July 2022 Seattle Housing Market Real Estate Report
SEATTLE HOUSING MARKET
STRENGTH REMAINS THROUGH INTENSITY ADJUSTMENT IN JULY 2022
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 start with our 60 second video discussing the 3 key indicators and how they affect the market. Then an infographic and a highlight of what stood out the most this month and some quick stats we think are important.
We deep dive into what story the statistics are telling us. Next we will hear from the 24th most influential person in real estate, Lennox Scott and what he sees happing in the Seattle market. We will do a short breakdown on Sales Activity, Days on Market, 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.
SEATTLE REAL ESTATE MARKET
- Average Sales Price DECREASED by $19k total to $1.042mil
- New Listings INCREASED to 1,901
- Sold Homes DECREASED to 1,179
- Pending Sales DECREASED to 1,053
- Percentage of Sold Price to List Price DECREASED to 103.8%
- Interest Rates INCREASED to a Solid 5.5%
- Home Inventory INCREASED to 1.3 Months of Supply
Every month we gather all the facts, data and statistics about the Seattle Housing Market and share them with you. We will discuss the 3 major factors in determining the strength of the market.
- Monthly Inventory Level
- Percentage of Homes That Go Pending In First 30 Days
- Current Interest Rates
The data tells a story about the current state of our local residential real estate market.
Increased interest rates and a large number of new listings is bringing the Seattle real estate market back to a more normal state.
The question that everyone seems to be asking is will the bubble burst.
I have found over my years that the least accurate information comes from the Media (TV, Social, Headlines). They tend to present the "facts" in a way that promotes their agenda... which is to get more people to watch, read and listen.
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 Uber Frenzy Market. We are currently sitting at 68.5% of new listings. We call that a Surge Market. A median or average type market would be around 30%.
Interest rates have increased and that seems to be shown in the news as the end of the world. We are currently at around 5.5% for a 30 year fixed conventional loan. Pre Covid we were around 3.75%, then the stimulus packages hit and the Fed lowered the rates to near 0. This gave the banks a rare opportunity to offer rates in the 2's and if you got in on that... Congratulations. Historically speaking interest rates in the mid 5's are considered a good rate.
Lawrence Yun the chief economist for the National Association of Realtors speculates that banks have "Baked-in" the future rate hike that has been announced by the Fed. He thinks that we should see rates stabilize in the 5's or 6's.
Inventory level has gone over the month supply again. 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 1.3 months of supply we are again able to tour multiple houses, often times not bidding against anyone or maybe 1 or 2 other offers. We are starting to see home inspections become the norm again.
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.
"Marry the Home and Date the Interest Rate."
While we are seeing the inventory levels start to slowly increase we have not seen it affect the average price of homes to much yet. We did see the average sales price drop slightly in June.
We are 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 we continue to see "premium pricing" fade away into the summer it leaves us feeling like prices have dropped. At this time most economists are predicting that prices level off, but will not loose appreciation. Anywhere from a 1-3% appreciation gain for 2022 are what the experts are predicting.
We should stay in a Surge market meaning that 40-50% of homes sell in the first 30 days through the summer.
Seattle rent continues to increase and it appears demand has as well as we are hearing stories of applicants calling as soon as the rental hits the market and being 1 of 20 callers. We have even heard stories about people have to win rental bidding wars.
According to ApartmentList.com Seattle's median 3-bedroom rent for an apartment is $4,629 month. Which equates to approximately a $800K home with 20% down on a 30 year fixed 5.5% interest rate loan.
As we find ourselves in a recession the best hedge for inflation is real estate. As we keep seeing public figures like Bill Gates and Jeff Bezos buy real estate at an extraordinary rate.
As we have been talking about for a while now Seattle has the 2nd highest percentage of tech workers in the country. Tech jobs bring people in from all over the world and tend to be come with an above average salary. So what do tons of new people with above average salaries need when they get to Seattle, a place to live.
When you add the large number of high income tech workers with the historically solid interest rates and the desire for people to move into larger homes that accommodate all the at home activities that people have gotten used to along with crazy high rents and a desire to counter inflation with real estate we should steer clear of any kind of bubble bursting.
Despite WA being fully open we will continue to offer a full suite of Virtual Real Estate Services.
The intensity adjustment continues in the Seattle real estate market as summer begins. Although lower than last year, local sales activity is strong. There was a mini surge of new resale listings in June as we are returning back to a pre-pandemic real estate market. The influx of new listings brings more buyers into the market who are poised and ready to put an offer on their future home.
Seattle’s luxury housing market is returning back down to a healthy level of sales activity for properties priced above $1 million.J Lennox Scott
READ THE FULL REPORT HERE: https://www.themadronagroup.com/seattle-housing-market-report/