CEO of John L. Scott Real Estate
November 2022 Seattle Housing Market Report
SEATTLE HOUSING MARKET FORECAST
HOME PRICES, INTEREST RATES, REAL ESTATE STATISTICS, VIDEO AND CHARTS
THE SEATTLE HOUSING MARKET AT A GLANCE
3 KEY INDICATORS
SEATTLE HOUSING MARKET
- SALES ACTIVITY INTENSITY:
- 44.5% (STRONG)
- INTEREST RATE:
- 7.09% (UNCOMFORTABLE)
- INVENTORY LEVEL:
- 2.2 Months (LOW)
THE SEATTLE HOUSING MARKET ANALYSIS FOR NOVEMBER 2022
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.
THE CURRENT HOUSING MARKET IS NOT LIKE THE GREAT RECESSION OF 2008. Although the 2022 housing market has experienced a major intensity adjustment, the amount of unsold inventory is currently low in the more affordable and mid-price ranges where more than 80% of sales activity takes place.
I don't think anyone can argue that we are experiencing inflation and a bit of a recession.
What we are not experiencing is a mass job loss, homeowners with no equity and foreclosures and short sales.
What we are experiencing is a year over year 35%+ decrease in the amount of sales. While this is not good news for me it is not really affecting the real estate market that drastically. In fact Seattle has actually seen the average sales price increase the past 2 months.
Listings are selling at a swift pace for close to market price. Buyers are able to pick their home and make offers with little to no competition. We call this Real Life – Real Estate™
Meaning that rather than trying to buy just to take advantage of an artificially low interest rate or to sell because of an artificially high selling price people are buying and selling due to real life events.
This is a good thing. It gives us time to slow down and weigh the pros and cons of each real estate decision.
Sellers that are Market Ready Day One are still seeing their homes sell swiftly and for top dollar. On occasion, homes are still seeing multiple bid offers.
Buyers can often tour 6-10 listings at a time that match their search criteria and offer list price or below. Do a home inspection with little or no competition.
The real winner is the person that needs to sell and buy. 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. We are even seeing contingent sales start to get accepted again.
We are still hearing dooms day stories about the crash 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 44.5% of new listings. We call that a STRONG Market. A median or average type market would be around 30%.
Interest rates have increased with the news that the Fed intends to continue increasing the Federal Funds Rate. We are currently at around 7.09% 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 6's are considered a good rate.
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 increased a bit but are still what we consider low inventory. 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 2.2 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.
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".
As we continue to see "premium pricing" fade away through the end of the season it leaves us feeling like we are loosing value. At this time most economists are predicting that prices level off, but will not loose appreciation. Anywhere from a 0-3% appreciation gain for 2022 are what the experts are predicting.
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.
We should stay in a Strong to Surging market meaning that 40-60% of homes sell in the first 30 days through the winter.
Seattle rent remains high, according to ApartmentList.com Seattle's average 3+ bedroom rent for an apartment is $7,067 month. Which equates to approximately a $1,050,00 home (view Seattle 3 Bedroom homes for sale in the $1,000,000-1,250,000 price range) with 20% down on a 30 year fixed 7.09% 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.
FOCUS ON EACH NEW LISTING
Although a lower number of homes are going under contract and fewer new resale listings are coming on the market, the Sales Activity Intensity™ for new resale listings going under contract within the first 30 days remains resilient.
There is strong intensity for new resale listings up to $500,000 and healthy intensity above $500,000.
J Lennox Scott
SEATTLE REAL ESTATE GRAPHS AND DATA
With 2.2 months of supply if no other homes were listed in the next 66 days we would run out of houses to buy.
There were 1,086 new listings in October.
If you are looking for homes 2 million plus you are seeing more inventory than $500k-$1million.
As you can see from the table above anything below 5 months of inventory is considered low. Low inventory means higher demand. Higher demand drives the price up.
724 homes were sold in Seattle last month. That is down 96 from the previous month, down 496 from last year, and down 346 from 5 years ago.
In the Seattle housing market homes in the 500k-1m+ price range typically sell the fastest.
44.5% of homes are selling in less than 30 days in the Seattle housing market. A median market is usually closer to 30%.
Houses in the 0-$350K and $1m-1.5m price range are selling 50% of the time in the first 30 days.
Even as there are more homes for sale, there are still many buyers trying to buy… the homes that do list are still selling very fast.
AVERAGE SALE PRICE: $956,426
SINGLE FAMILY RESIDENTIAL: $1,104,903
We have already seen where a low inventory should drive up prices. The average sale price for Seattle homes is $956,426. In comparison 5 years ago the average sales price was $738,624 a 30% increase in equity, or a 6% increase per year.
Listings are selling at 99.1% of their list price on average.
As you can see from the John L. Scott 6 phases to a yearly house cycle chart we are in the slower time of the home buying cycle.
If you’re a buyer you will want to position yourself to create a buyer advantage when competing with other buyers and walk in confidence when making an offer. We can consult with you to be up-to-date with current market intensity and pricing, get pre-approved or fully underwritten through a lender, and receive email/text notification of newly listed properties.
In today’s instant-response market, it’s key to ensure you’re ready to act when the timing is right and make sure you are Buyer Ready Day One.
Sellers should be Market Ready Day One.
JOB AND POPULATION GROWTH
WHILE WE ARE NOT SURE HOW THE EMPLOYMENT NUMBERS WILL END UP HERE IS THE CURRENT UNEMPLOYMENT SITUATION
CURRENT UNEMPLOYMENT RATES
WA Employment Security Department
"King County lost population last year for the first time in almost 50 years", according to the Seattle Times.
SEATTLE MARKET STATS
STATS PROVIDED BY: INFOSPARK
- $967,3906 was the average sold price for listings in Seattle.
- 1,086 new listings went on the market this month.
- 1,984 homes were for sale during the month.
- 721 homes went pending in Seattle.
- 724 homes sold this month
- 2.2 months of inventory available in Seattle
- 24 was the average days on market for a home to sell in Seattle
- 98.9% was the average listing price vs. sales price percentage
- $561 was the average price per square foot in Seattle
- $700,390,229 was the total closed sales volume for Seattle
- 7.09% was the interest rate
- 44.5% of homes sold in the first 30 days in Seattle
SEATTLE HOUSING MARKET SUMMARY
The Seattle Housing Market saw 1,086 new listings, 1,984 homes were for sale, while 724 homes sold in October in Seattle.
The average days on market drecreased to 24 days, the percentage of sale price to listing price decreased to 98.9%, and the average sales price increased a bit. The percentage of homes that sold in the first 30 days is 44.5% indicating a Strong Market. Inventory is at 2.2 months of supply indicating a Low Supply.
Despite interest rates jumping in the last couple months the pool of buyers seems to remain fairly strong.
We should continue to see a strong market through the Spring of 2023.
Now is still a good time to sell your home as we are still seeing low inventory and historically high prices.
If you are considering a move up, a move down, or just want to sell your home… Months of inventory is still at below average. Homes are selling at a rapid pace, the Interest Rates are still at average rates.
The Seattle job market has remained strong powered by the tech sector.
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