In a statement released on July 6, the Northwest Multiple Listing Service (Northwest MLS) said changes in the Western Washington real estate market in June “show signs of a shifting market, creating opportunities for some buyers,” due to a “healthy jump in inventory” as home sales fall.
According to John Deely, executive vice president of operations at Coldwell Banker Bain, the rise in inventory levels mean a deceleration in home prices.
“Having the standing active inventory rise above the closed and pending categories in June means we are finally building inventory, which is healthy for the marketplace. It slows down the steep price appreciation we have been seeing and provides a bit more time for buyers to look at more properties,” Deely said.
In Lewis County, the rising inventory has resulted in a 92.72% increase in homes listed for sale over the past year, rising from 151 in June of 2021 to 291 last month. At the same time, closed sales have fallen 23.13%, from 147 last June to last month’s 113.
But the slowdown in home price increases is of little comfort for prospective Lewis County home buyers. According to Northwest MLS, Lewis County is one of only seven counties in Western Washington to see home prices rise by 19% or more in the past year, more than twice the increase in King County.
Data provided by Northwest MLS shows a 20% increase in Lewis County’s median home price in the past year, rising by $75,000 from $375,000 to $450,000. The county’s 20% increase represents a larger increase in median home prices than neighboring counties, including Thurston County’s rise of 11.39%, Clark County’s 13.4%, Pacific County’s 6.62% and Grays Harbor County’s 17.22% increase.
According to local real estate agent Eren Millam, Lewis County is unlikely to see a decline in home prices anytime soon, even with rising interest rates.
“Inventory is still very low even though they’ve been going up with the interest rates,” Millam said. “The only way the interest rates have affected prices is by decreasing the rate of appreciation.”
Data Millam provided shows Lewis County’s inventory levels are at 25% of what they were at the peak of the housing bubble in the leadup to the 2008 recession. At the time, there were about 950 homes listed. Now, even with the influx of new homes on the market, there are less than 300.
Millam also pointed to Lewis County’s absorption rate, the speed at which new homes are sold in one month, as evidence the market would continue to climb.
“Last year and early this year, the absorption rate was about 100% and now it’s at 37%,” Millam said.
An absorption rate of 37% means of the homes that have come on the market this month, 37% have been sold. Anything above a 20% absorption rate is considered a seller’s market.
Millam thinks land that isn't currently zoned for residential units should be rezoned.
“We have a lot of prime buildable land sitting outside of a flood zone because it’s not zoned residential. But we don’t have the population to develop that industrial land,” said Millam.
In Millam’s view, Lewis County will continue to have a seller’s market for the foreseeable future, unless changes are made to local zoning codes.
“There are a lot of people saying there’s going to be a crash, and there’s no evidence of that. It’s still truly a supply and demand issue and until inventory catches up, prices are still going to rise,” Millam said. “Even if the market does crash as much as it did in 2007 and 2008 when the market lost 20%, then the prices would fall back to where they were in March 2021.”
