Just like the daffodils, more listings are popping up during the spring residential housing market in Redmond.
For this time of year, it is typical to see an increase of as much as 60 percent in the number of homes for sale.
“We are seeing more listings come onto the market, but inventory levels are not rising because virtually every home that comes on the market sells immediately due to the backlog of buyers,” said Mona Spencer, a John L. Scott office leader.
Spencer’s reference to the speed of new listings disappearing is not hyperbole. According to Northwest Multiple Listing Service data for Redmond, the median number of days a home is on the market is seven.
The two factors that are injecting rocket fuel into this current, quick-action market are: stronger than expected job growth and buyers eager to purchase before interest rates increase.
Using stats from the Washington State Employment Security Department and Western Washington University’s Economic Forecaster, here is a summary of job growth in the region: From 2013 to 2016, regional job growth was approximately 3 percent, which is considered extremely strong. In 2017, job growth lowered into the mid 2 percents, which is considered very strong.
The projection for 2018 was in the upper 1 percents, which would have been considered strong job growth, but—starting in November and evident in our current market – job growth has spiked back up to the 3 percent range and a status of extremely strong.
“We have high paying jobs in this region, and people who come here for those jobs expect to purchase a home when they get here,” Spencer said. “The availability of good jobs and the influence of foreign investors continue to put pressure on supply, which drives prices up.”
Regarding interest rates, Spencer explained that every 1 percent increase is equal to about 10 percent in purchase price. With an interest rate of 4 percent, for example, a buyer could qualify for a $500,000 home. At 5 percent, however, that same buyer now qualifies for $450,000.
According to the most recent Case-Shiller home price index release on March 27, Seattle has now led the nation for 17 months consecutively for increases in the cost of a single family home. For the Seattle metro area, the year over year price increase from January, 2017, to January, 2018, was 12.9 percent. If the streak continues—and forecasters expect it will—Seattle will break San Francisco’s record of a 20-month streak. Price increases and inventory shortages in Redmond directly contribute to these larger metropolitan trends.
According to NW MLS data, the median sales price for a single family home in Redmond was $900,000 in March, 2018. This is an increase of 4.7 percent from the March, 2017 median price of $860,000. While an increase of nearly 5 percent in one year is not insignificant, the price increase in neighboring Kirkland was 15.3 percent. For all of King County, the year over year price increase for a single family home was 15 percent.
“I’ve been in the real estate business for 45 years and this year is the most intense boom market I have ever experienced,” Spencer said. “I can still remember the billboard from the early 1970s, ‘Will the last person leaving Seattle – turn out the lights.’ It’s hard to believe this is the same place.”
From the kaleidoscope of restaurants and new construction in downtown Redmond to the grassy expanse of Marymoor Park (which boasts one of the region’s best dog parks), Redmond remains a highly desirable area. The spring residential housing market has a lot in common with the daffodils: it’s radiant, for sellers, and it’s also fleeting. For those looking to buy a home, inventory is expected to increase another 25 percent in May, June and July.
Submitted by John L. Scott.
