Seattle Real Estate Market Report for August 2023

AFTER THE FIRST OF THE YEAR, WE’LL SEE MORE BUYERS, LISTINGS, AND TRANSACTIONS ALONG WITH HIGHER PRICES IN MORE AFFORDABLE AND MID-PRICE RANGES

National Association of REALTORS® Chief Economist Dr. Lawrence Yun just forecasted a gradual decline of home mortgage interest rates, leveling out at 6% through 2024. Therefore, we anticipate more buyers searching to purchase a home. Approximately 70% of buyers have a home to sell, providing additional inventory. However, with higher buyer demand in the more affordable and mid-price ranges than the number of new listings, home prices will head higher. Separately, the luxury market and lifestyle/destination markets are positioned with great selection and great pricing; we anticipate increased buyer activity over the year ahead.

We are stuck in this new market where there are less new listings hitting the market year over year and a higher interest rate than we had gotten comfortable with over the last few years. Where we see some new listings come on the market and get multiple offers in the first 5 days.  We see other new listings come on the market and sit untill a price drop is performed, or accept a less than list offer.

This is producing an interesting situation where the market can be in favor of both a seller and a buyer depending on the condition of a new listing.

Let me explain.  Now more than ever a new listing must come on the market in Market Ready Condition.  If the home is in Market Ready Condition, priced correctly and in a desirable condition there is a very good chance that it will sell quickly (0-7 days) and for an escalated sales price.

If a home comes on the market and it is a little beat up, priced too high or in a bad location it is possible it may sit for a few weeks giving a buyer an advantage and the possibility of negotiating a lower price or seller credits.

Until we get a influx of listings or the interest rates become unmanageable... We do not have enough houses to sell.  We are currently showing 1.5 months supply of inventory in Seattle and that is a Shortage.

In order to maximize your home selling/buying experience:

• 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.

The dooms day stories about a potential crash continue to circulate and there is no doubt that we have seen a severe dip in the economy.  I have found that the best way to really understand how the real estate 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 57.2% of new listings.  We call that a SURGING Market.  A median or average type market would be around 30%.

Inventory levels continue to stay low and are at what 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.

Interest rates play a huge role in the demand.  If people can not get financing, or financing that match their needs, that will limit the demand.  Right now interest rates are right around 7%.  Data shows that we will tolerate interest rates under 7% and continue buying homes.

BONUS TIP:  With some listings it is possible to negotiate for Seller's concessions.  Look for homes that have been on the market longer than 7-10 days.  Generally these concessions would go towards your closing costs.  Now might be a good time to negotiate seller concessions towards buying down your interest rate.  Either a permanent or temporary 2/1 buydown.

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 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 of 2024.

Seattle rent remains high and according to the Bureau of Labor Statistics it is the second highest victim of inflation at 8.3% rise from last year.

According to Zillow the average rent for a Seattle 3 bedroom home is $3,800 month.  Which equates to approximately a $600,000 home (view 3 Bedroom Seattle homes for sale in the $500K - 700K price range) with 20% down on a 30 year fixed 7% or bought down to as low as 5% 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.  

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.