According to the National Association of Realtors (NAR), existing-home sales nationally were down in March, but continue to outpace year-ago levels. So what does this mean for the housing market?
Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases.”
“We were expecting a seasonal increase in home listings, but a lack of inventory has suddenly become an issue in several markets with not enough homes for sale in relation to buyer interest,” Yun said. “Home sales could be held back because of supply factors and not by demand–we’re already seeing this in the Western states and in South Florida.”
King and Snohomish Counties are definitely feeling the effects of a substantial decrease in new listings. According to statistics from the Northwest Multiple Listing Service (NWMLS), inventory levels have reached record lows. All but a few areas are reporting less than a two month supply of homes.
Using NWMLS statistics, non-foreclosure listings have decreased 30 percent with pendings up 58.5 percent during the last six months. Average square foot prices have increased 3.3 percent. Prices are similar when combining King with Snohomish, Pierce and Kitsap counties.
According to Trendgraphics, King County has seen a 17.3 percent decline in foreclosures in March from February. It is not surprising that sales (combining sales with pendings) are up 34 percent over the same period. Looking at the previous 6 months, there has been a 38 percent decrease in new foreclosures with sales up 22 percent. Average listing prices have actually increased 1.1 percent (Ed. Note: According to NWMLS, however, King County closed sales prices in March 2012 declined 7.8 percent from March 2011). Shortage of inventory is influencing what price lenders are willing to negotiate. Low balling is no longer an option on a property that a buyer really wants. In deciding what value to place on a short sale or foreclosure, buyers should keep these stistics in mind to help determine their offering price.
All-cash sales slipped to 32 percent of transactions in March from 33 percent in February over 35 percent in March 2011. Investors account for the bulk of cash transactions but many lenders are changing their loan processes and are opening lending opportunities.
Both national and local statistics highlight the return of investors to the housing market. Investors purchased 21 percent of homes in March, down from 23 percent in February and 22 percent in March 2011. Most of the interest has been in foreclosures, but not all. With rentals in high demand, many investors see possibilities in well-priced non-foreclosure residential homes as well as duplexes. Low prices are bringing investors from Canada as well as many Pacific Rim countries.
First-time buyers accounted for 33 percent of transactions in March, 32 percent in February and 33 percent in March 2011. Figures for first time buyers generally include buyers who have not owned a home for at least 3 years.
These numbers do not guarantee a continual upward swing in home prices. They do, however, lend hope to the expectation that we have reached the bottom of the market. Demand always effects perceived value. The best thing these numbers indicate is that buyers are willing to make the step into home ownership. Consumers need to feel confidence in the economy before making a major purchase. Are we confident yet?
Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales.