It’s a seller’s market as Snohomish County home prices rebound

Remember when the housing market collapsed?

Yeah, that’s so 2007.

The market has bounced back, homes are being sold quickly and sellers are often getting what they ask for properties, and sometimes a little more.

“Inventory is controlling the day,” said David Maider, owner-broker of Windermere Real Estate/M2 in Everett. “There are a low amount of homes on the market and a relatively high number of buyers who want to take advantage of the prices and low interest rates. All of those things point to a market that generally favors the seller.”

Consider this: In April 2011, the median price for a home in Snohomish County was $225,000. Just four years later, this past April, the median price for a home in the county was $335,000. That’s an increase of $110,000, a jump of 48 percent.

While home prices fluctuate month to month, the arrow has been pointing up, and it’s been pointing up for some time.

That’s not to say the market is back to pre-recession levels. Home prices haven’t reached the top of the market set in 2007, when the median price was better than $350,000 some months.

Still, it’s in the same ballpark.

On the frontlines of the housing market are Connie Mennie and her husband, Ralph.

They’ve owned their 100-year-old home for 17 years in a historic part of west Stanwood. It’s where they raised their three kids. They wanted to sell the house four years ago when their youngest, Jake, graduated from high school, but they didn’t because the market was down.

Connie Mennie spends four hours each day commuting to her job as a customer communications supervisor at Sound Transit in Seattle.

“I want half the house and half the commute,” Mennie said. “It’s a great place to raise a family, but I work in downtown and my husband works in Maltby.”

They put their house on the market last fall but only got a few nibbles. They took it off the market in December and put it back up more than a month ago. The number of people looking at the home has been night and day.

That’s led them to ask the obvious question: Where will they move when their home sells?

“Every house we see that we like sells within a week, and I don’t want to make an offer until we know our house is sold,” Mennie said. “I like to plan things and I’m living with a lot of ambiguity right now.”

Someone who can relate is David Floan.

He’s the executive vice president of production for Evergreen Home Loans, overseeing 35 offices in six states, including a Marysville office.

Like the Mennies, he, too, is looking to sell his home, but he doesn’t know where he’d move.

“I’m personally prepared and ready to go, but the problem is I can’t find anything I want to buy,” Floan said.

While more people are putting their homes on the market, those new listings haven’t kept pace with the homes actually being sold.

In April, the most recent month of available data, homeowners in Snohomish County put 1,702 properties on the market, up from 1,591 homes a year previous. But the total number of listed properties for the county dropped from 2,237 to 1,937, a decrease of nearly 17 percent.

It’s considered a healthy market when there are six months’ worth of homes in an area. The supply of homes is measured by the amount of time it would take for the current inventory of homes to be sold if no new homes were listed.

Some parts of the county, like the Mill Creek-Mukilteo-Everett area, have less than a month of supply.

One of the factors is the recession. While home prices have increased, many homeowners haven’t built enough equity to be willing to sell and look for a new one.

People build equity two ways: by paying down the principal and by watching the value of their home increase year after year. Historically, homes increase in value in the Puget Sound area 4 percent to 5 percent per year, Floan said. That just didn’t happen during the recession.

In the past four years, homes have seen a surge in sales prices month after month. Will it continue?

Floan thinks it will, but more slowly, “in a more modest, more historic pace.” One thing that will slow the increase in home prices is an increase in interest rates.

“If we see rates ratchet up, that’s going to slow things up because there will be fewer buyers who can qualify for a home,” Floan said.

Real estate observers have expected interest rates to climb eventually, although they’ve hovered at historic lows for many years. Even if they climb, they’ll probably only come up slowly, said Deidre Haines of Coldwell Banker Bain.

“I’m pretty sure we’re going to continue to see a pretty robust market,” Haines said. “I don’t anticipate any major declines anytime soon.”

One of the market naysayers is Tim Ellis, who writes the blog Seattlebubble.com. He started the blog before the recession out of frustration that homes didn’t seem affordable. Despite the name of the blog, he hasn’t always been down on the housing market in metro Puget Sound. He eventually did buy a home in Everett in 2011.

But he’s raising questions about the market again. In a blog post this spring, he questioned whether the increase in the market is “Seattle Bubble 2.0.”

He noted similarities between today and seven years ago: double-digit rate increase in sales prices, low inventory and homes selling for more than the asking prices.

He also noted some differences, chief of which is that the no-money-down loans of the past have been regulated away and buyers are more cautious.

It all adds up to a weird market, Ellis said. Many home buyers are putting a substantial amount of money down on new homes, he said. It’s possible that other things are at play. Maybe there’s a tech bubble that could burst and hurt the housing market in the Puget Sound region. Maybe foreign investors could dry up for reasons that have nothing to do with the region.

“If we are in another bubble, I feel like the outcome is going to be very different, but I don’t know what it will look like,” Ellis said. And it’s possible that Snohomish County and the Puget Sound region are experiencing a shift in which property values climb into the rare air of areas like New York and San Francisco.

And that would be disappointing in another way, Ellis said.

“I bought a house in 2011, but my perspective is still the buyer’s perspective,” Ellis said. “It seems like that opportunity has evaporated for the people who are out there trying to buy today.”

Real estate professionals say they don’t think there will be a collapse in home prices anytime soon.

“I don’t think we’re anywhere near in a position to worry about another bubble,” said Haines with Coldwell Banker Bain. “The increase in appreciation has been pretty steady. It hasn’t gone up overnight.”

There are a lot of positives to the market right now, said Maider, owner-broker of Windermere Real Estate/M2 in Everett. Interest rates are still historically low, employment is up and consumer confidence is high.

While King County is becoming less affordable, that makes Snohomish County more attractive, he said. As for supply, there are fewer distressed homes now than just four years ago. New construction still hasn’t geared up. Maider believes that all makes a healthier market than eight years ago.

“The demand feels real,” Maider said. “I think the market is behaving like the market does when there is a low supply of inventory and a lot of demand in the marketplace.”

As for people being priced out of the market, it’s a legitimate concern, Maider said, especially since wage levels haven’t kept up with price increases.

“I think my gut response is it is all supply and demand,” Maider said. “If housing gets too high then fewer people will buy and prices will come down to the point where people can start buying again.”

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