By Will Heaton
As we come to the end of yet another record year for the housing market in the region that is certainly the question on everyone’s mind. You may have heard from real estate brokers, lenders, investors or other industry professionals that claim to have the crystal ball and will tell you that there is nothing to worry about until the end of 2020 or maybe they are saying that the prices are going to start falling tomorrow, but the truth is no one really knows. While no one can accurately predict home appreciation or when this hot Seattle market will even begin to slow down, there are several sets of data that we can examine to forecast. For the record I am not making any predictions one way or the other, I am only providing information, most of which are readily available.
Anyone that has basic knowledge of economics understands the level of supply determines demand which in turn affects pricing. So the largest key indicator is available housing which is usually taken as either the number of active listings on the NWMLS (Northwest Multiple Listing Service), or months of housing supply which is that figure for available housing on the NWMLS divided by historical sales to arrive at the time in which it would take for there to be no inventory if sales continued at the same pace. According to NWMLS statistics, there are approximately 4,237 housing units available in King County which represents the lowest number of housing units available in the last 10 years for any month. The supply of inventory for King County is 1.4 months for residential housing and .9 for condos which also represents the lowest figure for the month of September this century. Clearly, available inventory is a major factor affecting pricing and is the major cause of home appreciation.
The days on market (DOM) statistic, or the number of days between when a property is actively listed and when it goes pending is another great indicator of market movement. According to the NWMLS, this is also at the lowest number for the month of September in the last 10 years, with only 9 DOM in King County for all property types. And King County is just slightly lower than Pierce and Snohomish Counties in the same category, at 14 DOM and 11 DOM, respectively, also the lowest figures in the last 10 years. This article is not long enough to explain every statistic that provides clues to the future of our Seattle real estate market, however, there are several more that can be found on the NWMLS and published through various real estate sites and blogs. A couple of those are the ratio of pending sales to active listings, and sales price to list price which provides a look into just how much higher than list price buyers are willing to go. Digging in even further you could compare historical figures on a month to month basis looking at the number of listings, closed sales, pending listings and all of these statistics could be broken down for each property type and or price point in each county, city or submarket. Brokerages are also able to compile data on a number of showings per listing and number of offers on each listed home.
There are two absolute certainties about the Puget Sound real estate market. #1 There is plenty of information available on the subject in order for you to develop your own beliefs and #2 Everyone seems to have an opinion as to when this market is going to slow down. Please contact Carolyn Gossett at [email protected], 425.999.5203 or Justin Reed at [email protected], 425.229.2055 to learn more. If you haven’t been to our Investor 101 Class, please join us every other Monday to meet our team and learn about the investment process. Visit our website for more information.
About the author…
Will Heaton is a co-founder and managing partner at Intrust Funding. As the fund manager, he is responsible for investor relations, underwriting, and new business development. Will has over 10 years of experience in multifamily and residential real estate. Drawing on his comprehensive knowledge of renovation financing and construction management, Will uses a value-add approach to complete his multifamily and residential real estate projects. He regularly gives educational lectures to real estate investors and has been quoted on numerous occasions in
well-respected publications. Will has been recognized by the Master Builders Association and Built Green for his work with LimeLite Development and Infinity Land Management. He is an enthusiastic member of the community and enjoys participating in various non-profit groups throughout King County. In his free time, Will enjoys adventures with his wife and their two children, classic cars, and fishing.
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