Pierce County home prices still climbing as more homes being sold in ‘luxury’ category
September saw another intense month of home sales, and in Pierce County the demand is now reaching into higher-priced inventory.
In data provided this week to The News Tribune from John L. Scott Real Estate, 108 properties priced $750,000 and above moved into “pending sale” category in September, compared with 54 homes in the same price category that moved to pending in September 2019.
That’s a 100 percent increase.
September 2020’s number of pending homes in the $750,000 and above category also was beyond previous years dating back to 2017 when 32 were listed in that category.
The latest figures from Northwest Multiple Listing Service released Thursday also show a market with continued shrinking inventory and most areas seeing rising prices.
In the NWMLS report, Pierce County reported its median closed sale price was $434,999, up more than 13 percent from a year ago, with inventory at less than a month’s worth, which has been the story all summer.
In comparison, surrounding counties and their median closed sale prices and percentage increases over 2019:
▪ King County: $753,600, 14.18 percent
▪ Snohomish County: $569,997, 15.74 percent
▪ Mason County: $368,400, 32.28 percent
▪ Kitsap County: $420,000, 9.66 percent
▪ Thurston County: $390,000, 12.12 percent
According to J. Lennox Scott, chairman and CEO of John L. Scott Real Estate in his monthly recap, “The past three months set individual monthly records for the number of homes going under contract in central Puget Sound as well as an all-time high for the median home price in Pierce County.”
Scott noted there remains “an extreme shortage of homes priced up to $750,000” in the county, along with a record-setting number of luxury property deals.
Nearly half of the $750,000-or-more properties from the August list for sale were pending in the first 30 days, according to Scott’s report.
That compares with more than 84 percent pending in first 30 days for homes priced $250,000-$500,000.
“In the luxury price range of $1-2 million, sales activity intensity varies from strong to very strong, and unsold inventory ranges from shortage to low. Buyer activity is selective above $2 million,” Scott noted in the September county analysis.
Demand and financing are playing a role.
Joe Bauman, a broker with the John L. Scott Tacoma-University Place office, told The News Tribune via email: “This activity is driven by a number of factors, the first of which being constrained inventory; we still have a shortage of homes here in all price points including the luxury market.
“In addition in high-end neighborhoods such as North Tacoma, Lake Tapps and Gig Harbor, there are truly exceptional homes that come onto the market each week across the county. Additionally, we are seeing historically low interest rates even in the jumbo loan market that allow more people than ever to enter into the luxury market as buyers.”
One issue still contributing to the paltry inventory is people choosing to refinance at the currently historic low interest rates in lieu of resale, with 2020 expected to end the year with 90 percent more refinances nationwide than in 2019, according to CNBC.
Some conventional loan refinances soon will face an adverse market refinance fee.
The fee was created “to cover projected COVID-19 losses of at least $6 billion at the Enterprises (Fannie Mae, Freddie Mac),” according to the Federal Housing Finance Agency. “Specifically, the actions taken by the Enterprises during the pandemic to protect renters and borrowers are conservatively projected to cost the Enterprises at least $6 billion and could be higher depending on the path of the economic recovery.”
The new fee, to begin in December, “will exempt refinance loans with loan balances below $125,000, nearly half of which are comprised of lower income borrowers at or below 80 percent of area median income. Affordable refinance products, Home Ready and Home Possible, are also exempt,” according to the agency’s Aug. 25 update.
Jumbo loan refinances also are exempt as well as loans via portfolio lenders, as well as “government-backed mortgages, including FHA, VA, and USDA loans,” according to Forbes.
The fee is equal to 0.5 percent of the loan amount, expected to come in the form of a slightly higher rate or added to closing costs.
This story was originally published October 10, 2020 at 8:00 AM.
