RPG's Real Estate Market Trends Summary – Q1-2016 Newsletter
After a sky-rocketing surge in sales activity stats nationwide to end Q4-2015 last December, existing-home sales activity tumbled in Q1-2016, particularly in many of the hottest markets. Hit by continuing low supply levels and unrelenting price growth the National Association of Realtors (NAR) reported that all four major regions experienced sales declines in February. Then in March home sales nationwide only rose by an annual rate of 1.0%, the smallest increase in sixteen months, even while new listings grew 6.8% compared to last year. The strongest regions remain the South and the West, the Northeast is the weakest.
NAR chief economist, Lawrence Yun, stated that overall sales took a considerable step back in most of the country in February and March, particularly in the Northeast and Midwest. There were extraneous factors weighing on the decline, such as an extremely early Easter holiday. "The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February's lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers," Yun said. There are other economists who would agree with Yun’s observation that there is an increasing difficulty for buyers faced with declining suitable inventory. Redfin chief economist, Nela Richardson sums it up colorfully; “No matter how high homebuyer demand is, it takes two to tango, and many sellers are sitting (2016) out.” Take San Francisco, Seattle, Portland, OR and Minneapolis as examples – all are seeing sales activity rates falling for the first time in almost 2 years as a direct result of significant inventory declines. San Francisco’s situation may be a bellwether for the rest of the nation, too, as its home prices are falling for the first time in four years. The median sale price had averaged 15% appreciation in 2015, fell 1.8% year over year, while the number of sales plummeted over 22%. Nationally, the median sale price rose 4.7 percent year over year by the close of Q1-2016, about the same rate as in the February data, but below the 12-month average of 6.1 percent appreciation. The average sale-to-list price ratio climbed to 92.9 percent, the highest level since 2009. Overall inventory nationwide fell year over year by 3.2 percent, the 14th consecutive month of declines despite the 6.8 percent increase in new listings.
Interest rates fell for much of Q1-2016: The 30-year, conventional, fixed-rate mortgage rate declined from 3.87 percent in January to 3.66 percent in February and below 3.6 at the beginning of Q2-2016. Rates are very likely to stay at or near these historically low figures for all of 2016, putting added pressure on home price increases in the most affordable markets even as sales activity declines.
The Spokane regional data story is consistent with the rest of the country. The average regional MLS sales price in March was $204,562 compared to $182,265 for March last year and compared to $265,200 for the national average. This local increase in average sales price was 12.2%, notably stronger than the national average, due in large part to Spokane’s relative affordability for investors and upwardly mobile buyers moving in with home sale proceeds from high-equity markets on the coast. The median sales price for March was $187,500, an increase of 10.4% over March 2015 when the median sales price was $169,900. March 2016 closed sales of single family homes on less than one acre including condominiums totaled 495. Last year’s March closed sales data for the same type of properties totaled nearly the exact number at 497 Q1-2016 sales totaled 1,186 compared to 1,166, for last year through Q1-2015, an increase of only 1.7%. The average sales price for Q1-2016 is $199,378 compared to $182,181 last year, an increase of 9.4%. The median price through Q1-2016 is $182,500 compared to $167,950 last year Q1-2015, up 8.7%.
The national story of limited inventory is playing out regionally as well. Spokane and North Idaho inventory continues to be tight. Inventory in the Spokane MLS as of this report totaled 1,752 properties compared to 2,162 last year at the same time. Inventory is down 19%. New construction sales reported to the Spokane MLS are up 18.7% through Q1-2016, with 165 sales compared to 139 for Q1-2015.
National Association of Realtors, Spokane Association of Realtors, Coeur d'Alene Association of Realtors and Redfin all contributed source material for this report.