It’s common knowledge here in the Puget Sound region that our housing inventory levels are low across the region, but just how low are they?
Current Interest Rates
Very low! But first, the clarification that this article pertains to single-family-residential housing only, and only within the Eastside real estate market. This geographical market covers all of Bellevue, Kirkland, Redmond, Issaquah, Sammamish, Snoqualmie, Snoqualmie Falls, North Bend, most of Woodinville, and a fair chunk of Bothell. The portions of some of these communities that lie outside of King County are not in this data.
Second, the data is taken from the statistical analysis that I do each Monday morning. The data point for each of the years shown is the first Monday of each new year.
The available inventory is the number of all homes that were available for sale on that Monday, and the “Pending Contracts” statistic for each chart is the number of homes that were entered into a pending contract in the 30 days prior to the that Monday.
Third, the inventory trends reflected by this Eastside market review are fairly typical across the Puget Sound region with a few exceptions. There are three charts that are included (below) in support of this story. Let’s take a look at the “Available Inventory” chart to begin.
The chart above paints a remarkable picture of where we have been with inventory levels, and where we are today in comparison. In January 2011, we were still working our way out of the great recession (it would be another year before the market would begin to turn), there were 2,247 homes available for purchase. The same first Monday of 2021 found us with only 188 homes – 1/12th of the inventory of 10 years ago –available for purchase across the entire Eastside market! If we dropped both the two highest inventory years from our discussion and consider only the years 2013-2020, the average number of homes available on the first Monday of each of those years is 666, more than 3 times the amount of inventory available as we enter 2021.
Buyer Activity – Pending Contracts
Here the story takes on a heightened level of interest! As we look at the “Pending Contracts” chart, we see that the buyer activity – the number of pending contracts –has been fairly consistent across all those same years. The buyers have been there every year. The only reason that the numbers are slightly lower in the last three years is because inventory levels been too low to supply the demand.
Combined Chart – Available vs Pending
To wrap up our discussion, the combined chart showing the “Available Inventory Vs Pending Contracts” paints the best picture of just how low our current inventory levels are. The available inventory trend line shows a rather steep downward slope over the past ten years while the pending contracts (buyer activity) trend line shows and flat and consistent level of buyer activity across those same years. With inventory levels now below the rate of absorption, we find ourselves measuring the available housing in days rather than months – far from a balanced market! In summary, look for this year to be another year of multiple offers and rising prices.