Report: Puget Sound housing inventory could remain limited until spring 2022

Puget Sound housing inventory remains tight heading into fall and could remain limited until next spring, putting more strain on buyers looking to break into the region's red-hot real estate market.

A new report from the Northwest Multiple Listing Service (NWMLS) found that the region saw slower listing and sales activity in October, suggesting a slight seasonal slowdown. While a reprieve for buyers was expected heading into the fall months, brokers also reported sensing some "buyer hesitancy" as more local companies waver on a return to in-person work.

"While the overall slowdown in the market is seasonal and can be attributed to people being priced out of the market, as well as a slight uptick in interest rates, supply chain issues experienced with construction materials late this summer are beginning to normalize," said John Deely, executive vice president of operations at Coldwell Banker Bain, in a news release Thursday.

New listings in the region shrunk by 19% in October compared to the previous month which saw "frenzied" levels of activity. At the end of October, there were only 6,588 active listings, representing the smallest inventory selection since June.

Across all 26 Washington counties surveyed in the report, there is only 0.66 months of inventory, down slightly from 0.75 last month. The agency has not seen more than a one month supply in inventory since July 2020 when it reached 1.04 months. However, four Washington counties do currently have over two months of supply: San Juan, Okanogan, Adams and Ferry.

The median sale price for both single-family homes and condos in the region last month was $575,000, up $75,000 from a year ago. While many counties have experienced double-digit gains in prices, some areas of King County are seeing slower rates of growth. Last month, Seattle saw a 5.3% gain in median sale price while prices on Vashon jumped 33% compared to last year. Experts pointed to a slow return to in-person work in urban cores to explain the discrepancy in prices and change in demand.

"The trends provide a mixed message as to whether demand will return to the cities as quickly as anticipated," said James Young, director of the Washington Center for Real Estate Research at the University of Washington. "With millennials looking for value and increased opportunities to purchase a home in the suburbs, it could be an interesting few months as to whether the lifestyle of the city and employers can change the balance of demand back to the city."

Although a recent survey from Zillow found that homebuyers over the age of 60 were outpacing millennial buyers nationally, a closer look at statistics in Seattle shows that almost half of homebuyers in Seattle were between the ages of 18 and 39 while only 17% were 60 and older.

The market for condominiums has continued to stabilize over the last several months following pandemic lows that saw price reductions in dense urban areas like downtown Seattle. Condo inventory still remains historically low with listings down 55% in October compared to the same time last year.

Priced out of buying a single-family home, NWMLS brokers said it is likely that more residential buyers are turning to condominiums, leading to a strong increase in demand in that market. The median sale price for a condo in King County last month was $475,000, up only a modest 3.3% from the previous year.

Experts continued to wane on whether the market would see more seasonal slowdowns, although some believe that supply will remain limited in the region until spring 2022.

"A home listed now will have higher viewership since the buyer pool has not gone down," said Frank Wilson, branch managing broker at John L. Scott Real Estate. "With the pace of this market, a correctly priced home offered now would probably be off the market by Thanksgiving, allowing the seller to have a quiet holiday."