February 2023 Seattle Real Estate Market Report
THE SEATTLE HOUSING MARKET AT A GLANCE
3 KEY INDICATORS SEATTLE HOUSING MARKET
- SALES ACTIVITY INTENSITY: 39.9% (STRONG)
- INTEREST RATE: 5.99% (ACCEPTABLE)
- INVENTORY LEVEL: 1.5 Months (SHORTAGE)
This article will be about the current and future state of the Seattle area housing market. Refer to the table of contents to skip to your interest.
We started with the Seattle housing market at a glance and the 3 key indicators, then the Seattle market video discussing the 3 key indicators and how they affect the market.
We deep dive into what story the statistics are telling us. We will hear from the 29th most influential person in real estate, Lennox Scott and what he sees happing in the real estate market. We look at Sales Activity, Market Intensity, Price, Interest Rates, Timing and Job and Population Growth. A complete list of the MLS Infospark stats for Seattle housing market trends.
Lastly, don't forget to check out the newest Seattle homes for sale.
With fewer buyers looking to purchase homes, there are fewer homes coming onto the market which is leading to the shortage/low level of unsold inventory especially in the more affordable, mid-price+ range of homes.
Heading into the spring market, we will increase one level of hotness of Sales Activity Intensity™ for new listings before the intensity settles down pre-summer when we can expect to see a higher number of new resale listings coming onto the market. Remember, it’s okay to buy and sell within same market timing.
We continue to stay on a similar trajectory as we were on in 2018 where after an extended period with extremely low inventory and low interest rates, the interest rates increased and the sales intensity decreased. In 2018 this was most noticeable starting in June and going through the winter as activity started to pick up in March. We would then go on to set sales records for the next 2-3 years.
Although new listings more than doubled to 762 listings in January, with the super low levels of November and December the inventory level still dropped.
This shortage of inventory has February starting to see multiple offer situations again. Not on every listing and not to the extent that we had seen over the last few years.
The average sales price for a Seattle home in January of 2022 was $824,879 and in 2023 it was $842,871, a 2% increase.
After a winter of cleanup we are coming into the Spring market with a low inventory and a backlog of buyers that ready to buy.
Sellers need to be Market Ready Day One to take advantage of the low supply and ensure their homes sell swiftly and for top dollar.
Buyers need to readjust to the new normal and get themselves Buyer Ready Day One. Not every listing is a multi-bid scenario but we need to be ready when they are.
It is always OK to buy/sell within same market timing. In this market most sellers are sitting on big equity and can take their time to get their home ready for sale. After we sell we have a much higher chance of buying our move up or move down without having to arrange for temporary housing.
Most of the dooms day stories about a potential crash have died down and while anything is possible I have found that the best way to really understand how the market is responding is to look at the data and match it up with the eye test.
We tend to look heaviest at the 3 key indicators to determine the health of the market.
The percentage of new listings that go pending, or under contract, in the first 3o days. We call this the "Sales Intensity Scale". During the pandemic we literally had to make up a new adjective to label what was happening as we were seeing over 90% of new listings go pending in the first 30 days. We called that an Ultra and Uber Frenzy Market. We are currently sitting at 39.9% of new listings. We call that a STRONG Market. A median or average type market would be around 30%.
BONUS TIP: With some listings it is possible to negotiate for Seller's concessions. Generally these would go towards your closing costs. Now might be a good time to negotiate seller concessions towards buying down your interest rate a percentage.
Inventory levels continue to decrease and are at we consider a Shortage Inventory Level. This last year we hit all time record lows for the amount of homes for sale. When there are not many homes to buy and many people looking to buy homes that is simple Supply and Demand. Not enough supply for all that demand.
What we saw happen was 10-20 people bidding on the same house. People buying houses they were allowed to tour for 15 minutes. People waiving all their contingencies and bidding the price of the home up by $50-200K. That was an abnormal market.
With 1.5 months of supply we are again seeing some bidding wars, waiving of contingencies and ultra quick sales, but it is not yet the norm.
If you are thinking of buying a home in Seattle right now and are worried that the interest rates have increased it is important to contrast that to what you gain.
Recently Fannie Mae a government-sponsored lender forecasted that the rate on a 30-year fixed mortgage will fall to an average 4.5% in 2023.
"Marry the house (while they are easier to get) and date the rate until they come back down to the 4's".
We should stay in a Strong to Surging market meaning that 35 - 65% of homes sell in the first 30 days through the summer.
Seattle rent remains high and according to Zillow, "Rent growth should remain strong in the short term as high home prices keep many would-be first-time buyers in the rental market. Over the next 12 months, rents are expected to grow more than inflation, stocks and home values."
According to Rent.com Seattle's average 2 bedroom rent for an apartment is $3,249 month. Which equates to approximately a $650,000 home (view Seattle homes for sale in the $500K - 700K price range) with 20% down on a 30 year fixed 5.99% bought down to 3.99% with a temporary 2-1 buydown interest rate loan.
As we find ourselves in recession-like situations the best hedge for inflation is real estate.
As we have been talking about for a while now Seattle has the 2nd highest percentage of tech workers in the country. "Seattle Overtakes Boston as Third-Richest US City by Household Income" (Bloomberg)
Despite WA being fully open we will continue to offer a full suite of Virtual Real Estate Services.
Read the Full Report Here: https://www.themadronagroup.com/seattle-housing-market-report/