The pandemic brings one major upside for homesellers. For buyers… not so much.
After a price dip back in March, home prices are rising again. Driven by caution, historically low mortgage rates, and ultra-low inventory, sellers across King Country are now enjoying the benefits of bidding wars and lightning-fast sales.
Many sellers are waiting to list their homes until the pandemic clears up. It feels risky, after all, to invite prospective buyers into your home so they can look around. Granted, most Realtors (us included) have adopted new technologies that prioritize safety and allow buyers to tour 3-D home models without ever breaking quarantine—but despite these innovations, many would-be-sellers are still playing it safe.
Low Mortgage Rates
Other sellers are making the most of low, low, low mortgage rates and choosing to refinance rather than sell. Last week, the average rate for a 30-year fixed mortgage set a limbo record: 3.07%, which is the lowest rate ever in a Freddie Mac data series that goes back to 1971 (source: HousingWire).
Note: This reluctance to sell has slowed in the last few weeks. Sellers are re-entering the market and putting their homes up for sale. The number of new home listings last month (June 2020) was about the same as the number of listings last year (June 2019). This isn’t enough to bring inventory back to normal, but it’s enough to maintain the current state of the market.
Across western Washington, inventory has fallen by about fifty percent.
- King county: 47.5% fewer homes for sale (compared to this time last year)
- Pierce county: 47.2% fewer homes for sale (compared to this time last year)
- Snohomish county: 52.6% fewer homes for sale (compared to this time last year)
The King county real estate market has just over one month of inventory right now. The situation is even more extreme in Pierce and Snohomish counties, where inventory is down to a meager three weeks. All across Washington State, the market is hot. Homes are selling faster than they have since early 2018.
Note: “Months of inventory” measures how long it would take to sell all the homes on the market, based on the current level of demand. Thus, “months of inventory” takes into account both the number homes for sale and the pace of the market.
What’s this doing to prices? Driving them higher. The typical King county home sold for $725,000 in June, which is up 7.9% from May, and up 4.3% from June 2019. Looking closer at those numbers, the biggest price increases (8.1%) happened in South King county, a traditionally more affordable area of the city (typical single-family home are now selling between $480,000 and $519,000).
The pandemic, clearly, isn’t slowing things down as some early predictions feared. Anecdotally, we’ve been selling our listings in a matter of days—usually just a single weekend. All have sold over asking price.
Note: The condo market, meanwhile, paints a different picture. In King County, condo prices fell 0.2% from this time last year (the typical condo now sells for $419,000).