Rate of price increases slows as homebuyers grow weary

Rate of price increases slows as homebuyers grow weary
By Dan Aznoff | Sep 20, 2018

Home sales in Mill Creek continue to be strong despite an apparent lack of inventory and buyers who have grown tired of the frenzied state of the market.


Home prices have continued to climb for the past 72 months, but now at a rate lower than at any time since 2016, according to Economic Indicators released by Snohomish County.


The demand for homes in Mill Creek has been slowed by lack of inventory and indications of further increases in interest rates, according to local Realtors contacted by The Beacon.


“The inventory in Lynnwood, for example, has fallen by 40 percent and has dropped to just one month’s supply,” said Reilly Forrest with Keller Williams. “The supply of homes continues to make this a seller’s market, but buyers have seen what the media has predicted about higher interest rates.


“Many buyers have decided to take a wait-and-see attitude.”


Sellers need to be realistic, advised Mill Creek resident Cassy Reichelt with the Windermere Real Estate office in Alderwood.


“Sellers may not get five offers, but in most cases they’ll get one good one,” Reichelt said. “Buyers have more to choose from. There is not as much urgency as there was back in March and April.”


Reichelt does not believe the recent jump in interest rates has not reduced the number of buyers.


A survey of prospective buyers conducted by the firm CoreLogic indicated that 15 percent of homeowners an 28 percent of renters wanted to buy property, while only 11 percent of owners wanted to sell.


“The lean supply of homes for sale is leading to higher sale prices and fewer days on the market. And an especially acute shortage for entry-level homes,” said Dr. Frank Nothaft, the chief economist for CoreLogic.


He stressed the point by pointing out only half of the homeowners surveyed had mortgages at 3.75 percent or less.


Active listings in the county indicate the market is “tight, but continues to loosen since inventory hit a low point in March,” according to the economic update published by Snohomish County. The same survey indicated that number of closed home sales dropped almost 10 percent from July to July.


Although the housing market in the county remains strong, some factors have changed. The median price of a home fell a full $20,000 between July and August of this year from $485,000 to $465,000, but remains more than 8 percent above the median prices of a year ago.


Sellers are not seeing as many multiple offers, according to Forrest. He said buyers have become fatigued with losing out by $50,000 in bidding contests for a single family homes and are not willing to settle for a condominium.


Older buyers have become the strongest segment of the market. Annual homeownership rates from 1982 through this year indicate that buyers aged 65-plus are most likely to own a home, while those under 35 have now dropped to its lowest level in more than a dozen years.


A spokesperson for The National Association of Realtors said the revised numbers reinforce signs of a soft market, noting that sales of previously-owned homes dropped to a two-year low this summer amid restraints in supply and escalating prices.


The unemployment rate in Snohomish County continued to drop for the second month in a row to a low of 3.8 percent, a trend that has not been seen since 2011. Employment rose in virtually every category, except Information, which includes publishers, media and data processing.


Employment in the Financial Services segment of the market surged by 700 workers, or 5.5 percent, since July of 2017. Statewide, the unemployment rate statewide increased from 4.2 percent in June to 4.5 percent in August, a slight improvement over July.


Newly-released retail sales data for the county showed a year-to-year increase of 7.5 percent, from $3.3 billion to $3.5 billion in 2018.


The retail numbers in Mill Creek exceeded those reported by the county. Retail sales increased 7.3 percent in the city during the first quarter of the year compared to the same three months in 2017.


Mukilteo was the only city in the county to report negative retail growth, while gains were reported in Woodway, Granite Falls, Montlake Terrace and Bothell.

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