Current Trend in Real Estate Market

      It has been said in various news media that the US economy and the housing market are undergoing mild recovery. To show both home buyers and sellers the specific market figures in King county, I pull some statistics data from the northwest multiple listing services (NWMLS) and did some analysis.

    Figure 1 shows the numbers of active residential listings and closed sales in King County from January 2011 to September 2012. During this period, the month with the highest number of active listings (available homes on market) is July 2011 with 8,186 active listings. After that, the number of active listings has gone down to about five thousand every month and maintained at approximately that level. The number of closed sales, however, was going in the direction of mild decreasing until January 2012. Although the number of closed sales started to increase after it hit the bottom early this year, it maintained at approximately two thousand every month.
 

     One of the most important factors that affect the value of a product on a free market is supply and demand. When there is greater demand for certain product than its supply, the value of that product tends to rise. On the other hand, when the demand for that product is less than the supply of that product, the value will go down. Real estate market is affected in part by changes in the supply of and demand for available listings and mortgage loan funds. If the number of available houses stays relatively the same while the number of buyers on the market increases, house value tends to go up.

 

     If we use the number of closed sales as an approximate indicator of demand on the market and compare it to the number of active listings, we can find a pretty good match to the trend of house values. According to the data in Figure 1, the demand for new housing has been increasing since January 2012, while the number of available homes on the market has remained approximately the same this year. The result of an increasing demand and steady supply is reflected in house values and one important indicator of local house values is the medium price.  Figure 2 shows the medium price of residential homes in King county since January 2011. The medium price of residential houses hit the bottom at $ 308,125 in February 2012. Since then, the medium price of residential houses is in the direction of increasing.

 

 Figure 2. Medium price of residential homes in King County since January 2011

     Brokers say that combination is resulting in disappointment for buyers who are slow to accept the reality of a recovering housing market. Meanwhile, some sellers with well-priced, well-prepared homes are receiving multiple offers according to Wilson, a member of the Northwest MLS board of directors.

     One might notice that the number of closed sales in September 2012 dropped a little bit. It is still too early to tell whether or not this is the beginning of a slowing down market. However, we can see from Figure 1 that the supply (active listings) far exceeds the demand (closed sales). It is still the buyers’ market. Along with the factor of a record low mortgage rate, it is one of the best times to invest in real properties.