What is happening in the Greater Seattle Real Estate Market now that we are halfway through the year?
Welcome to July’s Market update!
We will go over the most recent market stats and current market conditions. And, as always, we’ll mention key points so whether you are a buyer or seller, you are in the know.
Let’s first briefly summarize what’s happened thus far in 2022. What a year it has been for real estate across the Greater Seattle region! For the first 3 months of 2022, it felt like home prices were on a rocket ship heading straight up. Then, around mid-April it felt like someone hit the breaks, hard. That someone was the Federal Reserve, and they hit the breaks by raising interest rates rapidly. By mid-April, rates had gone up to 5%, which is a huge jump from the 3.1% at the start of the year.
In the second quarter of the year rates continued to rise but not as rapidly. In a nutshell, these extreme rate hikes coupled with the dramatic rise in home prices has led to where we are now, a more flat market. This means home values are not rising. But, because we still have relatively low inventory, prices are not dropping dramatically either. In other words, homes are selling close to their asking prices. Now, this is a broad stroke statement, because it depends on the specific home; the location, the price point, the condition, etc.
Yes, there are many sellers who have even had to lower their prices in order to get their homes sold. This is a very different market from a few months ago when homes were selling for 12% above their asking price on average. So, let’s dive right into the numbers. Also, it is important to note, we will sometimes share the year-over-year numbers (that’s June 2021 to June 2022) and sometimes mention the month-over-month numbers when important.
In May 2022, Snohomish and King County both saw an increase in the number of homes come on the market (in other words, more inventory). While the City of Seattle had a decrease in inventory. But in June, all 3 areas saw an increase in inventory. Snohomish County saw a 15.3% increase in inventory, King County saw a 7% increase, and the City of Seattle saw a minor increase of about 1% of new listings come on the market vs this same time 1 year ago.
Now, lets’ mention the speed at which homes are selling. Interestingly enough, even though we have had an increase in inventory, and a decrease in the number of buyers competing, homes across our region are still selling rather quickly. Keep in mind, some of these numbers do lag because most of the homes that closed in June 2022 were actually listed in April or May, which is when the market was more robust.
For instance, in Snohomish County, the average time it took to sell a home in June 2021 was 9 days. In June 2022, it took 12 days. For King County, the average was 10 days last year and 9 days this June. For Seattle, the average days on the market was 11 last year, vs this June was 8 days. When looking at these numbers you might think the market is just as hot as earlier this year or last year. However, we expect that in the coming months the numbers will show it now takes longer to sell a home on average.
Let’s talk about the sales price to list price ratio which tells us how much above or below the list price homes are selling for on average. In Snohomish County, homes went from selling for 8.5% above the asking price, to selling for 2.2% above the asking price, year over year, which is a decrease of 6.3%. For King County, homes went from selling for 8.4% above the list price to 3.5% ABOVE the list price year over year. This is a decrease of 4.9%. And in Seattle, homes went from selling for 6.6% above the list price to 5% above the list price, which is a decrease of 1.6%. What does this all mean? To put it simply, homes were selling for way above their asking prices earlier this year and this time last year. However, as mentioned earlier, we are seeing homes sell much closer to their asking prices.
What about the median home values? In Snohomish County, the median sales price went up from $705,000 to $790,000 year-over year. That’s an increase of just over 12%. For King County, the median sales price went up from $865,000 to $930,000 year-over year, which is in increase of 7.5%. And in Seattle, the median sales price went up from $885,000 to $971,000 year-over year, which is in increase of 9.7%. When looking at the year-over-year comparison, values are increasing across the board. However, if we look at the month-over-month trend, this paints a very different picture.
The following numbers are the most interesting we are going to share in today’s market update. Snohomish County’s Median Sales Price in May was $810,000, while June’s median Sales price was $790,000. This is a decrease of 2.5%, or $20,000 in home values. King County also saw a decrease in value because in May, the median sales price was $1,003,000, while in June, it was $930,000, which is a decrease of around 7% or $73,000. And in the City of Seattle the median sales price was $996,000 in May, while in June it was $971,000. That’s also a decrease of 2.5% or about $25,000.
Now, this is a big deal because the data shows us prices have come down from their all-time high. Not to beat the dead horse, but this was inevitable given the huge surge in prices coupled with the huge surge in interest rates. So, what are this month’s tips and takeaways?
Let’s start with buyers:
· Should you wait to purchase if prices might come down more? Not necessarily. We are not fans of trying to time the market. More importantly, the answer depends on your affordability and personal needs. When you find a home that meets your desired criteria, timing and you can afford it, you should consider a purchase. At the same time, currently you may also be able to do some good negotiating to get a better deal.
· Speaking of which, when you are negotiating with a seller, it is often more valuable to you as the buyer to get the seller to pay towards your closing costs or, pay down your rate vs. merely reduce the asking price. You can play with the numbers with online calculators, but you’ll soon see that you can easily come out ahead with certain strategies. Talk to your lender about the best option for you.
Now for you sellers.
· When you are pricing your home, you shouldn’t just compare what your neighbor’s house sold for earlier this year. That’s because rates were lower, and the monthly mortgage was more affordable. Instead, try to compare to the active homes for sale in your neighborhood. Or, better yet, compare to the homes that just went under contract.
· Because this is no longer an extreme seller’s market, try to make sure your home looks top notch. First impressions count more now since there are not as many buyers competing for homes. Also, be sure to set the right expectations upfront so you are not stressed if your home takes a bit longer to receive an offer. You may have to pivot or even lower your price to get it sold.