Is There a Slowdown?

At our Tuesday business meeting, where I gracefully arrived with three children, we were talking about a lot of stuff. There was the usual update on interest rates, title and escrow, and all the usual stuff. Those deserving recognition were recognized, we celebrated anniversaries and retirements, the things you usually do at bigger team meetings.

It was also time to peek at the current market. It is nearly end of July, and summer is moving forward at a rather rapid pace. I know it is as I can hardly believe Mia’s at her horse camp, and next week is August. I mean for goodness sake, it feels like the school ended last week, and now we are supposed to go back for meet and greets and curriculum nights in a month!  Target is selling school supplies at full speed, and I have barely gotten into this summer thing.

But, it most definitely is summer. Today I saw the first raindrops since June 17. It’s scorching hot, it’s dry, it’s what summer is supposed to be. But it’s not just the weather and horse camp. Summer shows in our stats as well. The market is a tad calmer than what is has been, however the inventory is still low – higher than a month ago, but low, and if we compare this year to last year, the market is still hot, hot, hot.

Real estate is a cyclical industry with its annual peak traditionally in the spring months. The last time the absorption rate of the inventory has been below 100%, was in September of 2016. At this point we are nowhere close to that. The absorption of the inventory, looking at Seattle Eastside (NWMLS areas 500-600) was 133.8%, meaning that in June 133.8% of condos and single-family homes for sale in this area went under contract. We are constantly selling more than what is available. No, we are not selling homes that don’t exist. Neither are we selling homes twice, but the stats cannot keep up with the speed of the market and also not all sales happen through NWMLS. Yes, we are 28.8% down from May, but we are still 5.4% above the highest absorption rate last year, and 28.5% above June 2016.

Looking at the inventory since beginning of 2012, the graph looks like a ball that someone bounces at it keeps going less and less high with each bounce. In January 2012, the inventory for Seattle Eastside was at 2,514 homes with the number being the highest that year. Pending sales were at 805. This year our inventory has been climbing since January reaching its highest point of 1,046 homes in June. That is 217 homes less than the lowest inventory in 2012. At the same time, pending sales hit 1,399 homes under contract but not yet closed, 95 more than the highest pending sales in 2012. See what I’m talking about? Year by year, the inventory is lower, and lower, and lower.

Most likely July will be slower than June, but as the market is constantly absorbing over 100% of what is in the inventory, it looks different that what you may think of as a slowdown. In high demand areas, there may be 5 offers instead of 15, or some homes may be on the market for longer than from Thursday to Tuesday. However, homes in high demand will still be in high demand. Like the one down the street from our house. The one and only Arch home for sale that had - according to rumors, you know, neighbors talk – over 200 people walk through the home in 3 days before it went pending. As I’m curious, I would love to hear how many offers they got. 

If you want to look at the graphs, you can find them here.