After retreating a bit in August, Seattle-area home prices rose again last month, according to a new report.
The median price of a King County house that sold in September was $460,000, up 5.3 percent from August and 9.5 percent from a year ago, the Northwest Multiple Listing Service reported Monday. Seattle’s median price was $517,000, up 3.4 percent from August 12.15 percent from a year ago.
“It’s looking pretty frothy out there,” said Stephen O’Connor, director of the Runstad Center for Real Estate Research at the University of Washington. “Double-digit increases, it’s not the norm.”
Prices had fallen a bit in the city and county from July to August, although they still rose from August 2013. O’Connor noted that August tends to be a slow month in Seattle.
One reason for the rising prices is that inventory (how long it would take all the homes on the market to sell at the current rate of sales) remains well below that four to six months considered the balance area between supply and demand.
Last month, King County had 2.35 months worth of inventory, up from 2.08 months of inventory in August and 2.26 months in September 2013. Seattle’s inventory was 1.62 months, up from 1.36 months in August but down from 1.83 months a year ago.
“At the risk of sounding incredibly obvious, it is supply and demand,” O’Connor said.
The number of homes on the market actually fell last month from a year earlier, by 11.4 percent in Seattle and 0.14 percent countywide. Sales ticked up by 0.2 percent in the city and 4 percent countywide. Pending sales — which don’t all close, but can be the best indicator of recent activity — fell by 2.9 percent in Seattle but rose 4.35 percent countywide.
Improving economic numbers nationwide may spur the Federal Reserve to raise interest rates, and that could push potential buyers off the fence, O’Connor said. “Certainly, there’s going to be plenty of people who go, ‘Yeah, I’d better jump in now.”
Prices should impact sales over the coming year, Gary O’Leyar, designated broker/owner of Prudential Signature Properties in Seattle, said in a listing service news release. “I foresee a general leveling off in overall market activity as prices approach the affordability ceiling for many buyers.”
George Moorhead, designated broker and owner of Bentley Properties/America’s Home Caretakers in Bothell, predicted prices would rise slowly, while sales would dip.
“What we are seeing is market correction and a balance of pricing, inventory levels and overall market health,” he said.
In the news release, local real estate professionals noted several trends.
There’s stiff competition for homes over $2 million, Windermere Real Estate President OB Jacobi said. “I attribute this to Seattle’s economic boom, which is attracting an increasing number of high-paying, executive level professionals and international interest.”
Declines in bank-owned homes on the market and investors buying lower-end prices are pushing up median prices, according to Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. This is “helping sellers as well as appraisers justify values,” he said.
Chinese buyers are making “very significant purchases of prime properties,” particularly east of Seattle, according to O’Leyar. Beeson agreed, saying high prices in Vancouver and San Francisco are pushing these buyers here.
John Deely, principal managing broker at Coldwell Banker Bain in Seattle, said high rents are spurring parents to buy places for children attending local universities.