Steady job growth, lack of buildable land fuel home sales and prices

EVERETT — Home builders are running out of room for new developments in south Snohomish County, real estate industry insiders say.

The lack of developable land is one reason listed homes are selling quickly and median prices are rising.

Steady job growth in King and Snohomish counties and low interest rates are driving demand, which has consistently overwhelmed the number of homes and condos for sale, according to market data from the Northwest Multiple Listing Service.

The NWMLS compiles sales listings from real estate agents in 23 Washington counties.

Builders can’t find enough affordable, available land to meet the influx in demand, said Mike Pattison, of the Master Builders Association of King and Snohomish Counties.

Pattison is the industry group’s government affairs manager for Snohomish County.

In areas that are nearly built out, developers are having to think small, he said.

Development projects are shrinking from dozens of homes to “six, nine, even just four homes,” he said.

Builders have flocked to the Mill Creek-Bothell area in recent years. More new homes were sold in 2014 in that area than anywhere else in Snohomish and King counties, according to MetroStudy, a firm that tracks housing data.

The area will likely be built out in three to five years, the firm’s regional director, Todd Britsch, told The Herald earlier this year.

The lack of land is not a surprise.

“We’ve been ringing the bell on the lack of supply for several years,” Pattison said. “There’s very little political will to expand” urban growth boundaries.

Restrictions on stormwater runoff and other environmental regulations make some land too costly to develop, he said.

Environmentalists and anti-sprawl advocates defend such regulations and growth boundaries as necessary to maintaining the area’s quality of life.

Some developers have built up, rather than out. Downtown Everett has seen hundreds of new apartments built in recent years.

But increasing building heights can meet local opposition in some areas, such as in Edmonds, Pattison said.

It could “take an affordability crisis” to resolve the situation, he said.

The median home price in Snohomish County in July was $362,987, an 8.35 percent increase from a year ago.

King County’s median price of $485,000 last month was a 3.63 percent rise.

Across Washington, the median price was up 4.11 percent, according to the NWMLS.

With prices rising and houses in short supply, homeowners are hesitant to sell without new housing lined up, said Matthew Gardner, chief economist at Windermere Real Estate. “It creates a classic chicken-and-egg scenario.”

At the current pace of sales, home buyers would go through all houses on the market in Snohomish County in less than two months, according to the NWMLS.

King County has an even lower supply — enough to last about five weeks. The NWMLS recorded an average inventory of slightly more than two months. A healthy market has five or six months worth of inventory.

Homes for sale are expected to remain in short supply through next summer, but Gardner said he doesn’t see any sign of a housing bubble.

The last bubble — which burst in 2007, prompting the worst economic downturn since the Great Depression — was fueled in large part by speculative construction and banks making bad loans, neither of which are happening now in metro Puget Sound, he said.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

July housing market

All data are for single-family homes. The information is for county, median price and sales inventory (months).

Snohomish: $362,987, 1.85

King: $485,000, 1.22

Island: $279,000, 3.22

Skagit: $270,000, 3.32

Pierce: $247,000, 2.22

Source: Northwest Multiple Listing Service

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