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CONTACT SCBJ Kurt Batdorf, Editor kbatdorf@scbj.com

House sales prices fall while listings increase

SCBJ staff

Value is what's selling in the current housing market, according to members of Northwest Multiple Listing Service.

Commenting on the Friday 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.

In Snohomish County, members reported 642 closed sales, down 18.8 percent from 792 closed sales in August 2009. Pending sales numbered 906, down 23.8 percent from the 1,189 reported one year earlier.

On Camano Island, there were 21 closed sales, up from 16 last August. Pending sales fell from 29 last August to 27 last month.

“It is solidly a buyer's market,” said NWMLS director O.B. Jacobi, general manager of Windermere Real Estate Co. “The market is good for sellers who price their homes correctly. 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.

Snohomish County's combined median sales price for homes and condos fell 8.77 percent, from $285,000 in August 2009 to $260,000 last month. On Camano Island, year-over-year August sales prices rose 6.3 percent from $233,750 to $248,500.

For single-family homes (excluding condos) in Snohomish County, the median price was $267,972, down 10.66 percent from a year ago. Prices increased from 12 months ago in Clark, Grays Harbor, King, Kitsap, Kittitas, Mason, San Juan, Skagit and Thurston counties.

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 12 months ago. Among them, Snohomish County's active listings rose 7.74 percent, from 5,559 to 5,989.

“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.

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

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

“I believe we are going to see this same type of market through the end of the year and into first quarter 2011,” Stenvers said.

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 said. “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.”