Seattle Real Estate Market Update | August 2019
Here are my latest thoughts on the Seattle Real Estate Market: Housing prices in Seattle have started their seasonal decline. I suspect we will see a modest correction in the Seattle real estate market throughout the remainder of the year and that home prices will be up year-over-year as we head into 2020.
Hey, I’m Zach McDonald’s your real estate agent with Real Property Associates and this is my Seattle Real Estate Market Update for the month of August 2019. In this video, I’m going to share a story. I’m going to share the stats for the Seattle real estate market last month and we’re going to talk a little bit about the application for you coming up. All right, so we’re going to start off this update with a story. We’re going to talk about some people that I met actually on my YouTube Channel, so Ashwin and Ayesha, congratulations guys. They just closed on their first home purchase in South Lake Union. They bought a condo a few weeks ago and they contacted me off of my YouTube Channel.
They probably reached out, I don’t know, four or five months ago now, and they just wanted to get some direction. So we met up for lunch, we talked a little bit about their situation, home buying process, got them connected with a great mortgage lender, and then, in the ensuing months, we went from kind of thinking about buying a place to actually getting under contract. So if you’re watching this video and maybe you’ve been watching this for a while or maybe you’re new to my YouTube Channel and you’re thinking, “Yeah, I think I want to buy a house in the next few months,” please don’t hesitate to reach out. I’d love to bring value to your situation and help you buy a place as well.
Now, let’s transition to the stats. Now, the Seattle real estate market if you’ve been watching these videos recently has been in transition. Last year, in the springtime, we peaked out at the highest prices we’ve ever had and then we had a fairly epic correction in the market. If you haven’t watched these videos in the past, go take a look at some of the older ones and you can kind of follow the story along. This month, prices are down about 5%. We’re down a little bit over 5% from the same time last year. This is about the time where we just saw a super-steep decline in home prices and that decline continued all the way into the beginning of this year.
Now, we’ll talk about a few of the factors, I think, that contributed to that steep decline. A little bit of a (this time of year) typically, we start to see home prices correct a little bit if you want to call it for the year. Prices will peak out in the spring, early summer and then kind of trail off a little bit into the fall and beginning of winter, so that’s normal. What we saw last year wasn’t normal. So when we’re talking about home prices being down a little bit over last year, again, this market has definitely cooled. It also, I think, is maybe stabilizing a little bit. I’m going to say that on camera with a little bit of a face, right?
So home prices last month, median sales price 741. I already said that we were down about 5.6% actually over the year, last year. Our high this year, 775 in May, so we’re down a little bit as well from our median sales price high this year. What we saw though, in Shoreline, Lynnwood and Edmonds, some of the suburbs, just north of Seattle is we’re actually up on home prices year over year, little interesting fact for you.
Now, this last month, we saw a 10% fewer listings than we did the same time last year. So last year we started to see a flood of inventory into the market and there was also a little bit of a stall and we’ll talk about that stall here in a little bit. We also saw 15% more pending sales this year over last year, so more people were buying as well, so fewer listings, more people buying. That means we don’t have as much supply building up, 2.3% more closed sales, so we also had more sales this last June than we did the year before. What we did see though is we have 25% more homes on the market.
Earlier in the year, we are seeing numbers like 100% more homes on the market. So we’re starting to be similar to where we were at last year, at least more similar to where we were at, and this gets us to about 2.2 months of supply of housing on the market. A little bit up from last year, but more consistent with where we’ve been just over the last year. Supply definitely increased. What that does is it causes buyers to have more options and it takes away that multiple offer situation.
Now, if you’re buying a house in Seattle, depending on the neighborhood or your price point or the specific house, we still might come across multiple offer situations, but they are definitely a lot less common than they were in 2017, beginning of 2018. Now, that doesn’t mean that the market isn’t competitive anymore. We’re still seeing housing prices, the median and the average right around that 100% mark, so right around the asking price. Just over if you’re looking at the median number, the average is 100% of the asking price, so we’re not seeing a lot of deals in the Seattle real estate market, but we’re also not seeing a lot of price escalation.
So as a seller, you still have a relatively strong negotiating position if you’re willing to be patient. Buyers, you don’t have a lot of leverage. There are opportunities, right, that sit on the market for a little bit. The average days on market’s around 22 so if you’re getting a house above the average days on market, there might be opportunities to negotiate the price down. If you’re getting a house in the average or below or near that median, which is only 10 days on the market, maybe a more desirable property. There’s not a ton of negotiating room, but it’s still good info to know, just kind of knowing what you’re getting yourself into.
Now, I want to share a few things that I think contributed to the market correction last year that are a little bit different this year. So we might see what I’ve been talking about is actually finishing the year out ahead of where we did last year versus below where we’re at at this current point. So let’s talk about the first one. The fed funds rate, short term interest rates, and this is controlled by the Fed. So the Federal Reserve, so last year they upped the rate four different times, and it was essentially a sign of a healthy economy is the idea, right? We’re confident in the economy, the economy’s booming, let’s raise that short term rate and let’s start capitalizing it, right, and also hedge on inflation a little bit.
Now, what we saw is a massive reaction in response to that at least I think in the real estate market we saw Seattle and a lot of the other major real estate markets really did stall out last year when that happened. And you can see that the first-rate was in March. The second one was in June and September and then December. But the market just kept getting worse and worse and worse as this happens. Now, this last month, they actually dropped the rate for the first time since 2018, last week actually they dropped that rate, so it’ll be interesting to see what kind of impact that has on the housing market. I didn’t know if dropping the rates is necessarily going to stimulate the housing market, but I don’t think it’s going to continue to impact it in a negative way like we’ve been seeing.
As far as my other thoughts about the dropping in the rate, I don’t really want to go into it. I’m sure you have your own. I have my own. Part of me is like, “Ah,” and part of me is like, “Cool. They dropped the rate,” so I don’t really want to get into it on this video. I do think though that the other part to talk about is just interest rates in general. Now, the fed funds rate is not directly correlated to housing market mortgage interest rates, but there is an indirect correlation, and what we saw last year is that the mortgage rates also were climbing.
So we had the fed funds rate going up and then maybe some kind of ancillary impact. We saw the mortgage rates going up and mortgage rates went up to almost 5% last year. And if we were to look, and this is according to the Freddie Mac Mortgage Market Survey, right? I’m not a loan officer, I’m not going to quote actual interest rates for you. But according to Freddie Mac’s Weekly Survey interest rates were getting close to that 5% mark back in November 2018, but the same time last year in August, we had rates around 4.6%, right, on average. This year, the average rate was around 3.75% with a few points added in there, a few percentage points of buydown. So it’s just really fascinating to see the rates at the lower mark this year. So we’ve got a few different things.
I think the biggest one is just those mortgage rates, and that affects affordability. In Seattle, where we were already starting to reach peak prices, we were also seeing rates go up. And so now affordability is affecting and it was already dramatically affected. And so what we really saw was a response to the market. Well, okay housing prices are already getting super borderline unaffordable for at least a lot of people, and then we saw interest rates go up, so now the bar even got raised more. Maybe if you were somebody thinking about making a move, you couldn’t afford to make that move you wanted to or you couldn’t make that purchase that you wanted to, so you just sat on the sidelines. And I think that was a big contributing factor to last year’s prices.
So this year, with mortgage rates going down this time of year, or at least more stabilizing, Freddie Mac’s survey, their quote of the week. I’ll just read it because I think it’s interesting they say, “Mortgage rates have essentially stabilized over the last two months, which reflects the recovery and improvement in the economy from the malaise earlier in the year. Going forward, the combination of low mortgage rates, tight labor market and high consumer confidence should set up the housing market for continued improvement in the home sales heading into the summer and early fall.”
I have similar sentiment. I don’t know if we’re going to see a take-off in the Seattle real estate market as a result. But I do think, like I’ve been saying, that we’re not going to see the steep drop off the rest of the year and then we will see prices up higher than they were at the same time last year going into the fall and winter. So stay tuned for the next market update.
Now, a couple of quick applications. The first one is if you’re a homeowner and you’re planning to live in your house for the next few years or for a while, you might want to consider a refinance. If you bought your house last year around the same time last year or even into that fall, winter as we were talking about, those rates were climbing up. It might actually behoove you to get a refinance and just get out of that old loan and you can even get a better rate. Again, if you’ve had your house for a really long time and you still haven’t refinanced when rates were lower in the past few years, this could be your chance. So if you’re thinking about a refinance or think it might be something that you should consider, feel free to reach out. I know a couple of great loan officers and I’m happy to connect them to you if that’s what you’re looking for.
Second application, buyers, interest rates are down again, whoo and housing prices are going to mellow out the rest of the year, so at least that’s my thoughts. So if you’re thinking about buying this year, kind of got the perfect storm. Interest rates are down again, housing prices are probably going to remain similar to what they’re at or go down a little bit as they do historically this time of year, so if you’re a buyer this is going to be your better time in 2019 to make a home purchase.
Thanks so much for watching this market update. I super appreciate your attention and I value it highly. If you found this video valuable, which I know you did, please consider subscribing to my channel, especially if you’ve made it all the way to the end. That means you actually wanted to hear what I had to say, so let’s go ahead and hit that subscribe button. Thanks so much for watching and we’ll talk to you soon. Bye for now.