Southwest Washington’s housing market closed out 2020 with a strong December, posting seasonally high sales that exceeded those of the prior year and drove inventory levels to yet another record low even as new listings also saw year-over-year gains. That’s according to the latest report from the Regional Multiple Listing Service.
Demand for homes spiked in the second half of the year, and real estate agents and builders both point to the pandemic as the cause. The shift to work-from-home has caused many families to want more space, and the current market gives them the financial tools to make it happen.
“People are spending less and saving more due to travel and entertainment limitations related to COVID,” Terry Wollam, managing broker at Wollam & Associates in Vancouver, wrote in an email. “Lower interest rates are also causing housing to be more affordable.”
The RMLS report listed 632 pending sales in December, a 15.8 percent decrease from the 751 in November, but a 19.2 percent increase over the 530 reported in December 2019. Closed sales followed the same pattern with 803, a 2.7 percent decrease from November’s 825 but a 16.4 percent jump from December 2019’s 530.
New listings saw the biggest year-over-year surge, with the 551 reported listings representing a 12.5 percent decrease from November’s 630 but a 31.2 percent jump from the 420 in December 2019. Even so, it wasn’t enough to halt the trend of shrinking inventories.
The region’s inventory in months, an estimate of how long it would take to sell through the existing backlog, fell to just 0.6 in December, the latest in a series of new record lows that the market has posted in the latter months of 2020.
Inventory has fluctuated from about 1.5 to 3 months in the past few years, and was most often at or above 2 months until midway through 2020, when the housing market came roaring back following a slump during the initial months of the pandemic.
The inventory in months dropped to 1.6 in June and reached 1.0 by September, then hovered at 0.8 for October and November, which was an all-time record low until December broke it. The inventory in months was 1.8 in December 2019, Wollam noted — triple where it stands one year later.
The supply also varies by price range, according to Mike Lamb, a broker at Windermere Stellar in Vancouver. Lamb said his own office had estimated there to be less than 0.2 month of inventory for houses priced below $450,000.
“Across the board, until you get up into a million dollars, there’s less than a month of inventory,” he said.
The median sale price rose from $410,000 in November to $420,000 in December, and the average price rose from $453,000 to $467,800. For comparison, the median sale price in December 2019 was $375,000, and the average was $414,000.
The median sale price for 2020 overall was $405,000 and the average was $448,000, compared with a median of $371,000 and an average of $407,700 for 2019 overall.
“The lack of inventory is creating bidding situations in the acquisition of homes,” Wollam wrote. “The aggressive increase in values year over year is reflective of demand and record low inventory.”
The pattern isn’t going to change any time soon — Wollam said he expected prices to appreciate at 10 percent or higher through 2021 due to the low inventory, with supply unlikely to catch up to the heightened demand until the following year.
New home construction accounts for about 39 percent of the total inventory, Wollam wrote, an unusually high proportion that signals that very few pre-owned homes are being listed for sale. The construction side has problems of its own, he added — the pandemic has made it tougher to secure development loans from banks, leading to a relative slowdown in building.
Builders have also faced challenges in material and labor availability throughout 2020, and Wollam noted that material costs typically go up at the start of the year.
Still, it’s only a relative slowdown — and there are signs that the high demand is spurring further development. The Building Industry Association of Clark County reported last month that, based on data from the city’s development review division, Vancouver was on track to issue about 65 percent more single-family construction permits in 2020 compared with the prior year.
Patrick Ginn, CEO of Vancouver-based homebuilder Ginn Group, said last month that construction activity picked up in the summer and has been at a sustained high point through the fall and winter.
There’s reason to expect resale listing activity to pick up too, at least a little bit. Wollam and Lamb both noted that the market typically sees an uptick in new listings in January, and Lamb said there were some strong listing months in 2020 as well, it’s just that they were obscured by the high sales rates. Even so, he said he expects demand to continue keep pace.
“We’re going to be working from the inventory as it comes in on a week-to- week, day-to-day basis,” he said. “So it really depends on how much listing activity there’s going to be.”