Prices in our area have now been rising faster than anywhere in the country for twelve months. Sellers seem to be getting the message that now is a good time to put their home on the market. There was an increase in new inventory in October, but with homes selling rapidly, there still aren’t enough properties to meet demand. As a result, counties throughout the Puget Sound area saw year-over-year price increases in the double digits.
The median price for a single-family home on the Eastside rose 10 percent from a year ago to $845,000. Homes in West Bellevue hit a new record median price of $2.6 million. Despite soaring prices, demand has remained strong in this desirable area. And the continued robust economy makes it unlikely that home prices here will cool any time soon.
The number of new listings in King County increased at the highest rate in more than a year. But, they were grabbed up quickly, with most homes selling in well under 30 days. The shortage of homes for sale propelled prices up, with the median home price in King County jumping 15 percent over the same time last year to $630,000.
Seattle remains the hottest real estate market in the country, with prices rising here at more than double the national rate. Rents in Seattle are also rising faster than almost anywhere else in the country, pushing more people into the home buying market. High demand and slim supply helped boost the median price of a single-family home nearly 18 percent to $735,000.
The median price of a single-family home in Snohomish County in October was $440,000, an increase of 14 percent over the prior year. The market here may be moderating slightly. Brokers note that while multiple offers are continuing, listings are experiencing longer market times and fewer above-list price offers.
The Washington State economy added 79,600 new jobs over the past 12 months—an impressive growth rate of 2.4%, and well above the national growth rate of 1.2%. However, as we anticipated in last quarter’s report, we continue to see a modest slowdown in the growth rate as the state grows closer to full employment. Growth has been broad-based, with expansion in all major job sectors other than Aerospace (a function of a slowdown at Boeing). Given the current rate of expansion, I am raising my employment forecast and now predict that Washington will add 81,000 new jobs in 2017.
Given the robust job market, it is unsurprising that the state unemployment rate continues to fall. The current unemployment rate in Washington State is 4.6% and we are essentially at full employment. Additionally, all counties contained within this report reported either a drop or stability in their unemployment rate from a year ago. I maintain my belief that the Washington State economy will continue to outperform the U.S. as a whole. Given such a strong expansion, we should also expect solid income growth across Western Washington.
Home Sales Activity
There were 25,312 home sales during the third quarter of 2017. This is an increase of 3.6% over the same period in 2016.
Clallam County maintains its number one position for sales growth over the past 12 months. Only four other counties saw double-digit gains in sales. This demonstrates continuing issues with the low supply of listings. There were modest declines in sales activity in six counties.
The market remains remarkably tight with listing inventory down by 14.2% when compared to the third quarter of 2016. But inventory is up a significant 32% compared to the second quarter of this year. Pending sales rose by 5.2% over the same quarter a year ago, which suggests that closings in Q4 will still be robust.
The key takeaway from this data is that inventory is still very low, and the situation is unlikely to improve through the balance of the year.
Given tight supply levels, it is unsurprising to see very solid price growth across the Western Washington counties. Year-over-year, average prices rose 12.3% to $474,184. This is 0.9% higher than seen in the second quarter of this year.
With demand far exceeding supply, price growth in Western Washington continues to trend well above the longterm average. As I do not expect to see the new home market expand at any significant pace, there will be continued pressure on the resale market, which will cause home prices to continue to rise at above-average rates.
When compared to the same period a year ago, price growth was most pronounced in Grays Harbor County where sale prices were 20.1% higher than the third quarter of 2016. Nine additional counties experienced double-digit price growth.
Mortgage rates in the quarter continue to test the lows of 2017, and this is unlikely to change in the near-term. This will allow home prices to escalate further but I expect we will see rates start to rise fairly modestly in 2018, which could slow price growth.
Days on Market
The average number of days it took to sell a home in the quarter dropped by eight days when compared to the same quarter of 2016.
King County continues to be the tightest market, with homes taking an average of 17 days to sell. Every county except San Juan saw the days on market drop from the same period a year ago.
This quarter, it took an average of 43 days to sell a home. This is down from the 51 days it took in the second quarter of 2016 and down by 8 days from the second quarter of this year.
At some point, inventory will start to grow and this will lead to an increase in the average time it takes to sell a house. However, I do not expect that to happen at any time soon. So we remain in a seller’s market.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the third quarter of 2017, I have left the needle at the same point as the second quarter. Though price growth remains robust, sales activity has slowed very slightly and listings jumped relative to the second quarter. That said, the market is very strong and buyers will continue to find significant competition for accurately priced and well-located homes.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.
The typical seasonal slowdown of new listings in September added to frustration for buyers who are competing for a very limited number of homes. Strong job growth continues to fuel demand. The state added 83,000 new jobs in the month of August, and September looked to be just as robust. The result? King, Pierce and Snohomish counties all reported double-digit price increases from a year earlier.
The median price of a single-family home on the Eastside jumped 14 percent from the same time last year to a $855,000. As the median on the Eastside approaches the $1 million mark, the price tag for a luxury home is increasing. Of all the single-family homes that sold on the Eastside in September nearly 40 percent sold for more than $1 million. In the city of Bellevue, two-thirds of the homes sold for more than $1 million.
The median price of a single-family home sold in King County in September increased 16 percent from a year ago to $625,000. While down from the record high of $658,000 in July, it represents the highest value for any September since records began in 2000. Among the largest metro areas in the U.S., our region has now led the nation in price increases for the last 11 months.
Seattle’s inventory remains as tight as ever, with homes being snapped up in days. A big hiring push by local employers just keeps adding to the pressure. With supply dwindling and demand soaring, prices had only one place to go – up. In September, the median single-family home price in Seattle soared 15 percent over a year ago to $725,000.
The median price of a single-family home in Snohomish County sold in September was $450,000, a 14 percent increase over the same time last year. With just slightly over one month’s inventory of homes available, it’s unlikely price growth here will slow any time soon.
High demand and low supply made it the market’s hottest August since records began in 2000. Sparse inventory was again the norm, as were multiple offers. However, brokers are cautioning sellers to price their homes correctly. Most buyers have been in the market a long time and are well educated. Overpriced listings are not getting showings or offers. In some rare good news for buyers in this heated market, mortgage lenders are relaxing some standards to make it easier to buy a home.
The median price of a single-family home on the Eastside increased 11 percent from a year ago to a $853,000. That number is down slightly for the second month in a row, but affordability is still a big issue. The share of million-dollar homes here is rising faster than just about anywhere in the country. In Medina, 99.7 percent of homes are worth at least $1 million. On Mercer Island, it’s 88 percent, and 64 percent of West Bellevue homes are worth $1 million or more.
The local area led the nation in home-price growth for the 10th straight month. In August, the median home price in King County jumped 18 percent over the same time last year to $650,000, off slightly from the record high of $658,000 in July. While inventory is low, the fourth quarter of the year has always seen the lowest demand for home sales. If you’re thinking about buying a home, it is to your advantage to work with your broker and make an offer now.
Inventory-starved Seattle just can’t keep up with the demand of its growing population. Lack of supply helped push the median price for a single-family home to $730,000, an increase of 17 percent over a year ago. That’s down slightly from the peak of $750,000 in June. If sellers need an incentive to put their home on the market, a recent analysis showed Seattle among the top U.S. cities for sellers to get the greatest return on investment.
While prices in King County may be showing the first signs of moderating, Snohomish County continues to hit new records for home prices. The median price of a single-family home here jumped 14 percent over the same time last year to $455,000, yet another record high.