Housing Inventory Leveling Off in Western Washington Despite Slowdown in Sales

Inventory showed signs of leveling off around Western Washington, with pending sales comparable to totals during the past four months, according to the latest report from Northwest Multiple Listing Service (NWMLS).

Brokers and lenders also suggest the September 7 announcement by the Treasury Department to place Fannie Mae and Freddie Mac under federal control could ease the U.S. mortgage market crisis and help lower mortgage costs.

NWMLS members added 11,415 new listings of single family homes and condominiums to inventory last month – the fewest number since December 2007.

With the current inventory and pace of sales, there is an estimated 7.4-month supply in the four-county Puget Sound region. Nationally, there is an 11.2-month supply. 6 months is considered a balanced market between buyers and sellers.

In King County, the median price for single family homes and condos that sold and closed during August was $388,350, about 6.4% less than a year ago when the median price was $415,000.

For single family homes (excluding condos) the median price for last month’s completed sales was $314,000, about 10% less than a year ago when the median price was $349,900. Condo prices are down about 4.8% from a year ago, dipping from $260,000 to $247,500.

“I cannot stress enough what an amazing opportunity exists right now for move-up buyers,” said J. Lennox Scott, Chairman and CEO of John L. Scott Real Estate. “The price gap between the more affordable price ranges and higher price ranges has narrowed which means these buyers can afford to “price jump” into a new home at a premium value,” he added.

NWMLS director Dick Beeson agreed low interest rates and abundant selection makes now a very good time to buy, but acknowledged the new environment for borrowing is hindering some would-be borrowers. There is pent-up demand, he stated, but said, “Buyers are stymied by the lending world’s inability to get their collective heads around making loans instead of running scared to the nearest disapproval letter.”

Asked about the potential impact of the Boeing strike, Beeson said it could have a ripple effect long-term, but does not expect the market to change “too dramatically” for now.

One local lender expressed optimism about the federal takeover of Fannie Mae and Freddie Mac. “The announcement by the Treasury Department to take control of the GSEs marks a significant turning point in the credit crisis, said Erik Hand, president of Response Mortgage Services (John L. Scott’s in-house lender). “Although some are already pointing to this action having the potential to cost the U.S. taxpayer billions, I feel the opposite is true,” he commented, adding, “To sit back and watch the GSEs flounder would prolong the credit crisis, placing further pressure on housing, resulting in increased foreclosures, and ultimately damaging the economy much more than what a takeover of the GSEs will cost.”

National analysts anticipate improving markets around the country.

Richard F. Gaylord, president of the National Association of REALTORS® (NAR) said the up-and-down pattern may break soon. “We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives.”

Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase. “Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”

~ Courtesy of NWMLS