275,000, down 3.5 percent from a year ago. Prices increased from 12 months ago in nine counties (Clark, Grays Harbor, King, Kitsap, Kittitas, Mason, San Juan, Skagit, and Thurston), led by San Juan (up 23.8 percent) and Mason (up 20.8 percent).

In King County, which accounted for more than one-third of last month’s closed sales of single family homes, the median price was $380,000, an increase of 1.3 percent from the year-ago figure of $375,000.

Along with lower prices and record low mortgage interest rates, buyers have abundant inventory to consider, further bolstering their bargaining position.

NWMLS members added 9,533 new listings to inventory last month. The mix included 8,172 single family homes and 1,361 condominiums. With these additions, the number of active listings at month end totaled 44,186, an increase of 6.4 percent from a year ago. Sixteen counties reported larger inventories than twelve months ago.

“The active listings inventory and the influx of new listings are still very strong for the buyers,” said NWMLS director Darin Stenvers, managing broker at John L. Scott, Inc. in Bellingham. The extremely low mortgage rates are enabling today’s purchasers to buy more home, but he said he believes buyers are learning from the past and seem to be buying the home they can afford, rather than the home they thought they could afford. Stenvers also noted the relatively flat prices, together with the large number of foreclosed and short sales transactions, are reflective of a buyers’ market.

Jacobi described the current pool of buyers as “value-hunters” with stable income and good credit. They’re taking the opportunity to purchase homes they couldn’t afford a few years ago, according to Jacobi, who noted this pool includes first-time buyers as well as move-up buyers with strong equity in their existing home.

Prospective purchasers may not be aware of a forthcoming change in annual mortgage insurance premiums, a change that can reduce purchasing power, emphasized J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

“Buyers may not be aware of plans by the Federal Housing Association to raise its annual mortgage insurance premiums by 3 percent on October 4. With FHA loans accounting for about half of all home loans, the change will affect a significant number of borrowers, Scott remarked.

“When you do the math on a $300,000 loan, the increase equates to an extra $81 a month or nearly $1,000 annually.” Conversely, he explained, “this effectively represents a 3 percent loss in purchasing power, which for your typical FHA borrower can make a big difference when trying to buy a home.”

Looking ahead, brokers and housing analysts expect a long, slow recovery of the housing market. Commenting on the latest activity report, MLS director Stenvers said, “I believe we are going to see this same type of market through the end of the year and into first quarter 2011.”

In a statement accompanying a National Association of Realtors® report on existing home sales for July, Lawrence Yun, NAR chief economists said the recovery looks to be a long process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he stated, adding, “Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

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.