A lot of new listings have come to market in the past 6 weeks. Unfortunately, a lot more buyers are looking for homes to purchase. The net result is that the inventory of homes for sale is down even lower—17% (King County) to 43% (Mercer Island) lower than this time last year even while pending sales are up 17% (Eastside) to 32% (Mercer Island). This makes the squeeze on buyers the greatest it has been since the boom market of 2006.
The Seattle-Metro area currently has only 0.6 month’s supply of inventory, a record low, compared to 1.0 month’s supply in April 2014. Surrounding areas had a similar take—the Eastside was down to 1.1 month’s supply from 1.5 months of inventory last year; Mercer Island was down to 1.1 months from 2.6 in April 2014; and King County was down to 1.0 months from 1.5 months last year.
Median sale prices were generally up 7% (Eastside) to 17% (Seattle-Metro) over those of last year in most areas throughout King County.
It’s not a pretty picture for buyers. Where is all of this demand coming from? Three factors are significantly noted by this writer. The first, King County added 48,500 jobs in the last 12 months. Yes, you read that correctly, forty-eight thousand five hundred jobs!
On top of that, rent prices have soared far higher than home appreciation and average mortgage payments, causing renters to definitely re-think the prospect of renting when they could own for far less per month. While the Seattle average annual rent appreciation was 9.1%, the most coveted areas (Queen Anne and Market) were up 17-23% in just one year. See Zillow’s rental reports at http://www.zillow.com/research/local-market-reports/ for a full analysis. Because many leases come up for renewal in spring and summer, many more buyers are in the market now than would typically be.
Lastly, the rate of new construction and issuance of building permits came to a screeching halt during the bust market of 2008-2011 wiping out many local builders and leaving a severe shortage of new construction homes. While builders have finally begun to re-enter the market at a measurable level it has been too little, too late.
With interest rates so low, those homeowners looking to move in the next several years are more focused on getting settled now at a great rate rather than taking their chances on where rates might go in the future. The bottom line comes down to monthly payment and you can buy far more house at a low interest rate than you can at a higher one. It’s like getting more house for free. So, now you have a clear picture of why the demand is so significant and further, why buyers aren’t just deciding to wait it out.
Click on the reports below for details.