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The Northwest MLS tallied a busy December 2012 as First-time buyers and investors return.
Home buyers around western Washington made offers on 5,314 residences during December, outnumbering the 3,857 owners who listed their homes for sale.
The imbalance helped push up prices and further thin the already depleted inventory.
While the expected seasonal slowdown occurred in December, determined buyers were undaunted by sparse inventory and record breaking rainy days, according to December statistics from the Northwest Multiple Listing Service.
This is a unique housing market, and there is nothing normal about the combination of factors fueling the current market.
MLS members reported 5,314 pending sales of single family homes and condominiums last month for a modest year over year increase of 1.5%
That volume of mutually accepted offers fell from November’s total of 6,522 but far exceeded the number of listings, 3,857, that members added to the MLS system during December.
It also marked an unprecedented fourth straight month when pending sales outnumbered new listings.
MLS members tallied 5,267 closed sales during December, out-gaining the same month a year ago by 526 transactions for an increase of about 11.1%.
The 2012 total of 64,624 closed sales was 14.8% higher than the volume reported for 2011.
Brokers expect the housing market rebound to continue, while cautioning sellers to refrain from becoming too greedy and expressing hope for “controlled natural growth” to sustain the recovery.
They also believe distressed properties, rising rents and re-engaged investors will have an impact on activity for the foreseeable future.
Many buyers are no longer considering short sales or bank owned property because of the uncertainty and complexity of those transactions, opting instead to focus on non-distressed listings that would likely close in a more reasonable and more predictable time frame.
As time goes by the short sale and bank owned home will become more and more of an investor target.
Even with distressed properties (and the lower prices they usually fetch) being part of the mix of sales, median sales prices are edging up. Last month’s buyers paid more for their home than purchasers of a year ago, and the number of properties sold for a million dollars or more jumped nearly 56%, rising from 68 in December 2011 to 106 in December 2012.
The median price area-wide was $255,000, up 13.3% from twelve months ago when the price was $225,000.
Prices rose by double digits in ten of the 21 counties in the Northwest MLS service area. Homes and condos that sold in King County commanded the highest prices at $342,000, reflecting a gain of more than 17.5%.
Nationally home prices rose by 7.5% annually and for the 13th consecutive month
For single family homes (excluding condos), the median selling price rose $30,000 system wide (about 12.8%) climbing from $235,000 a year ago to $265,000.
In King County, the median sales price of a single family home jumped nearly 18.8%, from $320,000 to $380,046.
Within the county, the biggest increases on single family homes that sold were reported in Skyway/Bryn Mawr area (up 89.8%)
Central Seattle (up 50.2%)
Vashon (up 35.6%)
Bellevue west of I-405 (up 28.6%)
Burien-Normandy Park (up 26.9%)
Prices and the number of multiple offers may be rising in part because of shrinking inventory.
At the end of December, there were only 17,718 properties for sale, which compares to 26,630 active listings for the same time a year ago. (down 33.5%)
In Snohomish County, year over year inventory was down more than 53%, while in King County the selection was about half the year ago levels: 3,801 listings versus 7,472.
Looking ahead, many brokers expect a strong market in 2013, with some expressing concern about “frenzied bubble growth”.
Last year was the best year in real estate for both buyers and sellers since 2007, with better pricing for homes, lower interest rates than ever recorded in history, and best of all, the opinion that the market has finally bottomed.
Those factors combined to start a buyer frenzy from February to mid-August.
We fear another “perfect storm” with double digit appreciation will return, but prefer “controlled natural growth” as the best recipe for long term economic stabilization, “not frenzied bubble growth with no foundation for support”.
Low unemployment, less inventory, low interest rates and rising rents are among factors that will create a strong housing market in 2013.
The return of first-time buyers who find it is becoming cheaper to own than rent and the imminent multi-billion dollar settlement involving foreclosure mishandling by 14 banks also bode well for a more balanced recovery.
An example of that is a $367,665 loan closed in December has a payment of $1,600 per month on a house that would rent for $2,395.
Another positive indicator brokers noted is improving builder confidence. It recently rose to its highest level in more than six years, according to a National Association of Home Builders (NAHB)/Wells Fargo survey released in December.
Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB research.