Seattle Real Estate Market Update March 2024

THE SEATTLE HOUSING MARKET AT A GLANCE

Seattle housing market update infographic

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 3 KEY INDICATORS
SEATTLE HOUSING MARKET

  • SALES ACTIVITY INTENSITY:
    • 66.9% (FRENZY)
  • INTEREST RATE:
    • 7.08% (ACCEPTABLE)
  • INVENTORY LEVEL:
    • 1.2 Months (SHORTAGE)

THE BIG DEAL
We are all patiently waiting for the economy to reach the perfect balance between normal and recession, so the Fed can start cutting rates.  This will start the process of releasing the pent up demand.

 

SEATTLE HOUSING MARKET MARCH 2024: IN-DEPTH ANALYSIS AMIDST FRENZY, SHORTAGE, AND RISING RATES


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.


Hey Seattle homebuyers, as we delve into the Seattle housing market for March 2024, the landscape reveals a series of dynamic shifts and patterns worth noting. With a blend of optimism and caution, let's explore the current state and anticipate the road ahead in this ever-evolving market.

Market Dynamics and Key Trends:

  • Interest Rates and Their Impact: The Seattle-area housing market continues to be influenced by higher interest rates, which have added a layer of complexity for buyers and sellers alike. While these rates have led to a more cautious approach from potential buyers, they are also creating a unique set of opportunities within the market​.

  • Inventory Fluctuations: A notable trend is the decline in inventory, coupled with an increase in sales in certain counties, indicating a robust demand that persists despite fewer homes on the market. In January 2024, King County experienced a significant year-over-year decrease in active listings, alongside a modest increase in closed sales, showcasing the market's resilience and competitive nature​.

  • Pricing Insights: The median sales price in King County has seen a 5.12% increase compared to the previous year, stabilizing at $760,000. This stability in pricing, amidst fluctuations in inventory and interest rates, suggests a market that continues to attract a diverse range of buyers and sellers​.

  • Condominium Sales: An interesting subplot within the larger market narrative is the surge in condominium sales, which have witnessed a substantial year-over-year increase. This rise reflects a growing segment of the market that's adapting to the broader trends impacting single-family homes​.

  • A Glimpse into the Future: Experts remain optimistic about the Seattle-area housing market's trajectory, forecasting moderate growth and a gradual move towards a more balanced market. Strategic pricing for sellers and vigilance for buyers are recommended, especially as the market adjusts and evolves in response to interest rates and inventory levels​.

  • Navigating the Market: For buyers and sellers alike, the current market conditions underscore the importance of being well-informed and strategic. Whether it's capitalizing on the competitive nature of the market or navigating the challenges posed by interest rates and inventory shortages, success in the Seattle housing market demands a nuanced understanding of its dynamics.

A significant point of discussion revolves around interest rates, which have been a pivotal factor for both buyers and sellers.

The Federal Reserve's monetary policy, particularly its stance on interest rates, plays a crucial role in shaping the real estate landscape. As of now, the Fed has not implemented any rate cuts this year, maintaining a cautious approach amidst various economic signals. However, there's a growing anticipation that the first rate cut could occur as soon as June.

This awaited adjustment comes amidst a backdrop of high interest rates that have undeniably impacted the housing market, constraining affordability and influencing buyer behavior. Higher rates have led to a cautious approach from potential buyers, who are keenly observing the Fed's moves for any sign of relief that could improve their purchasing power.

The prospect of an impending rate cut by the Fed is significant, as it could potentially unleash pent-up demand within the market. Buyers who have been sidelined due to the higher cost of borrowing may see this as an opportune moment to enter the market, hoping for more favorable conditions. This anticipated move is watched by market participants, as it could signal a shift in the current dynamics, providing a much-needed boost to market activity.

Sellers, too, are closely monitoring this situation, as a reduction in interest rates could lead to an increase in buyer interest, possibly enhancing the competitiveness of the market. This scenario underscores the importance of strategic pricing and presentation, with sellers needing to align their expectations with the evolving market conditions.

Seasonally we should be seeing a significant increase in activity in March and into the summer.  We have seen activity pick up significantly the last couple of weeks in particular.

It remains a confusing real estate market and has some unpredictable ups and downs for buyers and sellers.  On the one hand, we see 65-75% of new listings go pending in the first 30 days and most of those are multiple bid competitive situations. On the other hand, we are seeing 16% of listing with a price reduction.

What is the difference?  Listings Must Be Turnkey (New Construction, Fully Updated, or in Extremely Good Condition) if you want it to sell quickly for over asking.  Everything else sits for a few weeks and either gets a lower bid or does a price reduction.

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.

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

Until we get an influx of listings or the interest rates become unmanageable... We do not have enough houses to sell.  We are currently showing 1.2 months supply of inventory in Seattle and that is considered a Shortage.

When we have a low amount of listings that means we are still in a Seller's Market.

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 the 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 doomsday stories about a potential crash just seem to not want to go away.  We have seen severe inflation and many recession-like activities.  I have found that the best way to 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 66.9% of new listings.  We call that a FRENZY Market.  A median or average type market would be around 30%.

Inventory levels continue to stay low and are at 1.2 months supply what we consider a Shortage Inventory Level.  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 matches their needs, that will limit the demand.  Right now interest rates are right around 7% (Mortgage News Daily).  Data shows that we will tolerate interest rates up to the 7% range 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.

THE RENT VS BUY CONVERSATION

BUYING A HOME MEANS AVOIDING RISING RENTS

When you rent:  Your monthly payment usually goes up every time you sign a new lease

When you buy:  Your fixed-rate mortgage payment is locked in for the length of your home loan

HOMEOWNERS OWN A VALUABLE AND TANGIBLE ASSET

“. . . the average U.S. homeowner now has about $290,000 in equity.” (Corelogic)

When you rent: You won't get any return on your investment as you pay your rent monthly

When you buy: As home prices rise, and as you pay down your home loan, you build equity.

OWNING YOUR HOME GROWS YOUR WEALTH OVER TIME

“A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.” Dr Lawrence Yun

When you rent:  When the cost of renting goes up, it's more difficult to save money for a down payment to buy a home.

When you buy: As you build equity through the years, you give your net worth a big boost.

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 $3,400 per month.  This 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% 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.  

We should stay in a Frenzied to Surging market meaning that 35 - 85% of homes sell in the first 30 days through the Fall of 2024.

Seattle has the 2nd highest percentage of tech workers in the country. "Seattle Overtakes Boston as Third-Richest US City by Household Income" (Bloomberg)

MULTIPLE OFFER CITY

The new year has kicked into gear with limited inventory and strong buyer demand which has created many multiple offer situations. As we enter the spring market, we expect to see an increase in the number of new resale listings coming onto the market, although it is still below normal. Additionally, with an increase in new resale listings comes an increase in new buyers ready to purchasJ Lennox Scott


LENNOX SCOTT

CEO of John L. Scott Real Estate


Lennox Scott
SEATTLE REAL ESTATE GRAPHS AND DATA

SALES ACTIVITY AND INVENTORY



seattle sales activity

With 1.2 months of supply if no other homes were listed in the next 36 days we would run out of houses to buy.

There were 1,066 new listings in February.

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.

634 homes were sold in Seattle last month.

In the Seattle housing market homes in the 500k-1m+ price range typically sell the fastest.

MARKET INTENSITY

Image

66.9% 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 $750K - 1m price range are selling 79.2% 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 fairly quickly.

PRICE

AVERAGE SALE PRICE: $1,010,991

SINGLE-FAMILY RESIDENTIAL:  $1,120,620

CONDOS: $679,378

AVERAGE SALES PRICE 5 YEARS AGO: $735,595

% INCREASE OVER 5 YEAR SPAN:37%

LISTINGS SELL PRICE COMPARED TO LIST PRICE: 100.9%

TIMING

yearly housing cycles

As you can see from the John L. Scott 6 phases to a yearly house cycle chart we are just starting the more intense Spring Market.


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 unemployment rates

WA Employment Security Department

Where Counties are Growing[Source: U.S. Census Bureau]

"

"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

  • $1,010,991 was the average sold price for listings in Seattle.
  • 1,066 new listings went on the market this month.
  • 1,269 homes were for sale during the month.
  • 779 homes went pending in Seattle.
  • 634 homes sold this month
  • 1.2 months of inventory available in Seattle
  • 37 was the average days on market for a home to sell in Seattle
  • 100.9% was the average listing price vs. sales price percentage
  • $587 was the average price per square foot in Seattle
  • $643,300,695 was the total closed sales volume for Seattle
  • 7.09% was the interest rate
  • 66.9 % of homes sold in the first 30 days in Seattle

SEATTLE HOMES FOR SALE


seattle homes for sale
SEARCH SEATTLE LISTINGS

SEATTLE HOUSING MARKET SUMMARY


As we reflect on the Seattle housing market's performance in February, the numbers paint a compelling picture of resilience and strength.

February witnessed 1,066 new listings into the market, while the total number of homes available for sale stood at 1,269. Despite the challenges, 634 homes found new owners, highlighting the sustained demand in the region. Notably, homes in Seattle were not lingering on the market for long, with the average days on market at just 37 days, a testament to the market's robustness. The selling price, on average, exceeded the listing price by 0.9%, showcasing the competitive nature of the market, where buyers are willing to pay premium prices for their desired homes. The average price per square foot reached $587, further emphasizing the market's strength.

February's statistics also reveal an interesting dynamic with 1.2 months of inventory available, indicating a tight market that leans in favor of sellers. This scarcity of inventory, coupled with a high percentage (66.9%) of homes selling within the first 30 days on the market, underscores the vigorous activity and the quick pace at which properties are being snapped up. The total closed sales volume for Seattle stood at an impressive $643,300,695, reflecting the high stakes and significant investments circulating in the Seattle housing market.

As we gaze into the horizon, it's clear that Seattle's housing market is poised for an exciting trajectory. With interest rates at 7.09%, there's a palpable sense of anticipation about the next buying cycle. The market's pulse suggests a vibrant period ahead, especially through the summer of 2024. For those contemplating selling their homes, the current climate remains highly favorable, characterized by low inventory levels and historically high prices. This environment offers a golden opportunity for homeowners looking to sell, whether they're considering upsizing, downsizing, or simply seeking a change.

Moreover, Seattle's job market, with a strong backbone in the tech sector, continues to provide the economic stability and growth that fuels the housing market. This synergy between a thriving job market and a robust housing sector promises to keep Seattle at the forefront of desirable living and investment opportunities.

In summary, the Seattle housing market is not just surviving; it's thriving. With favorable conditions continuing to dominate, now is an opportune time for sellers to make their move. The strength of the job market, combined with the dynamics of the housing market, sets the stage for a vibrant and prosperous period ahead. Whether you're selling, buying, or simply exploring your options, the Seattle housing market remains a fertile ground for opportunity and growth.

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