Real Estate Market Update - December 2022
The greater Seattle-Bellevue real estate market dramatically cooled after June 2022 due to the typical downward seasonal trend combined with exponentially higher mortgage interest rates that peaked in October and November at 7.85%--from rates as low as 2.625% in late 2021 to 3.85% in March 2022. Now, interest rates are at a two-month low and qualified borrowers are seeing rates below 6%, again. I believe mortgage interest rates will range between +/-5% and +/-6% in 2023. Keep in mind, mortgage interest rates are a function of a borrower’s down payment and credit score. I do not believe we’ll see rates below 4% in 2023 or 2024.
Currently, the quantity of King County homes For Sale (Supply) in November 2022 versus November 2019 (pre-pandemic levels) has only increased approximately 0.467%. Please be aware the charts during the pandemic (roughly April 2020 until April 2022) are an anomaly due to the Federal Reserve slashing the Fed Funds rate to zero that effected massive demand for home purchases. It resulted in outrageous house price appreciation of approximately 34% nationally in just a two-year period.
Based on the data/charts, there was a somewhat similar housing correction in 2018 that resembles 2022, which may help forecast 2023. If you recall, the Federal Reserve also dramatically increased the Fed Funds rate in 2018, which increased mortgage interest rates, and increased the supply (homes For Sale) while decreasing demand (homes that Sold). See my article What to Make of Seattle’s Market Cooldown, dated September 17, 2018, for details. In short, the 2018 housing correction began in May 2018 and ended in December 2018, which decreased home values by over 10%. Subsequently, home prices appreciated approximately 7.5% in 2019. The quantity of homes For Sale (Supply) in King County in November 2022 (2,796 ea.) versus November 2018 (4,143 ea.) decreased over 32%.
The following graph represents single-family home sales activity, specifically end of year supply (homes For Sale), in King County over the last four years:
The average single-family home sales price in King County decreased 15.5% from May 2022 ($1,250,000) to November 2022 ($1,056,000).
The following graph represents single-family home sales activity in King County over the last five years:
I believe 2023 will be a healthier real estate market based on the stabilization of mortgage interest rates and the home value correction in 2022.
For Buyers
It’s a good time to be a Buyer! It’s been years (circa 2015) since Buyers in the Seattle metro area could really take their time and shop... Buyers have been rushed to pre-inspect a home and sewer (+/-$750) and make a competitive offer against 10 or more other offers that escalates over $100,000 while waiving all contingencies and releasing Earnest Money to the Sellers. Buyers—revel in this moment—because I don’t think it will last much longer!
See article regarding the Pacific Northwest Housing Shortage.
For Sellers
The ideal time to list a property for sale is in late February to early May. If you’re interested in selling, please reach out as soon as convenient, so we can prepare, plan, schedule and execute accordingly.
Every market is made-up of sub-markets and conditions are always changing. I’m available and happy to help you or someone you know with any real estate needs.
Have a healthy and happy new year!