May 2022 Seattle Housing Market Report

We are seeing signs that the market is starting to normalize to it's more predictable patterns.

After a year and a spring where we have seen some of the lowest inventory levels ever for an extended period of time and interest rates hitting their lowest marks of all time, both are starting to relent.

Interest rates are at a more normal 5.55% and we had 300 more new listings than pendings last month giving the inventory a bump and putting the number of homes for sale in Seattle over 1,000 for the first time since October of last year.

According to Lawrence Yun, Chief Economist for the National Association of Realtors, “Higher mortgage rates will inevitably pull home sales down in the coming months and slow home price appreciation”.

While we are seeing the inventory levels start to slowly increase we have not seen it affect the average price of homes, yet.  We actually saw the average sales price and the percentage of sold price to list price increase slightly last month.

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.

Expect to see "premium pricing" start to fade away as the summer nears and that leaving us feeling like prices have dropped.  We should stay in a market meaning that 40-50% of homes sell in the first 30 days.

This should result in the market stabalizeing and prices staying about the same but with less competition on each new listing.  Meaning less multi-bid scenarios and bidding up prices into that "premium pricing" range.

We will have to see what this does to the astronomically high rents in Seattle.

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 5.55% interest rate loan.

The Bureau of Labor Statistics recently reported the US inflation rate rose to 6.8% the highest it has been since 1982.  The best hedge for inflation is real estate.  As we are seeing public figures like Bill Gates and Jeff Bezos buy real estate at an extraordinary rate.

As we have been talking about for a few months 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 low 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.