Median sales prices increased by double-digits in Pierce and Thurston counties in August from the same month last year. As real estate data from the Northwest Multiple Listing Service (NWMLS) confirms, buyer demand continued to exceed homes available for sale.
Median sales prices of single-family homes and condominiums combined jumped almost 15.2 percent in Pierce County and 12.2 percent in Thurston County. Other South Sound-area counties posted double-digit gains as well, with Mason up 17.5 percent, Lewis up 19.1 percent, and Grays Harbor up 12.1 percent, according to the latest NWMLS data available before this story went to press.
Record low mortgage interest rates have fueled buyer demand even further in the South Sound and elsewhere in the United States. Rates reached an all-time low of 2.86 percent for an average 30-year fixed-rate loan as of Sept. 10, according to Freddie Mac, almost a full point lower than at that the same last year. They ticked up to 2.87 percent as of Sept. 17, the latest figure available for this story.
South Sound’s housing supply-demand imbalance also is resulting in multiple offers on many properties, and sales prices sometimes tens of thousands over asking price.
South Sound real estate professionals note more buyer interest from outside their respective counties, especially from King County, where median sales prices are driving many buyers to go south for cheaper housing. King’s median sales price of $680,000 in August was $255,000 higher than Pierce County’s and almost $292,000 higher than Thurston’s.
Also, real estate representatives are seeing more people with the ability to work from home due to COVID-19 who are seeking to leave denser urban living for more space in outlying areas. More space can include larger yards, larger homes, and especially homes with offices.
In Pierce County, the most online traffic for active, for-sale properties from outside the county came from King, at 35.4 percent, according to home search site realtor.com. The figure excludes online views from Pierce County and outside the United States. The next-largest county viewing Pierce real estate was Snohomish, at 4.1 percent, followed by Thurston; Los Angeles County; and Marion County, Oregon.
“I have heard many of my members refer to the fact that King County is becoming inaccessible to so many people that it’s forcing people to look at Pierce County,” said Kaaren Winkler, executive officer at the Tacoma-Pierce County Association of Realtors.
In Thurston County, online views from King County totaled 19.8 percent, followed by Pierce County at 11.5 percent, then Snohomish County; Los Angeles County; and Maricopa County, Arizona.
Christina Janis, a broker with Epic Realty in Olympia and 2020 president of the Thurston County Realtors Association, sees more people wanting to escape urban areas for suburbia.
“They want that comfort of being close to things, but not being on top of things,” Janis said. “At least, that’s what I’ve seen in our Thurston County region — they want access to high-speed internet, good schools, shopping nearby, but they don’t want to be in that urban sprawl, per se.”
She also has seen buyers priced out of Thurston County who are having to look instead in Mason, Lewis, or Grays Harbor counties. But good, high-speed internet access is a key consideration for more rural locations, she noted.
The shortage of homes for sale is reflected in housing inventory, which indicates how long it would take to sell every active listing at the current rate of sales. That figure stood at less than a month in Pierce and Thurston counties in August, at 0.7 and 0.46 months, respectively.
The industry considers a balanced market to be four to six months, Winkler noted.
Pierce’s inventory was about half of what it was a year ago, in August 2019, when it was 1.34 months, according to NWMLS’s 2019 annual report. Same for Thurston, which had an inventory of 1.04 months in August 2019, the report showed.
“We just need to convince sellers to sell,” which is tricky unless someone has a life-changing situation or is moving somewhere with more housing supply, Janis said, noting a client who’s going to buy before he sells to avoid selling first and possibly having nowhere to live.
“We are getting a lot of that, and he’s in a position, thank goodness, that he doesn’t have to be a contingent buyer, because contingent buyers have no chance at all,” she said. “When you’re in a multiple (offer) situation, you don’t want to throw out a contingent offer, because the seller will just balk at that. So you have to find those future sellers that want to be buyers without being contingent, so that is a hard row to hoe there.”
In an NWMLS news release on August activity, Frank Wilson, the Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo, said: “In order for buyers to be successful in purchasing a home in today’s climate, they have to do some pretty illogical things” — examples being waiving inspections, paying more than the house is worth, or agreeing to pay the difference in cash between the lower appraised value and the sales price. “These are counterintuitive to what we used to see with a negotiation process,” he said.
Inventory also was low in Mason, Lewis, and Grays Harbor counties, at 0.72, 1.02, and 1.14 months, respectively.
Janis, who also represents new construction for Rob Rice Homes, said pressure is being felt on new homes, too.
“New construction usually does really well in times of short inventory because people can’t find those resales,” she said. However, because construction shut down for about 10 weeks early in the state’s pandemic response, builders have had to play catchup, she said, adding that buyers under contract were taken care of first before additional spec homes were built or presales taken in. But as construction caught up, there was a backup in permitting at the county level, she said, noting permits that used to take a month were taking four.
Lumber prices also have soared nationally, adding additional strain. Lumber prices rose almost 15 percent in August, according to a mid-September post on the National Association of Home Builders (NAHB) website. The hike marked the largest four-month gain since 1949, NAHB said.
“Such a sharp increase has put unnecessary pressure on homeowners and builders alike to figure out how to close the gap,” NAHB said.
In a separate post earlier in September, NAHB said lumber prices had increased the cost of a single-family home by more than $16,000.
In mid-September, Janis said her waiting list for new Rob Rice homes was about 45 people wanting to know when homes would be available. While COVID-19 crimped the real estate market early on, brokers have adjusted well to the rules limiting people at showings, and are doing more virtual open houses, Winkler said.
“I’ve heard of many of our members (who) have mentioned that they have received offers when people have never physically seen the property; they’ve watched the virtual tour and put offers in,” Winkler said.
“It’s been amazing to see how my members have managed to shift how they do business,” she said. “And members of the public, the clients who are putting their homes on the market, are feeling confident enough with the way our members are abiding by the rules, following all the proper procedures in terms of showing, to feel comfortable having people in their home and putting their home on the market at this time.”