It’s a seller’s market this spring when it comes to homes.
For cities like Marysville and Arlington on the “affordable suburban fringe” for home ownership, skyrocketing prices in Seattle are pushing homebuyers north. They are looking for bigger homes for less money than they can find in the metropolitan area. That is causing home sales in this area to heat up, and it could get even crazier this summer.
“We’re getting offers within hours of some of our listings,” said Tanis Costa with Team Costa Real Estate in Marysville, a theme repeated by several local agents. “It’s an extreme seller’s market.”
Gene Bryson, broker and agent with Windermere Real Estate in Arlington, said, “What’s most interesting is that pending sales are actually higher than inventory in the county, which is almost impossible. You can’t sell more than there is.”
Added J. Lennox Scott, chairman and CEO of John L. Scott, “It’s a straight up crazy, frenzy market in King and Snohomish counties.” About 75 percent of homes are selling within 30 days, according to his analysis.
The market forces driving the local surge are many, real estate experts in Marysville and Arlington agreed.
Along with Seattle-area urbanites, they cited cash-ready newcomers moving to the Northwest drawn by jobs, low unemployment and high consumer confidence.
Seattle reigns as the hottest metropolitan area in the nation in home price growth, according to the Case Shiller Indices. The Seattle area is gaining about 1,100 residents per week, the U.S. Census Bureau says. At the same time, housing and condo inventory in Snohomish County in April fell 31 percent, from 1,462 active listings a year ago to 1,004 last month, Northwest Multiple Listing Service figures show.
In 2016, Snohomish County was second in the nation behind only Pierce County when it came to people moving in compared to moving out. The Census Bureau shows 10,500 people moved in Snohomish County, twice the number from the year prior.
That doesn’t mean sellers can just slap a price they like on their listing and expect it to fly off the shelf, said Diedre Haines, principal managing broker-South Snohomish County at Coldwll Banker Bain.
“We certainly don’t need or want overpriced inventory that just sits there, gets stale and becomes stigmatized. Agents need to be diligent with pricing and sellers need to be realistic,” she emphasized, noting today’s buyers are well informed and more sophisticated than in past markets.
Lack of Supply
Inventory fell nearly 25 percent from the volume of active listings being offered a year ago. At the end of April, MLS brokers reported 10,679 homes and condos for sale across a 23-county area, which compares to the year-ago selection of 14,235 listings, MLS says.
Snohomish County reported 1,004 homes and condos for sales in April, which compares to the year-ago selection of 1,462.
Viewed another way, housing inventory in both Snohomish and King counties is down to a three week’s supply – the time it would take to sell all active listings – when four to six months is considered a balanced market. There has not been more than two months of supply since September.
A primary reason for the lack of supply is that there are more buyers than sellers – first-time home buyers, move-up buyers and people downsizing – and enough time has passed for people who lost their house in the recession to start buying again before any potential rate increases.
The lack of supply continues to put upward pressure on home prices. The median price on last month’s sales of single-family homes and condos was $355,000, up 10.9 percent from the year-ago figure of $320,000.
For single family homes only (excluding condos), year-over-year prices jumped 11.5 percent, from $327,300 to $365,000.
In Snohomish County, the year-over-year gain was nearly 10.4 percent, rising from $385,000 to $425,000.
But in places like Marysville and Arlington there are so few homes available and so many buyers that all the homes are anticipated to be grabbed up in just three weeks – twice as fast as a year ago, and at a record speed, experts said.
Bryson said the inventory has gone up slightly in Arlington and Smokey Point the last several months, but actual homes sold has gone down.
Price of sales
Area-wide, prices have shot up .
In Marysville, the home median sales price is up about 15.3 percent at $317,075 compared to $275,000 a year ago.
In Arlington, the home median sales price is up about 10.3 percent at $336,724 compared to $308,000 a year ago. The average sale price in April increased from $340,000 compared to $324,000 a year ago.
By comparison, the median single-family house sold for $635,000 in Seattle and $751,000 on the Eastside. Condos across the county sold for a typical price of $326,000, more than the average full house anywhere in Washington outside King, Snohomish and San Juan counties.
The numbers are crowding out some home seekers and first-time home buyers. Families who last year were able to qualify for a $280,000 home loan may not be enough for the inventory that’s left in that price category. Plus, with multiple offers on homes, some buyers eager to make the best offer are waving inspections and contingencies.
“As a buyer’s agent, I don’t say waive an inspection, but that’s what some buyers are doing,” Costa said.
MLS brokers echoed that advice to not waive protective legal rights to get an offer accepted, either buyers or sellers.
Snohomish County saw the sharpest rise in home prices last year, along with Pierce County. The typical house last year cost $390,000 in Snohomish County.
Bryson said agents are seeing a lot of straight cash offers. “That wasn’t the case a few years ago, and there’s no question that it is happening.”
When buyers have ready cash from sales of pricier homes in the Seattle and Eastside communities, as well as squeezed markets in California, it’s difficult for conventional buyers seeking mortgages to compete.
“That’s making it harder to figure out the values,” Bryson said, adding that it skews the real value and “puts pressure on the pricing.”
He added, “Some prospective buyers have decided they are going to brave the commute to get more house for the money,” Bryson said.
Costa said single-story homes, particularly three-bedroom ramblers, are in high demand and hard to come by because they hold their value.
In addition to single-story houses, Bryson said homes on acreage are also much sought after and hard to find, while Bradford observed that newly built homes are the most popular in her circles.
Agents agreed that single-story homes are particularly appealing to older adults when much of the new home construction is two story.
For homeowners pondering putting their home for sale in the hot market, there is a Catch 22.
Bradford said those hanging on to houses are wondering, “Where will we go?” If you want to stay in this area. “You sell high, you buy high,” she said.
Most people want to move up or downsize when deciding to sell.
“The problem is you can’t find anything to downsize to,” Bradford said, adding that you’ll pay not a lot less for something smaller.
The hot home market has also sent rents skyrocketing, Otto said. Renters in the Arlington and Marysville market should be prepared to pay $1,600-$2,200 per month, when they could own a house for that same amount.
The median rent price in Marysville is $1,725, compared to the Seattle metro median of $2,195.
Local real estate brokers said they don’t foresee a let up anytime soon.
“I’m not seeing any signs that the trends are going to change much in the near future,” Bryson said.
Otto said look for continued growth, if interest rates stay the same. Freeway congestion points to it, and construction of apartment complexes in the Smokey Point area suggest movement north of Seattle and not enough housing.
Costa said he believes the housing market will spike locally this summer, while nationally, sales will taper off.
Scott expects “seller gridlock” to abate this summer for sellers who are waiting to put their home on the market. “As more inventory comes on the market it will be just as easy for them to purchase their next home as it is to sell their current one.”
Real estate experts say the residential housing market in the Puget Sound is not on a bubble; they expect soaring home prices for maybe years to come.
Bradford believes inventory may pick up as the school year ends.
Otto said that with entry-level homes are harder to find. He is troubled about what’s ahead for young first-time home buyers, what it will take to encourage entry-level priced development, and what that will look like.
“My concern is, what about the new generation?” Otto said. “How are they supposed to afford a home?”
Conventional wisdom holds that millennials desire less space, and are happy to own a condo, rent an apartment or live in a tiny house. Home ownership, with incomes far out-distanced by home prices, has become a lofty goal.
“The days of owning a house on an acre with a white picket fence, for this generation, those days are gone,” Otto said.