December 2019 housing activity was summarized in one sentence:  “The buyers are out there and are showing up at open houses and making multiple offers on new listings”

The severe shortage of inventory – “much lower than in years past” – will lead to continued buyer frustration and escalating home values. Last month (December 2019) marked the sixth straight month of declining inventory. MLS figures show inventory peaked in June when the database had 16,680 active listings ̶ about twice as many as December.

Inventory for single family homes and condos (combined) was down by more than 30%. System-wide there is only about 1.2 months of supply. The sharp drop in King County marked the first time since March 2018 that the supply of homes dropped below one month. Looking all the way back to 2012 when home values first began recovering, King County has only logged six months with supply levels lower than where we currently stand. This market is unlike any market we’ve seen in the South Sound over the past 40 years. Too many buyers chasing too few properties.

December’s volume of active listings included 3,777 new listings added during the month, but during the same timeframe, 5,943 sellers accepted offers on their properties. That number of pending sales was up about 4.7% from twelve months ago. December is typically a slow month for home sales with holidays and historically cold, wet weather, but December 2019 proved to be better in just about every single category than December of 2018 – this notwithstanding weather that was not as mild as 2018, and weather typically has an impact on sales. Historically, low interest rates and strong job growth continue to drive the Puget Sound housing market, which is already sizzling as we begin the new decade. In the more affordable and mid-price ranges, many areas are seeing frenzied sales activity with multiple offers on most properties. Home sales continued to be strong through December, fueled by low interest rates and new job creation. Hot spot locations continue to experience multiple offers on properly priced inventory.

December 2019 was one of the most active in recent years with an unusual number of ready, willing, and able buyers in the Seattle market. These buyers were competing for little inventory as the year ended. In the King County real estate market, December was a bit of an anomaly. Although appreciation has slowed considerably from the 14% or so annual appreciation increases that we experienced during the market frenzy years, inventory continues to get tighter. We experienced very high demand for housing.

Northwest MLS member-brokers recorded 7,093 completed transactions during December, a gain of more than 11% from the 6,374 closed sales of the same month a year ago. Prices on last month’s closed sales of single family homes and condos rose 8.75% from a year ago. For the MLS market overall the price was $435,000 versus the year-ago figure of $400,000.

For the four-county Puget Sound region (encompassing King, Kitsap, Pierce and Snohomish counties), the median sales price for December’s closed sales was $495,000, up 10% from the year-ago figure of $449,950. In King County, which had the highest volume of sales and the highest prices, the median sales price for last month’s closed sales was $615,000. That was an increase of about 3% from a year ago. Prices in King County peaked in May at $645,000.

“Unusually brisk activity” in the luxury market was reported as the year wound down, with several multimillion-dollar sales coming in all cash with less than two-week closings. Another noticeable trend cited was foreign buyers and sellers anxious to complete buy-sell transactions before year end. If this is any indication of the 2020 market, then we will be moving more towards the blistering market of 2017, swinging away from the more balanced market of 2019.

Some brokers expect the pressure on prices to ease during the first quarter of the year as inventory improves. We will see increased new inventory in the 1st quarter of 2020 resulting in a better selection of homes. Buyers should be ready to supply sellers with prequalification letters including satisfaction of major underwriting elements. Some relief should be on the way as the weather warms up and sellers choose to put their home on the market but it’s possible the trend of fewer resale listings than usual will continue on the Eastside. Eastside housing market is “particularly hot as it shows no sign of slowing down anytime soon with recent job growth announcements and an extreme shortage of unsold inventory priced up to $1 million.

Kitsap, Mason, Pierce and Jefferson counties continue to have constrained inventory, and “the market remains very competitive in all price categories. NWMLS figures show December’s inventory in those four counties declined more than 35% from the selection of a year ago, while prices jumped 10.4%. Collectively, there is less than a month’s supply (0.94 months) in these South Sound counties. Rentals are very tight with new apartments rented as soon as they are finished. Builders are “chasing the market with most of their inventory being sold before they are finished.

December’s double-digit price increases in several counties reflect the long-term trend of increased interest along the I-5 corridor. Looking ahead, expect brisk activity with inventory below one month in King County, we can only surmise that 2020 will show a return to rising home prices as a result of the lack of inventory and continued robust job market. While buyers will continue to benefit from low interest rates, there are simply not enough homes for sale. These predictors indicate that the first quarter of 2020 will be active. We continuously see multiple offer situations in the median or lower prices ranges. Price creep in Pierce County continues to be above 8% year-over-year for the past three years.

Clients often ask for ‘crystal ball’ projection regarding the direction the real estate market is heading: “Follow the employment numbers.” State Employment Security Department reports showing the unemployment rate in King County for November 2019 was 2.3%, the lowest rate for any month measured since January 2016 and the highest employment rate since November 2017. The only sound reason for waiting to buy real estate in the Greater Seattle market now would be finding the suitable home versus anticipating the market to get any less challenging for buyers in the near future.