In November we are generally getting close to the end of the real estate year in the Northwest and so it is a time to evaluate how the year has gone for our Eastside real estate market. As always, a great way to gain perspective on the market is to compare it to the previous year.
Current Interest Rates
However, the direct comparison of the two years is overshadowed by something that happened this year that has never happened before. Our nation – indeed the world – was hit by the Covid-19 pandemic, and life changed. By March 2020, the coronavirus had reached the point that our State was forced to “lock down.” Suddenly the practice of real estate became extremely difficult until a protocol was worked out that would allow real estate professionals to continue in a limited offering of services.
To see the dramatic change in our Eastside inventory as it was reshaped by the Covid-19 virus, please refer to the “Housing Inventory” chart (below).
Normally the month of March is when sellers begin putting their homes on the market and the pace of new listings continues to strengthen through mid-summer. The chart shows this growth of available inventory through the first half of 2019. Buyers responded with their increasing demand through mid-summer of 2019 as well. In the years gone by, these cycles have been typical.
While the remainder of 2019 proved to be normal for the most part, available housing began a steeper than normal drop by October. The year ended with about half the available inventory that it started with, which meant that 2020 began the year with an abnormally low amount of inventory.
But . . . did the buyer pressure drop off? Not a chance! Notice that the buyer activity (dark red line) for the January – March period for both 2019 and 2020 were virtually identical. With the same number of buyers but diminishing inventory, this was a “housing availability” crisis in the making even before Covid-19 happened.
THEN 2020 AND COVID-19
Aside from an abnormally low inventory at the beginning of 2020, the market had the appearance of being normal until we hit the Covid-19 pandemic in mid-March.
While the buyers re-engaged, the sellers lagged, and by mid-summer 2020 we reached a point where housing inventory on the Eastside dropped below a one-month supply (this is where the blue and red lines meet and cross over). At this point, we measure inventory in fractions of a month, or weeks – and these are very tight markets. Pent up demand on the part of the buyers was not matched by the normal increase of homes available for sale. Multiple offers again became the “norm.”
LIST PRICE/SALE PRICE
The last chart I will offer for this discussion is the List Price/Sale Price Comparison chart. Cause and effect – shortage of inventory versus strong buyer demand. While this chart depicts only two data points, the first Monday in November 2019 and the same Monday in November 2020, the information is consistent across the mid-half of both years.
In 2019, the final sale prices were lagging the list price across all regions reported, except for Shoreline which inched just slightly over the 100% mark. In 2020, the only area that did not show final sale price above list price was West Bellevue. All other areas were between 102% and 104% except for North Seattle (Ballard, Green Lake, Fremont, Wallingford, and others) which was over 109%.
Based strictly on the trends shown and not on any outside influencing factors, the year ahead could possibly be another year strongly in favor of sellers as buyers compete for what could be a very meager inventory of homes available. On November 2, 2020 there were only 433 single-family homes available for sale on the Eastside. On November 4, 2019, that number was 1,054. This represents a 59% decrease in the available inventory, year over year. We will be entering 2021 with a desperately low amount of inventory.