A tight housing market where demand is outpacing supply could drive prices higher for Western Washington homes and condominiums, real estate experts are predicting for the coming year.
Over the past year through December, median home prices have jumped by 6.41 percent in King County, 6.68 percent in Thurston County and nearly double digits, 9.76 percent, in Pierce County, according to new December 2014 statistics from the Northwest Multiple Listing Service.
The median home and condo sales prices in December in King County increased from $375,900 in December 2013 to $400,000 last month. In Pierce County, the median sales prices increased from $205,000 to $225,000 in that same period. Thurston County’s sales prices jumped from $224,950 to $239,975 from December 2013 to December 2014, said the listing service.
While home prices were moving the right direction for sellers, the market has yet to return to pre-recession highs, said Michael Robinson, residential investment specialist at Windermere Professional Partners in Tacoma. That high was $285,000. The low in February of 2012 was $185,000.
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Robinson said he is encouraged that the velocity of sales has increased to match the county’s 12-year average. But one potential continuing drag on home sale prices is the number of distressed properties — short sales and foreclosures — that are part of the home sales figures. About a fifth of Pierce County home sales in December were distressed properties.
Twenty-five percent of Pierce County’s owner-occupied homes are still under water — their potential sale prices are less than the amount the owners owe, according to Zillow.
Robinson said that as long as interest rates remain low, the Pierce County market is affordable to many potential buyers.
In Southwest Washington, median home sales prices ramped up steeply in December. In Pacific County, median home sales prices ascended by 58.65 percent in December compared with a year earlier. The median home and condo sales price there was $165,000 in December. In Lewis County, median prices increased by 48.89 percent to $167,500.
Driving those higher prices are higher number of pending sales accompanied by static numbers of homes entering the market, said the NWMLS. New, looser standards for home financing also are powering the demand for homes, noted the multi-county real estate listing service.
In Pierce County, for instance, pending December sales rose 12.99 percent in December while total active listings fell by 2.98 percent. In Thurston County, pending sales jumped by 8.49 percent while total active listings declined by 4.14 percent.
“Prices, interest rates and rents will continue to rise,” said Mike Gain, chief executive of Berkshire Hathaway HomeServices Northwest Real Estate in Seattle. “The cost of buying a home is not determined by price alone but by price and the mortgage rate,” he said. “The longer a buyer waits, the higher the mortgage payment as prices and interest rates continue to increase,” Gain said in a news release.
Higher priced homes are moving well, the new statistics show.
In King County, nearly 2,000 homes priced at $1 million and more sold in 2014. That number was up more than 25 percent compared with 2013.
On the lower end of the market, first-time buyers are finding it easier to qualify for a loan than just a few month ago, the listing service said.
“The much needed 3 percent down payment loans are finally back for qualified purchasers, said Gain. “This will allow more first-time buyers to break into home ownership.”
Despite holiday activities that normally distract home buyers from shopping for homes in December, home viewing was brisk last month.
“In December, our brokers experienced high open house traffic and strong demand from buyers as listing inventories declined,” said John Deely, Northwest MLS director.
“Buyers are determined to take advantage of the continued low interest rates and make their move sooner rather than later,” Deely said.
“If this level of activity continues,” said George Moorhead, Bentley Properties owner. “we will see yet another sellers’ market as inventory drops.”
Inventory levels of homes and condominiums for sale are low.
Across the 21 counties which the Northwest Multiple Listing Service covers, statistics show the inventory of homes for sale is a 2.8-month supply
In Pierce County, that inventory stands are 3.02 months. That compares with 3.39 months a year ago. In Thurston County, the inventory is 3.49 months. A year ago, the inventory was 3.81 months. King County’s inventory is less than 1.5 months, 1.44 months sales to be exact. A year earlier, the figure was 1.76 months.
Six months of home inventory is normally considered a good balance between demand and supply.