Real Estate Trends: May Housing Rebound
Posted June 14, 2020 in Real Estate Trends
May showed a strong rebound with a 50% increase in pending property sales over April. The pending sales also mirrored the same sale volume as May 2019. Surprisingly, given the pandemic, market time was only one day less than May of 2019. This May, new listings were down by 23.7% compared to May 2019. Prices held steady from April to May. With pending sales remaining the same and fewer listings, real estate pricing will be pressured to increase over the coming months. New construction’s market presence continues to grow, with 35% of SW WA listings. Months in inventory (The time it takes to sell all current listings) reduced from April, at 2.5 months, to 2.3 months; the same percentage as May 2019.
Due to pandemic-related limitations in construction, finished new-construction inventory is very low. Over half of new-construction listings are proposed, meaning they have not yet started construction. The total inventory of property listings is 1,304. Due to proposed and under-construction listings, the actual inventory of purchase-ready homes is substantially less, at 800. This provides an inventory of properties that would sell at the current sale rate in 1.4 months. With fewer options for buyers, competing offer-bids for homes have started going over list price. We will see some relief as under-construction homes finish, and new-home-starts commence. During Q3, we should see an increase in preowned-home listings, as pandemic concerns subside.
Year to date price appreciation is 6%, similar to the WA state average of 5.7%. The peak price appreciation to date was 6.7%, experienced in March. Following the COVID-19 impacts, prices settled to February levels at our current 6% appreciation mark. Based on statistics, I would expect to see price increases match March’s gains over the coming 1-2 months. According to CoreLogic’s data, Washington state is currently #1 for real estate price appreciation in the US.
Due to COVID-19, future lot development has been limited, causing a lack of new construction inventory for 2021, given that current new construction communities are selling out. This should spur home price appreciation in 2021 above the 4.5% level we witnessed in 2019.