Local Housing Market Nearing Crisis Situation For Buyers

Posted by Cary W Porter on Tuesday, January 25th, 2022 at 12:33pm

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“That’s just not normal. That’s not a balanced market,” “It really is a crisis of housing inventory in our area,”

Those are just some of the adjectives being thrown about concerning the local Western Washington housing market.

Just two weeks ago we predicted that January would be a competitive month as buyers rush to find a home before mortgage rates climb—and that's exactly what we're seeing.

A quick search on Redfin shows many examples. This Kirkland home sold for $500,000 over asking. This house in Bellevue, listed at $1.5 million, sold for $2.4 million— about $900,000 over asking price.

By Deedee Sun, KIRO 7 News

SEATTLE — A wild housing market is forcing many Seattle-area home buyers to pay $300,000 to $500,000 over asking price — in some cases, even nearly $1 million over asking.

Homes are getting snatched up hours after they go on sale. Open houses bring so many people, there are lines down the street.

“If you’re a buyer it’s tough. It’s pretty brutal out there. It’s been tough for buyers for the past four years, but in the last 3-4 months it’s just really felt like the most difficult market that we’ve ever navigated,” said Kendra Todd, a real estate broker with Kendra Todd Group at Keller Williams. “It’s fairly common — on the Eastside in particular — for people to be escalating $300,000, $400,000, $500,00 over list price.”

Todd, who has worked in real estate in Seattle for 14 years, says she has never seen anything like what’s happening now.

“That’s just not normal. That’s not a balanced market,” Todd said. “It really is a crisis of housing inventory in our area,” she said.

It’s making for long and difficult experiences for home buyers.

“It is frustrating. It’s definitely frustrating,” said Zening Chen, a West Seattle resident. He and his fiance are expecting, and they’re looking to move out of their current home in hopes of finding a house with fewer stairs that’s a better fit for a baby. “The last house we put an offer on had 20 offers total, with several people paying all cash. It’s crazy,” he said.

Steph Giola and her husband are also house hunting. She said they’re trying to play the game, making offers that are hundreds of thousands over asking price but are still getting out bid.

“It’s not even close. It’s 20 people making offers and they’re going at a half million plus over asking,” Giola said. “It’s exhausting knowing there’s only so much you can do,” she said.

“It’s competitive like I didn’t think it could get,” Giola said. “It’s definitely pretty cutthroat and quite an experience,” she said.

Zillow’s senior economist, Jeff Tucker, says there are a few reasons driving what’s going on. He says one reason is that the omicron COVID-19 surge likely stopped sellers from putting their homes on the market.

“If you go on Zillow, there are hardly any homes of any type for sale,” Tucker said. He said Zillow data showed big cities with the most conservative responses to COVID-19 showed the largest shrinks in housing supply.

Buyers Pour into the Housing Market Amidst Rising Mortgage Rates

Prices surged last week 16% over 2021, kicking off what could be the most competitive month in housing history.

You can find our full report in this week's housing market update. 

Projections are homes listed by March and closing in April will see the maximum number of bidding wars and escalating prices.

When is the best time to sell in 2022?

While there will always be variables such as quality of upgrades, location, and market conditions such as lack of inventory we are facing a unique situation in 2022.

1)     Interest rates are predicted to increase to 3.7 possible by as early as June and be around 4% by year's end.

2)     Conforming loans also received a huge increase from the 2021 cap of $776,250 up to $891,250. That’s an increase of $115,000 and adds much more buying power early before the interest rate increases.

3)     We are also faced with historically low inventory. In fact, inventory has dropped 90% in the past 10 years, and we currently only have a little over 4,000 homes for sale in all of Western Washington with a population of 5.5 million people. Additionally, we are projected to add upwards of 200,000 more people per year for the next 10 years.

All of this creates a perfect storm for listing early in 2022.

  •         Frustrated buyers with pent up demand seeing projections of homes increasing another 18 to 20% for 2022.
  •         Increased buying power of $115,000 for conforming loan limits.
  •         Pressure to buy NOW while rates remain closer to 3%.

Projections are homes listed by March and closing in April will see the maximum number of bidding wars and escalating prices.

In December 2021, Sammamish home prices were up 60.0% compared to last year, selling for a median price of $1.9M. On average, homes in Sammamish sell after 5 days on the market compared to 7 days last year. There were 48 homes sold in December this year, down from 102 last year.

  •   Most homes get multiple offers, often with waived contingencies.
  •   The average homes sell for about 9% above list price and go pending in around 5 days.

Newly-released year-end data from the Northwest Multiple Listing Service (NWMLS) showed that “annual sales volume surpassed 100,000 transactions” in the region in 2021, the first time that has ever occurred. In total, 107,354 sales combined for over $75 billion in value, marking a year-over-year increase of roughly 33%.

“Last year’s robust sales came despite record low inventory,” the NWMLS said in a press release. “No month had more than a month of supply.”

Typically, a so-called “balanced market” will have between four and six months of inventory. According to the NWMLS, the Puget Sound region hasn’t had four months of inventory in nearly seven years.

That’s made it a decidedly seller-friendly market, evidenced by the fact that buyers paid nearly 105% of the listing price on average last year. That number increased to almost 107% in King County, and 106% in Snohomish County.

That was accompanied by a 20% jump in prices for single-family residential homes region-wide, and a 14% increase in King County.

Only Prices Rose: 2021 Ends with Depleted Inventory, Rising Prices

 

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