King County Median Home Price – Now Under $400k

Housing activity for Northwest Multiple Listing Service members was disappointing last month, but not surprising, according to one industry executive. He and other representatives of the Northwest's largest MLS believe the situation is improving.

Housing activity for Northwest Multiple Listing Service members was disappointing last month, but not surprising, according to one industry executive. He and other representatives of the Northwest’s largest MLS believe the situation is improving.

“The results we’re seeing from October’s homes sales were not unexpected,” said Ron Sparks, managing vice president of Coldwell Banker Bain in Bellevue. He said a unique and historic combination of events has frozen many buyers. “The daily roller-coaster of events in the financial sector this past month has understandably caused a high degree of uncertainty with buyers and sellers alike, and uncertainty is not a good thing when making one of life’s most important decisions,” he noted.

October’s pending sales fell more than 27 percent from the same month a year ago, and dropped nearly 26 percent from September. Northwest MLS members reported 4,445 pending sales of single family homes and condominiums across its 19-county market area last month. All counties reported double-digit drops.

Sparks said the added anticipation of electing a new president who will have his own ideas about how to support the housing recovery created a recipe for the market ‘suspension’ this area and other markets experienced during the past month.

Others pointed to the stock market turmoil and misperceptions about the availability of mortgage loans as restraints on activity.

Listing activity also slowed during October, with members adding 9,647 new properties to inventory. The total, which included 8,129 single family homes and 1,518 condominiums, was the smallest number added to inventory since December 2007. Inventory is at its lowest level since February. At month end there were 46,189 active residential listings in the MLS system. That’s down 2.5 percent from a year ago when members reported 47,381 active listings. The highest volume so far in 2008 was of 51,817, the total inventory at the end of May.

Prices followed the downturn. For October’s 4,512 closed sales of single family homes and condominiums combined, the median price system-wide was $291,000, down 7.4 percent from a year ago. A comparison with September shows a 1.3 percent decline from the median selling price overall of $295,000.

Prices for completed sales of single family homes (excluding condos) fell about 9 percent last month compared with a year ago. Condominium prices dipped only 3.8 percent overall from a year ago.

Despite market volatility and shaky consumer confidence, one industry leader emphasized it’s important to understand that advantageous market conditions currently exist for those who are motivated to buy. “The truth of the matter is the market conditions are ideal for first time buyers, move up buyers, and investors,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. 

Scott noted interest rates are at historic lows for conforming and FHA loans and a variety of great mortgage options are available, despite perceptions to the contrary.

The perception that “no one is lending money” is inaccurate, said NWMLS director Matt Deasy of Windermere Real Estate/East Inc. Most loans have been federalized via Fannie Mae and Freddie Mac, but money is available, he emphasized. Deasy suggests potential buyers talk with real estate agents for referrals to good sources for mortgage loans.

“The public is waiting for a sign that all is going to be okay,” remarked NWMLS director Ken Bacon of Windermere Real Estate in Redmond. Incentives are also needed, he believes. For example, Bacon said the suggested reduction in interest rates would be buyers’ best stimulus, while admitting some misgivings about federal bailout programs. “The bailouts have to some extent created a different mentality for our buyers who wonder what these bailouts will do for them.

“A 1 percent or so reduction in interest rates would be viewed as a sign that they too may benefit from the bailout mentality,” Bacon commented, adding, “It would open the minds of ‘waiting to see buyers’ and create the first step for more buyers to pursue their dream of home ownership.” He believes a reduction, or buy down, in interest rates could accelerate the stabilization and turnaround of the housing market, and is confident Seattle’s market will recover, noting “only the timing is uncertain.”

Sparks also commented on the mortgage market. “Our real estate market continues to be affected by lending institutions. Many banks appear to have the ability to lend, but at a time when cash reserves are so precious, lack the desire to lend. This lack of desire is very apparent when you see how mortgage interest rates have increased steadily over the last 30 days,” he stated.

(According HSH® Associates, the nation’s largest publisher of mortgage and consumer loan information, the rate on a 30-year fixed rate mortgage for the week ending 10/31/08 was 7.05 percent; a year ago it was 6.73 percent.)

NWMLS leaders agreed consumer confidence will take time to rebuild, but are optimistic.

“Thankfully, we now see tangible housing and lending programs being initiated, with many more on the horizon,” said Sparks. “Interest rates are softening. We appear to be moving in a positive direction again!”

Lennox Scott reported having the opportunity to listen to several economists recently, including Lawrence Yun from the National Association of Realtors®. “I feel good about what I’m hearing. The bottom line is that the situation is manageable and things will improve,” he remarked, adding, “Despite the uncertainty of the financial markets, homeownership continues to be one of the most solid investments an individual or family can make.”

Statistical Summary by Counties: Market Activity Summary – October 2008