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Kurt Batdorf, Editor
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Published:
Tuesday, June 5, 2012
Tight inventory, low interest rates boost home sales
Median home sales prices posted a gain in May, the second straight month-over-month increase after several years of consistent declines.
The Northwest Multiple Listing Service reported a median sales price of $259,933 for a single-family residence, up 7.3 percent from the May 2011 median price of $242,250. Pending sales rose 20.9 percent, from 1,087 in May 2011 to 1,314 last month. Over the same period, closed sale were up 24.9 percent, from 684 to 854.
The number of closed condo sales were up 7.4 percent and pending sales were up 16.2 percent. Median sales prices increased in some parts of the county, but the overall median sales price dropped 7.5 percent, from $163,995 in May 2011 to $151,700, MLS data showed.
Active listings for homes and condos in the county in May sank more than 48 percent compared to May 2011.
Low listing inventory and record-low mortgage rates are intensifying buyer competition for homes close to job centers, according to brokers who commented on the latest market report from Northwest Multiple Listing Service.
Snohomish County’s listing inventory is the lowest of the 21 counties in the MLS market area. While real estate industry analysts consider a five- to six-month supply of homes to be a sign of a balanced market, Snohomish County had the lowest supply at 1.51 months, meaning it would take that long to sell the homes available if no new houses were listed for sale. Also facing a tight supply are King County (1.73 months), Pierce County (2.52 months), Thurston County (3.53 months) and Kitsap County (3.75 months).
“The six-month trend of low listing inventory continues to cause strong buyer competition for homes close to job centers,” Northwest MLS director Joe Spencer, area director for Keller Williams Northwest Region, said in a news release. He said he does not expect this trend to change direction “for quite some time due to what appears to be long-term economic and demographic influences.”
Spencer said low inventory levels, combined with “unbelievably low interest rates” will continue to lead to home values stabilizing in most areas, while in other areas “we are already experiencing modest appreciation.”
Northwest MLS figures show 10 counties in its service area experienced year-over-year price gains on closed sales of single-family homes.
J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said buyers are back purchasing homes, “igniting strong sales activity up the price points.” This, combined with the low supply, and in some areas, shortages of homes for sale, is creating what Scott said is “instant market activity from a backlog of home buyers” when market-ready homes are listed.
Record-low mortgage rates are driving homebuyer affordability, according to Frank Nothaft, vice president and chief economist at Freddie Mac. Rates as of May 31 were reported to be an average of 3.75 for a 30-year fixed mortgage, an all-time record low, and “an unprecedented” average of 2.97 percent for a 15-year fixed mortgage.
Nothaft said ongoing economic turmoil in Europe contributed to a decline in long-term Treasury bond yields to help bring fixed mortgage rates to new record lows. Compared to a year ago, he said rates on a 30-year fixed mortgage rate are almost 0.9 percentage points lower which translates into nearly $1,200 less in annual payments on a $200,000 loan.
Kurt Batdorf: 425-339-3102, kbatdorf@heraldnet.com.