September 2022 Seattle Housing Market Report
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SEATTLE REAL ESTATE MARKET
- Average Sales Price DECREASED by $77k total to $935k
- New Listings DECREASED to 1,230
- Sold Homes INCREASED to 930
- Pending Sales INCREASED to 985
- Percentage of Sold Price to List Price DECREASED to 99.4%
- Interest Rates INCREASED to a Solid 6.02%
- Home Inventory DECREASED to 1.5 Months of Supply
THE SEATTLE HOUSING MARKET ANALYSIS FOR SEPTEMBER 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.
Gary Keller, founder of Keller Williams real estate, said today's market is filled with 'mixed signals' that can make it hard to strategize. “I would say this is the most confusing market I've ever seen in my entire 40-plus years in our industry. It's confusing, and it's only confusing because you have mixed signals”.
Like I shared last month as real estate professionals this is a perfect market. 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.
Buyers are still seeing historically solid interest rates and can often tour 6-10 listings that match their search criteria and offer list price or below with an 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 51.8% of new listings. We call that a SURGE 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 6.02% 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 low 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, surprisingly fell a bit last month. 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 1.5 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".
We did see the average sales price drop a bit in August.
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 1-8% 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 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 $775K home (view Seattle 3 Bedroom homes for sale in the $700-800K price range) with 20% down on a 30 year fixed 6.02% interest rate loan.
As we find ourselves in recession-like situations 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.
Continue Reading: https://www.themadronagroup.com/seattle-housing-market-report/
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