Southwest Washington’s housing market saw an influx of new listings in October, but it wasn’t enough to ease the region’s inventory shortage, which fell to what the Regional Multiple Listing Service described as the lowest level on record.
“The lack of inventory is creating bidding situations in the acquisition of homes,” Terry Wollam, managing broker at Wollam & Associates in Vancouver, wrote in his own monthly evaluation. “The aggressive increase in values year-over-year is reflective of demand and record low inventory.”
According to the monthly RMLS Market Action report, there were 1,011 new listings in October, a 9.2 percent increase from the 926 reported in September and a 25.1 percent increase compared with October 2019.
Pending sales declined, but only slightly; 982 in October compared with 1,017 in September, a 3.4 percent decrease. There were only 753 pending sales in October 2019, making last month a 30.4 percent year-over-year gain.
Closed sales increased 1.7 percent, from 940 in September to 958 in October. The year-over-year increase was 37.6 percent, coming from 695 closings in October of last year.
Wollam wrote that the decrease in pending sales from September reflects the shortage of inventory, although he said it could also be explained by normal seasonal shifts or the lead-up to the presidential election. The higher rate of closed sales also meant that October was still a high-activity month.
“Like in September,” he wrote, “this is the most active October for sales since 2005.”
RMLS measures the region’s inventory in terms of how many months it would take to sell through all the current listings, and October’s sales activity brought that figure down to just 0.8 months — the lowest figure on record, and the first time since at least 2016 that the region’s inventory has fallen below one month. It’s less than a third of the inventory that was available a year ago, Wollam wrote.
The region is still seeing high demand despite the inventory shortages, he wrote, likely due to a confluence of multiple factors. Interest rates remain at historic lows, and the stay-at-home lifestyle imposed by the pandemic is pushing existing renters and homeowners to buy larger homes with more land, he wrote.
People are also working from home and spending less on travel and entertainment, he wrote, likely giving them more savings to work with for home purchases. There has also been an influx of millennial buyers entering the market.
Home prices resumed a steady climb following a brief retreat last month. The average sale price jumped from $468,400 in September to $473,400 in October –matching the previous high point in August — and the median price rose to $425,000 after holding at $420,000 for the previous two months.
Despite a slowdown in activity during the first months of the pandemic, the RMLS report’s year-to-date data shows that market sales activity in 2020 has managed to catch up and surpass the activity from 2019 — but new listings are lagging.
Comparing 2020 so far with the first 10 months of 2019, pending sales are up 7.4 percent and closed sales are up 2.3 percent, while new listings are down 7.4 percent.
Another big pandemic impact has been in new home construction, Wollam wrote. Material costs have risen while availability has fallen nationwide, and development funding from banks has become tighter. Newly built or planned homes now comprise about 30 percent of the properties for sale in Southwest Washington, Wollam wrote, down from earlier in the year.
Pre-owned home listings have picked up, he wrote, but the relatively lower level of new home construction will likely persist through 2021 and into 2022 — which means the prices are going to keep going up.
“I would expect prices to appreciate above 10 (percent) through the rest of the year when compared to the year prior,” he wrote.
The local office of John L. Scott Real Estate put out a report based on its own sales data, which included a breakdown of listing and sales activity by price range.
The shortage applies across the board for all homes priced up to $750,000, according to the report, but the most severe shortages are in the middle of that range. Homes priced had $250,000 to $350,000 had only 0.3 months of supply remaining, and homes priced at $350,000 to $500,000 had only 0.4 months.