Last week Windermere hosted 16 members of the China Alliance of Real Estate Agencies (CAREA) during a daylong tour of Seattle and Bellevue, WA. CAREA is a coalition of the largest regional and national real estate companies in China, representing over 60 percent of all Chinese real estate sales. Their stop in Seattle was a part of a four-city tour that also included Chicago, New York, and Dallas. The cities were identified because of their popularity amongst Chinese investors/buyers, and the CAREA member’s desire to better understand the residential real estate markets in those areas.
The group’s interest in Seattle stems from the growing number of Chinese foreign national buyers in the area, especially in neighborhoods like West Bellevue where real estate brokers say buyers are drawn to the newer homes, top-performing schools, and proximity to high-end restaurants and shopping. This year, Seattle surpassed San Francisco as the second place in the world where Chinese millionaires want to purchase property (according to Shanghai-based Hurun Research).
Windermere took the group on a tour of three luxury homes in West Bellevue that are on the market for between $5 and $10 million. The tour started with a new construction home priced at $6.8 million in Clyde Hill, represented by Windermere broker Shawna Ader. The second stop was a more traditional home in Medina for $5.3 million, listed by Windermere broker Wendy Paisley. The last home was the show stopper, an incredible manse priced at just under $10 million on Yarrow Point, represented by Windermere broker Anna Riley.
Along for the ride were also several members of the media who were drawn to the story about Chinese interest in the Seattle-area housing market. KING 5 News, KOMO 4 News, Q13 News, and the Seattle Times all spent time touring the homes and interviewing representatives from CAREA and Windermere about the reasons why Seattle is an increasingly popular location for international buyers.
Following the luxury home tour, the Chinese guests and Windermere executives gathered for lunch and a presentation by Windermere Chief Economist, Matthew Gardner, who provided an overview of the greater Seattle area housing market and economy. The day was then capped off with a seaplane tour of Seattle by Kenmore Air. As CAREA vice president Yi Lui stated after the tour, “A float plane is the way to sell Seattle.”
Housing demand is still exceeding supply. The low inventory has kept the market in an upward appreciation trend. Find out what the average days on market is, as well how much home prices have risen since 2015.
Washington State continues to see strong employment growth, outpacing national numbers with an annual rate of more than 3%. Interestingly enough, despite these substantial job gains, the unemployment rate remains stubbornly high at 5.8%. However, we're not overly concerned about this because it’s largely due to a growing labor force rather than a declining job market. This means that those who are unemployed who had previously stopped looking for work are now resurrecting their job searches because they have confidence in the economy.
We're expecting to see a modest drop in the unemployment rate through the balance of the year, and believe we will continue to outperform the nation as a whole with above-average job gains.
HOME SALES ACTIVITY
There were 22,721 home sales during the second quarter of 2016, up by 4.4% from the same period in 2015. We finally saw a much-needed increase in listings, which rose by 30.1% between first and second quarter. This increase in the number of homes for sale led to an increase in sales, which rose by 4.4% when compared to the same period in 2015.
Island County saw sales grow at the fastest rate over the past 12 months, with sales up by 22.1%. This is a small county which is subject to wild swings, so I take the data at face value. That said, the larger Thurston County saw sales up by an equally impressive 19.7%. Most interesting is that King County saw sales fall modestly compared to the same time period in 2015. Price—and supply—are clearly an issue in the most populous county in our state.
Overall listing activity was down by 21.8% compared to the second quarter of 2015, but the good news is that the supply side deficit is actually getting a little less than we have seen over the past few years. The total number of homes for sale was 30.1% higher than seen at the end of the first quarter. While much of this can be attributed to seasonality, it is still nice to see!
The region is experiencing positive job growth, and with it, migration to Washington State is running at a very brisk pace. Given these factors—in addition to our lack of new home construction—it is not surprising to see demand substantially usurping supply. As I look forward, I believe inventory levels will continue to rise modestly, but it will remain a solidly seller's market for the rest of the year.
With demand still exceeding supply, we should not be surprised to see average sale prices continuing to rise, as is certainly the case in our region. Home prices rose by 8.1% between the second quarter of 2015 and the second quarter of this year. This is down from the annual rate of 10.1% that we showed in our last report, but the rate is still far higher than the historic average of 4%.
Regular readers of this report will remember that there were several counties where average sale prices in the first quarter were actually lower than seen a year before. It was suggested that seasonality was to blame and that was indeed the case, with all counties in this report now showing annualized price gains.
When compared to the second quarter of 2015, price growth was most pronounced in San Juan County and, in total, there were nine counties where annual price growth exceeded 10%.
The prevailing supply/demand imbalance continues to push prices higher, and persistently low interest rates are just adding fuel to the flames. If rates stay at current levels, it is unlikely that we will see much in the way of slowing appreciation for the rest of the year.
DAYS ON MARKET
The average number of days it took to sell a home dropped by 17 days when compared to the second quarter of 2015.
It took an average of 67 days to sell a home in the second quarter of this year—down from both the 86 days it took to sell a home in the first quarter of this year, and from the 84 days that it took to sell a home in the second quarter of 2015.
The only market where the length of time it took to sell a home rose was in the notoriously fickle San Juan County, where it rose by 30 days to 196 days. In the rest of the region, the average decrease in the time it took to sell a home between the second quarter of 2015 and the second quarter of 2016 was 20 days.
Snohomish County has joined King County as a market that takes less than a month to sell a home. At 18 days, King County is unarguably the hottest market in the region, but sales are slowing due to the lack of inventory. This imbalance is unsustainable over the long term.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the second quarter of 2016, we're leaving the needle in the same position as last quarter. Inventory levels have improved, albeit modestly, and price growth has slowed very slightly. However, this is offset by a jump in pending sales, a slightly higher number of closed sales, and a drop in interest rates. As such, the region remains staunchly a seller's market.
Despite increasing prices, there is intense competition among buyers because inventory is at all-time lows. That means multiple offer and bidding wars, increasing the likelihood that your home will sell above your asking price. The median price of a single family home sold in King County in February was $514,975, a whopping 20% increase over a year ago. The Eastside’s median price was up 20% to $739,975. You may be surprised at how much your home is worth today.
4 Reasons to Sell Your House Now
1) Sale prices are at all-time highs.
Home prices in King County hit new highs last month. The median price of a single family home sold in King County in February was $514,975, a whopping 20% increase over a year ago. The median price in Seattle was up 24% to $644,950. The Eastside’s median price was up 20% to $739,975. You may be surprised at how much your home is worth today.
2) Competition among buyers is driving prices even higher.
With such limited inventory, homes in King County are selling rapidly – sometimes in days. If you list your house now, chances are you’ll get a buyer quickly.
4) You can make the sale work to your needs.
With competition for homes so fierce, you have the freedom to make the deal that works best for you. Many buyers are paying cash. They’ll also make concessions. Do you want to stay in the home a few months after the sale? Want a large earnest money payment? You’re in the driver’s seat, and many buyers are willing to do what it takes to get the home they want.
It’s a seller’s market.
Are you ready to take advantage of it?
All of the latest statistics are pointing to a seller’s advantage right now. But are there still benefits for buyers in this market? Absolutely.
Some potential home buyers may be hesitant to start their home search with extremely low inventory and high home prices in the Puget Sound region. While home prices have been increasing year-over-year, so have monthly payments for new buyers.
This is when you ask yourself: What is the cost of waiting to buy?
Between March 2015 and March 2016, the median home price on the Eastside increased $106,886. While the mortgage rate dropped slightly, the monthly payment increased $462 tacking on an extra $5,544 per year! How much more can it increase between now and March of 2017?
If you want to wait, just remember how much more you could spend per month if you hold off until next year to buy a home. Take advantage of these low rates and payments; get in touch with your real estate broker to help you navigate our housing market and find your new home.