Bidding wars, all-cash deals, 20 or more offers on a single home — that would be the real estate market here and in many places across the country.
It’s been a wild, year-long ride, say local real estate agents.
Last spring, the start of the traditional home-buying season collided with the COVID-19 pandemic and stay-home orders. That did not seem promising for the real estate market.
A few months later, it turned around, and in a big, big way.
Apartment and condominium dwellers and urbanites, especially those able to work from home, yearned to vacate cramped quarters and purchase a home. They were met by historically low interest rates: The average fixed-rate 30-year mortgage dipped below 3%.
Only one problem: There were more potential homebuyers than available homes.
“Demand vastly outstripped supply, and so, of course, prices jumped between 10% and 18% in the first six months of this year,” said Randi Szakaly, an agent with Windermere Real Estate in Everett.
As a result, multiple offers became the norm.
George Caudill, a longtime agent with Pacific Properties in Lynnwood, received 43 offers on one property, 26 on another. In the old days, he reviewed them one by one. To evaluate so many bids, “I had someone build me an Excel spreadsheet,” Caudill said.
Home and listing prices began to climb.
In Snohomish County, the median sales price of a single-family home in June was $716,000, up a whopping 32% from a year ago. That means that the house that sold for $716,000 in June sold for $541,875 a year ago, according to data from the Northwest Multiple Listing Service.
The spike is in line with the national median sales price, which was up 23% from a year ago June, according to the National Association of Realtors. King County numbers lagged, but not by much. The median sales price for a King County home in June, $860,000, was up 19% from a year ago.
Is it cooler?
A few recent signs point to a cooling market. For one thing, the sales of newly built homes has declined across the U.S. in recent months.
On the other hand, the National Association of Realtors reported that the sale of existing homes perked up slightly — 1.4% in June after trending downward for a few months.
The local real estate market took a breather from about Father’s Day, June 20, to mid-July, Caudill said. “It was snoozeville for a while.”
Szakaly says the summer lull is to be expected — folks are celebrating the holidays or taking long-awaited vacations. Sales are likely to pick up in the fall, she said, especially since mortgage rates continue to hover at around 3%.
On the supply side, there’s a glimmer of hope — the number of Puget Sound-area listings is up 14% in recent months, according to the Northwest Multiple Listing Service.
“Homebuyers will be happy to hear that between May and June the number of listings in King, Pierce and Snohomish counties rose, giving them more homes to choose from and possibly easing the pressure just a little,” Matthew Gardner, chief economist at Windermere Real Estate, told the listing service.
Szakaly and Caudill say there may be several reasons for the uptick in inventory.
Many homeowners are just now completing their spring project lists that are intended to spruce up their property and get it ready to sell, Szakaly said.
Caudill with Pacific Properties says a few clients were holding off putting their homes on the market until more people were vaccinated. “They just weren’t comfortable having the house shown until the numbers were up,” Caudill said.
Szakaly usually advises sellers to stay with friends or rent a hotel room to avoid the hassle of multiple showings.
In this market, it’s usually a short hotel stay, she said.
“Right-priced property is going to continue to sell quickly,” often going under contract in a week or less, Szakaly said.
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, agrees.“Many homes are going under contract within days due to the intense buyer demand,” he said.
Still, the bump in inventory may be short-lived, John Deely, executive vice president of operations for Coldwell Banker Bain, told NWMLS.
“We continue on a trajectory that will keep the Puget Sound region at the top of national lists for one of the hottest housing markets,” Deely said. “Inventory on hand remains at two to three weeks in the larger counties.”
A normal real estate market might offer a five-month supply of homes for sale. If there are 50 homes on the market, and 10 homes sell each month, that’s a five-month supply.
Nationally, first-time buyers accounted for 31% of home sales in June, down from 35% a year ago, the National Association of Realtors reported.
Affordability, especially for first-time homebuyers, is an ongoing concern for real estate agents, lenders and government officials, particularly in communities grappling with residential density or land use issues.
In Snohomish, King and Pierce counties, less than a quarter of June’s single-family homes had a list price under $400,000, which is considered in the affordable price range. By comparison, about a third of homes in the three counties were listed at $800,000 or above.
With homes in short supply, it’s no surprise that prices are being bid up. But some homebuyers are raising the stakes.
Some local buyers have downsized and sold larger homes, and have the funds for a sizable down payment or an all-cash purchase, Szakaly said.
The region’s tech sector is also a factor. It continues to draw new residents to the area, some of whom have sold homes in higher-priced markets and are ready to offer tens or even hundreds of thousands of dollars over a home’s list price.
Greater Seattle had the third-highest number of tech job postings in the U.S. last year, ahead of the San Francisco area, according to Indeed, an online job board. Those jobs typically include a hefty paycheck. Seattle-area tech salaries are some of the highest in the nation and average $109,628 a year. Only Silicon Valley, where the average is $123,826, offered more, Indeed reported.
“I had a young couple in their 30s up here from California — robotics experts,” Caudill said. “They were each bringing home $15,000 a month with no car payment. They wanted a shelter for their money.”
Said Deely with Coldwell Banker: “Given indications from tech companies like Amazon and Microsoft to lease large office spaces and hire thousands of employees in our region, drawing people from higher-priced markets like Silicon Valley with lots of money to spend, we don’t see much change in this scenario for buyers in the short term.”
In the old days, one of the first questions a home buyer might ask was how are the schools? Now they’re more apt to ask about internet speed or whether there’s sufficient square-footage for a home office, Caudill said. He’s also seen a spike in the number of homebuyers seeking space for mom and dad.
“I’ve had a couple clients say they’re bringing their parents to live with them,” Caudill said. “Instead of putting them in a retirement home, they’re saying, ‘Let’s have them with us,’” Caudill said. For those clients, the checklist includes a master bedroom on the main floor with at least a three-quarter bathroom for their parents, he said.
Buyers still ask about the school district, but now they’re also sizing up the backyard.
“They want a place for the kids to play where they can keep an eye on them instead of sending them around the corner to the park,” Caudill said. Because of that, smaller or less-up-to-the-minute homes with big backyards may command a higher price than a newer or even larger home on a smaller lot, Caudill said.
What’s a buyer to do?
Carole Falleen, an agent with Windermere Real Estate in Everett who partners with Szakaly, offers these pointers to homebuyers:
Above all, “treat your search for a new home like a job,” said Falleen. Be pre-approved with a lender before you begin looking at homes. Be ready to pounce if you view a property you want.
If you haven’t purchased a home in 10 or more years, be aware that many homes are going under contract in a matter of days. Mulling whether to make an offer for a week or more isn’t realistic in this market.
While you can purchase a home with 3.5% down, an offer is more likely to get a serious look if it includes 10% or 20% down.
If you’re a first-time home buyer or on a budget, consider looking at properties that need to be updated or remodeled.
Familiarize yourself with the area before you begin a home search. If you’re a walker, check out the sidewalk situation. If you’ve got kids, scope out the nearby parks. Are you a pet lover? Ask about the homeowner association’s pet policy before you put in an offer.
“You can change the house, remove walls and paint the interior, but you can’t change the location,” Falleen said.
Janice Podsada; firstname.lastname@example.org; 425-339-3097; Twitter: JanicePods