Change is upon Snohomish County’s housing market. If you’re currently shopping for a home, you may have already felt the shift. Homes that were once in a certain price point are no longer available or have risen in price.
Median Home Prices on the Rise
For the fourth consecutive month, Snohomish County’s median home price has increased. As of May 2012 the county’s median home price was $259,933 for residential homes, which is an increase of 11.52 percent since January 2012 when the median price was $230,000.
This increase bears all the hallmarks of the most recent real estate boom. In many cases, homes that are in good to excellent condition are selling fast and sometimes for more than the asking price.
Office buzz and conversations are no different. Talk of multiple offer situations, escalation clauses, highest and best, and broker consultations are common place. These experiences are brand new for first-time homebuyers, especially when previous years focused on terms like bank-owned, short sale, distressed, and walking away. Market prices have shifted to favor sellers – though it may be short lived.
Inventory Levels Continue to Decline
Inventory levels continue to break all boundaries with May’s real estate inventory being two months. The decline coincides with the median home price increase. In January 2012 inventory levels where at five months, the starting point for a seller’s market, and those levels stepped down fairly rapidly to May’s two months. As inventory decreased, the median home price increased at virtually the same pace.
The looming election is no doubt playing a pivotal role in the banks’ decisions on whether to release more foreclosed inventory, the rate at which the banks foreclose on properties, and their decision to proceed with foreclosure. According to ForeclosureRadar.com foreclosure cancellations have increased by 6.52 percent, and bank to the bank properties have decreased by 4.12 percent – meaning banks are more willing to do short sales and/or the improved local economy is aiding in the decrease of foreclosures.
All this translates to fewer homes hitting the market, and prices tend to increase as supply decreases.
How do Rising Prices and Lower Inventory Affect Purchasing?
To put this into perspective, let’s run through examples using Marysville real estate. In January 2012, a person buying a single-family home in the $150,000 price range could expect to pay an average of $106 per square foot. In May 2012, that average increased to $111 per square foot. So instead of being able to purchase a 1,500 square foot home for $159,000 in January that same home would cost $166,500 in May. Even though this increase may not seem too drastic, the reality for many homebuyers is that the home at $166,000 is now out of budget. A side note with regard to mortgage payments: In Washington state, taxes and insurance are included in monthly payments, which many mortgage calculators don’t factor in.
Are the rising home prices good for Snohomish County? On the selling side, the answer is a most definitive yes. Sellers have been beat up on value since July 2007, and they haven’t seen favorable conditions in a long time. However, buyers are now feeling the effects, and in some cases, are being priced out of the market depending on their financial flexibility. As a real estate broker, I am not excited to see housing prices increase at this rate due to the fact that affordability can rapidly be removed from the housing market, which is very important for the health and stabilization of Snohomish County.
Written by Toby Barnett