In a normal year, September would be when housing prices begin to level off.
But what about 2020 is normal?
Pulled up by unrelenting demand and an inventory drought, King County home prices hit a new all-time high of $753,600 in September, a 14% bump over last year, according to new data from the Northwest Multiple Listing Service.
Potential sellers are hunkering down, choosing to refinance rather than list, reducing the number of homes on the market in all of Western Washington to half as many as last year.
The market for homes priced less than $800,000 is especially intense, brokers said, as first-time homebuyers and former condo-dwellers look for more space as the pandemic drags into its eighth month.
For buyers seeking to compete at that price point, bidding wars, fleeting listings and all-cash offers are the norm. Typical for this market: The two-bedroom Wedgwood rambler that sold in early September for a full $100,000 over the $699,999 list price in an all-cash deal.
Listing agent Molly Cartwright said she priced the home to appeal to first-time buyers or “people who can’t do stairs” and are hoping to downsize. Two other offers, including another all-cash offer, “came close” to the winner, she said.
In less-expensive Pierce and Snohomish counties, homes are selling faster than anytime in the past five years. But buyers flocking to affordability are driving prices up there, too. The median home in Pierce County closed for a record $434,999 last month. Prices in Snohomish County leapt 3% from August to $569,997 — just under that county’s all-time high of $575,000, recorded in June.
“I’m a Realtor and I almost went crazy the week I bought my house,” said Tacoma broker Keryn Giguere, who last month purchased “the most humble house” in North Tacoma for $10,000 over the list price with a high down payment and an appraisal contingency — a promise to front more cash if the home appraised for less than the purchase price — after losing out on a handful of other offers.
And as the housing market in North Tacoma and University Place grows even more frenzied, buyers are importing strategies that weren’t normal until recently, Giguere said.
“You used to never see pre-inspections here,” she said. “That was a Seattle thing. Now — I hate to say it — it’s becoming the norm.”
A tsunami of new listings in the condo market offers some clues as to where some of the onslaught of demand is coming from: Remote workers looking for more square footage, said Christy Kinnaird, the founder of brokerage Seattle Living Spaces.
September saw 1,550 condos for sale in King County — the highest number of condo listings in over a decade and a nearly 24% bump over September 2019. Condos tend to linger on the market for nearly a month, but prices for condos that do find buyers are going up. The median King County condo closed for $431,000 in September, a 7.8% bump over last year.
“People love condos because they can walk to work, to bars, restaurants, shows, to meet their friends — all the things we haven’t been doing for the past six months,” Kinnaird said. “Now that they can’t use the city as their living room, we’re really feeling the condo crunch.” Renters are also looking to buy for the same reason, Kinnaird added.
Low mortgage rates are another reason that Pacific Northwesterners are thronging the home market, said Bank of America regional mortgage executive David Gorman. Mortgage rates continue to slide, each week bringing new historic lows. The average rate on a 30-year mortgage is now 2.88%.
But uncertainty about the future also factors into buyers’ calculations, Gorman said.
“Some buyers feel, ‘I’ve been wanting to do this, buy a home … I’m just going to do it now, because I don’t know what tomorrow will bring,’” said Gorman.
Mortgage availability reflects similar uncertainty. Stiffer mortgage underwriting standards from financial institutions leery of risk from a shaky job market have made it harder to get a home loan than any time since March 2014, according to the Mortgage Bankers Association.
The tighter standards, though, may not apply to many new Washington homebuyers, especially if they’re employed in an industry like cloud computing, logistics or software that is experiencing record profits amid the pandemic.
Seattle mortgage broker Rhonda Porter estimated her office is receiving five to seven times its normal volume of mortgage applications.
“In the beginning of the pandemic, there was a real pause,” she said. “Now, things are back to normal, and have been for a while.”
Normal for Seattle’s housing market — that is to say, overheated.
The rush of new demand from first-time buyers and people transitioning out of smaller spaces is driving up prices in places like Burien, Des Moines and Renton, said Seattle broker Kim Colaprete, who said that’s where most of her brokerage’s first-time homebuyers are looking. Home prices in Southeast King County jumped nearly 18% over last year, to a new all-time high of $552,000.
The market for higher-end homes, though, has cooled down slightly in the past month, Colaprete said. In more expensive Seattle, prices dipped slightly from last month, to $820,000 — still an increase of 9.3% over last year.
The price hikes are “awesome for people who own property,” said Tacoma agent Marguerite Martin. “And that’s pretty much the only people for whom this is awesome news.”