Summary
- While COVID-19 has definitely had a short-term impact on the real estate market, conditions today are nothing like they were in 2008. Low inventory, more home equity, and higher mortgage standards support a housing market that will recover.
- Low interest rates continue to support both ‘First-Time’ and ‘Move-Up’ Buyers in all price ranges.
- Inventory across the Puget Sound Region is averaging around 1.4 month of supply; still quite a ways away from a balanced market (typically 4-6 months of inventory).
- It’s really a mixed market regarding sales, based on county, city, and specific neighborhoods. Some properties are still experiencing multiple offers and even escalations while other properties are a bit more balanced.
- Only King County reported a gain in sales; closed sales up about 7% from a year ago, with condo closings growing more than 20%. Throughout the Puget Sound, closings were nearly even with a year ago.
- Only two counties (San Juan and Ferry) reported year-over-year price drops, with the remaining counties holding even or increasing in price.
- Despite COVID-19, buyers and sellers are still active. To ensure safety throughout the process, we are following more strict showing guidelines in accordance with state-wide government orders; limiting physical showings to only two people at one time, following CDC social distancing guidelines, no physical open houses, and offering alternative virtual options for private showings.
- We’ve developed improved virtual processes to better support our clients throughout both the buying and selling process. Let us know if you’d like to hear more.
The Details
Like many sectors of the economy, residential real estate is experiencing disruption and uncertainty due to COVID-19, just when the spring market was ramping up. Not surprisingly, the March activity report from Northwest Multiple Listing Service, which covers 23 counties across Washington state, was mixed as guidelines affecting how brokers conduct business evolved. Housing activity around Western Washington in March showed the volume of new listings added during the month surpassed February’s total, as did both pending and closed sales. Year-over-year prices increased. However, commenting on the latest report, Northwest MLS brokers emphasized the numbers do not yet reflect the impact the coronavirus pandemic is having on local real estate. The impact varies across the Puget Sound Region.
The economic turmoil surrounding the COVID-19 pandemic causes concern that an impending recession would also result in a housing crisis. Fear that we are heading for another 2008 grows with every headline mentioning recession. However, the real estate market conditions today are nothing like they were before the crash. Low inventory, more equity, and higher mortgage standards are among the reasons experts believe the housing market will recover.
Due to the governor’s “Stay Home, Stay Healthy” order that became effective on March 26, we will most likely experience less inventory added and fewer sales throughout April and likely May. The success of how our state’s economy ramps back up will have a direct impact on both inventory and sales throughout the summer months.
On March 17, in accordance with an emergency declaration by Gov. Inslee limiting the size of public gatherings, Northwest MLS announced it was temporarily disabling the public and broker open house features in the MLS system. Following modifications made on March 28, brokers were urged to restrict in-person engagements and advised that limited personal interactions to show properties when necessary were permitted by appointment only with no more than two people, including the broker. Additionally, those two persons must strictly follow CDC (Centers for Disease Control and Prevention) social distancing guidelines. NWMLS provides ongoing updates to its members that emphasize balancing housing needs with the industry’s paramount concerns for the safety of the public and preventing the spread of the virus.
The market is not totally stopped. Despite limitations, Northwest MLS brokers added 10,291 new listings to the database during March, outgaining February by 2,505 listings (up 31.2%) and nearly matching the year-ago number (10,516). At the end of March, there were 9,418 active listings in the NWMLS database, a drop of nearly 22% from twelve months ago, but a gain of 23% from February. Area-wide, there was 1.4 months of supply, but it ranged from less than a month in both Snohomish and Thurston counties to more than nine months in San Juan County.
Pending sales (mutually accepted offers) slowed during March, dropping about 13.5% from a year ago. Brokers reported 8,880 pending sales during the month, which compares to 10,261 for the same month a year ago. Compared to February, pendings rose by 525 transactions.
It’s really a mixed market based on county, city, and neighborhood. For those hot neighborhoods, inventory remains low and prices are holding strong; with multiple offers and escalations still a part of new offers. For other neighborhoods, it’s a bit more balanced, allowing buyers a little more time to make decisions and negotiate slightly better terms than just a month ago. The Luxury market has slowed just a bit, but again, it depends on the specific neighborhood.
Within the Puget Sound region, only King County reported a gain in sales; closed sales were up about 7% from a year ago, with condo closings surging more than 20%. System-wide, closings were nearly even with a year ago (6,735 versus 6,750), a reflection of strong activity at the start of the year. Median prices on last month’s completed transactions rose 10.3% from a year ago, increasing from $415,950 to $458,900. Only two counties (San Juan and Ferry) reported year-over-year price drops.
Northwest MLS representatives were generally upbeat about the adjustments being made and the prospects for recovering as brokers navigate through the crisis. Utilization of virtual showings and on-line views have experienced record traffic. New ways to market and care for clients virtually will be key during and post recovery.
There is some good news…it’s still a great time for both buyers and sellers. Buyers still have access to very low interest rates. Active sellers are seeing less competition due to low inventory. And both buyers and sellers who are currently active, are motivated.
And that’s our March Housing Update. Stay safe and stay healthy!
