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Tuesday, November 6, 2012 - Page updated at 12:00 p.m.
Home sales rise while inventory plummets in October
By Eric Pryne
Seattle Times business reporter
Plenty of buyers. Not so many sellers.
House sales surged in King County in October, while the number of houses on the market dropped to its lowest level since at least 1999, according to statistics released Monday by the Northwest Multiple Listing Service.
Buyers closed on 1,981 single-family homes last month, 33 percent more than in October 2011 and — perhaps more surprisingly — 10 percent more than in September of this year.
Sales volume usually peaks in the summer and tails off in the fall.
The surge also was reflected in pending sales, a less reliable measure of market activity. More were reported in October than in any month since June.
“The market clearly has caught fire,” said Glenn Crellin, associate director of research at the University of Washington’s Runstad Center for Real Estate Studies.
What’s motivating buyers? Some may think they will face more competition and higher prices when the traditional homebuying season starts next spring, said real-estate blogger Tim Ellis of Seattlebubble.com.
“They may be thinking they no longer have the luxury of time on their side,” he said.
Crellin agreed: “Lots of buyers have been sitting on the sidelines, saying, ‘I’m waiting for prices to bottom. I’m waiting for prices to bottom. Oops, I missed it!’ ”
Prices already have rebounded from the lows of last fall and winter: October’s median sale price, $370,000, was up nearly 16 percent from October 2011.
Record-low interest rates are helping persuade prospective buyers to pull the trigger anyway, Crellin said. Buyers with good credit could have locked in a 30-year mortgage below 3.5 percent this fall.
Single-family inventory, meanwhile, was down a whopping 40 percent in October from the same month last year, according to the listing service. The ratio of listings to sales suggests King County has only about two months of supply available, real-estate brokers say.
Five or six months’ supply indicates a balanced market, many experts agree. But, if it follows its historical pattern, inventory is likely to drop even further in November, December and January, when homeowners turn their attention to the holidays.
Analysts have attributed the lack of listings in large part to owners who effectively can’t sell because they bought just before the real-estate crash and now owe lenders more than their homes are worth.
But Ellis suggested another reason: The resurgent market has taken owners who still have equity by surprise, and they haven’t had time to get their homes ready to sell this year.
A survey released Monday by Seattle-based online brokerage Redfin found that sellers across the country increasingly feel better about the market, but also think they will get more for their homes if they wait a year or two.
Crellin said he expects inventory will bounce back in spring, in part because rising prices mean fewer owners are “underwater” on their mortgages now and can consider selling.
October’s 16 percent rise in the median single-family sale price in King County was the biggest year-over-year jump since July 2006.
But that increase is somewhat misleading.
House prices took a big drop in October 2011, with the median falling to $320,000 after hovering in the $345,000-350,000 range for several months.
This October’s $370,000 median looks strong in comparison. But the median has been slightly higher, between $375,000 and $380,000, in each of the past four months.
Another factor in the big year-over-year increase: The mix of houses selling has changed.
In October 2011, bank-repossessed houses, which are generally priced lower, made up 21 percent of all sales in King County, according to Redfin. Last month, that figure was just 7 percent.
All parts of King County saw double-digit, year-over-year increases in sales volumes in October, led by the Eastside’s 47 percent gain.
But the Eastside had the smallest increase in the median price, just 6 percent. Southwest King County, the county’s lowest-price area, had the biggest price jump, nearly 21 percent.
King County condo sales were up 35 percent compared with October 2011, according to the listing service. Almost all that increase came in Seattle and on the Eastside.
The median countywide condo price, $222,000, rose 24 percent year-over-year.
In Snohomish County, single-family home sales rose 12 percent in October from a year earlier, while the median price, $261,000, was up 11 percent.
Eric Pryne: firstname.lastname@example.org or 206-464-2231