In this commentary, J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, discusses the housing market nationally and in Puget Sound/Seattle, Wash.
The arrival of Daylight Savings triggers a burst in new listings, and more listings lead to more sales. In real estate, it’s all about the new listing.
The winter market is now officially over. Patterns in the winter market are more sales than new listings and reduced inventory. This causes a home price appreciation boost during the first part of the year in the more affordable and mid-price ranges and in the high-end market close to job centers. Over the second half of the year, as more listings come on the market, home price appreciation tends to flatten out.
Home mortgage interest rates are up from the first of the year, leading to slightly higher monthly payments, but they have not put a damper on the market. Right now, we are experiencing a mini power surge of buyer demand:
- This is the most intense housing market I have ever experienced during my 41 years in the industry. Almost every new listing is selling instantly. Because we’re virtually sold out of homes available for sale, all focus is on new listings coming on the market.
- Buyers can be hopeful knowing the number of new listings is on the way up. From January and February, we tend to see a jump of a 60 percent increase in the number of new listings in March and April. In the peak new listings months of May, June and July, we’ll experience another jump of 25 percent over the watermark of March and April.
- Seattle has led the nation in home price increases for 17 consecutive months—the longest streak in the country since San Francisco in the early 2000s.
- Year-over-year price gains for single-family residential homes in the four-county area are in the mid-teens.
- Year-over-year price gains for condominiums in King/Snohomish counties are above 20 percent.
- For the residential market, it’s all about the new listings coming on the market. We are virtually sold out of standing unsold inventory.
- The number of homes that went into contract in February 2018, was lower than in February 2017, only due to the limited supply of the number of unsold homes and the low number of new listings on the market.
- The pressure cooker continues for the backlog of buyers searching for a home for sale. With interest rates going higher the last few months, it triggers an additional mini power surge of buyer demand, creating the most intense market ever.
- The rate of home price appreciation in Seattle/Puget Sound has been running above the historical trend line for the last several years. With slightly higher interest rates on the horizon, the pace of home price appreciation will ease from a sprint to more of an endurance pace in the years ahead.
Lennox Scott is chairman and CEO of John L. Scott Real Estate. For more information, please visit www.johnlscott.com.
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