01/18/2019
REAL ESTATE MARKET CONTINUES SLIGHT PRICE DECLINES
According to the S&P Case-Shiller Index, home prices in the Seattle Metropolitan Market (which includes Pierce County) declined 1.1% in October compared to September. This latest decline, although slightly less than the prior month, reduced the total price gain for the first ten months of 2018 to 6.6%. It was the 4th consecutive month with no price gains in the Seattle market, resulting in a cumulative decline of 4.4% since June.
Las Vegas, San Francisco and Phoenix reported the largest year-over-year gains (Oct 2017 to Oct 2018) among the 20 cities in Case-Shiller’s index. Las Vegas led the way with a 12.8% price increase, followed by San Francisco with 7.9% and Phoenix at 7.7%, and then Seattle at 7.3%. Twelve of the 20 cities in the Case-Shiller Index reported price increases in October, with six reporting decreases and two with no gain or loss. Case-Shiller releases their housing statistics with a two-month delay.
“Home prices in most parts of the U.S. rose in October from September and from a year earlier,” said David Blitzer, Chairman of the Index Committee. “The combination of higher mortgage rates and home prices rising faster than incomes, means fewer people can afford to buy a house. Fixed rate 30-year mortgages are currently at about 4.5%, up from 4.0% one year earlier.” Home prices are up 54% since they bottomed in 2012. (Note: Home prices in the Seattle Metro area are up 92% since they bottomed in 2012). Reduced affordability is slowing sales of both new and existing single-family homes. Sales peaked in November 2017 and have drifted down since then. “
In Western Washington, with existing inventories rising, prices moderating, and recently announced increases in lending limits, buyers are finding more options according to industry experts. House hunters have a larger selection than a year ago. Northwest MLS figures for the 23 counties in the report show the year-over-year volume of inventory of homes and condos for sale rose from 11,193 last year to 15,830 this year, a gain of 41%. Despite these gains the “Supply of Homes for Sale” (the number of months it would take to sell the total inventory of homes listed for sale) is still slim compared to historical norms. In Gig Harbor the metric is 1.8 months, well below the 4-6 month level industry analysts use as a gauge to define a balanced market.
A favorable factor for home buyers was the increase in lending limits announced by Fannie Mae and Freddie Mac
for conforming loans in 2019. Regular loan limits will rise from $453,100 to $484,350. NWMLS director Dick Beeson said that the combination of stabilizing factors, including more inventory and only slightly higher interest rates, coupled with “more receptive and savvy sellers” are resulting in a “more reasoned approach to buying and selling. As inventory grows, he believes price increases will be “slower and smaller.”
NWMLS representatives expect the tilt toward a more balanced market to continue in the months ahead. OB Jacobi, president of Windermere Real Estate said “I expect this trend towards a more balanced market to continue into 2019, which will cause appreciation to slow somewhat, while giving buyers more options. This does not mean that the real estate sky is falling, rather it’s a much-needed shift towards a more sustainable, balanced market,” he emphasized.
In Gig Harbor, the market has been steady over the last three months. There were 109 sales in October, 94 in November and 98 in December. The total supply of homes for sale has slowly declined from a 2.3 months supply in October to 1.8 months in December.
For the calendar year 2018 in Gig Harbor, there have been 1,538 total sales of which 752 (49%) have been over $500,000 in price and a total of 91 (5.9%) over $1,000,000 in price. Contact me for a copy of my monthly Market Absorption Report to see how homes in your price range are doing.
