Seattle Real Estate Market Update | April 2022

 In #Market Updates, #Seattle Real Estate Market, #This Month, #Thoughts

Video Summary

Seattle & Bellevue both set new median home sales price records last month. In March, we saw more homes listed and mortgage interest rates rise, but the housing market remains extremely competitive.

Video Transcript

 

Hey all, Zach McDonald, your real estate agent with Real Property Associates. And this is my Seattle Real Estate Market Update for April 2022. Now I got to say, interest rates are going up, and this has been one of those things people are asking me very, very frequently, “Zach, what is going to happen to the real estate market as interest rates continue to climb.” I’ll talk a little bit more about that here as we go through this video, but I have another video that’ll be linked up below. You can check that out if you want to hear a little bit more of my in-depth thoughts there, but we’re going to talk specifically about the data from this month. As we go through the video, we’ll talk a little bit about how interest rates could affect the housing market. And we’re going to talk about a client story from last month and we’ll start it off there.

This month I want to feature May and Ryan, the Christofferson family, and just celebrate with them that they finally bought a house. Woo-hoo. I think my average client probably takes three to four months to buy a house. For them, they didn’t have a tremendous motivation to buy. They had a really great living situation, but they were casually looking for the past couple years. We’ve made a few offers here and there and we, this last month finally got across the finish line. They bought a beautiful house in Kirkland, great location. And you’re going to see a few of the clips here. A super, super fun moment for them. Kind of, it seems like the end of an era, let’s be real. A lot of our clients, we get to interact with for a shorter amount of time during the buying and selling process, and then stay in touch afterwards, but it’s not the same as that frequent contact as you’re going through the process.

And it looked a little different for us as again, I said they’re not super motivated, or they were, but they didn’t need to buy. So they were looking for the perfect house and I think we found it for them. So I’m really excited. Christofferson family, congratulations. Here’s your shoutout in the market update video, finally. I think I owe that to you guys, and I’m really excited for you in your new house in Kirkland.

Let’s jump into some of the stats now from March 2022. So these are from the Northwest Multiple Listing Service and the numbers we’re talking about here are for the residential sales. I love condos too, but we do focus mainly on the residential numbers here, as that’s the majority of the houses in King and Snohomish County, especially Seattle and Bellevue. So that’s where we’re going to focus our attention here. And I want to point out that Seattle and Bellevue, both set new median sales price records, again for the second time this year. Last month they set a new record and then we just broke it.

So, Seattle’s median sales price, last month, $957,500, which is up 17.1% year over year from last year, continuing to support my thoughts earlier in the year that Seattle was going to see some growth from last year to this year, because all of a sudden Seattle’s fairly affordable compared to some of the other areas. Bellevue also set its new record, as I mentioned here, $2,250,000 median sales price. Wow, that’s the median and that’s up 47.1%. So if you’re comparing Seattle and Bellevue, it sure looks cheap, affordable to buy in Seattle. King County also set a new record, as did Snohomish County for their median sales price. King County was at 935,000, which again, right in line with Seattle, up 13.5% year over year and Snohomish County let’s add them in here too. They were at $800,000 median sales price, up 25.7%. So, Snohomish County’s kicking some butt over the last year and I have some separate updates for King and Snohomish County, but thought I’d throw them into the mix here for some perspective.

If we look at the average sales price, all right, average sales price, even higher in Seattle, $1,144,718. So huge median to average sales price jump. Bellevue was over $2.6 million for the average sales price. King County’s average sales price was 1,224,978. New record, as I mentioned and Snohomish County’s average was just over $900,000 at $908,211. So, as we’ve mentioned, we see the median numbers, which means there are some houses on the lower end, but there are a significantly large number as well on the higher side. And so that’s where we come up with that median. It’s the middle number, but these averages are pulled upwards by the larger sales. So if you’re thinking of buying in King or Snohomish County, or if you’re thinking Seattle, Bellevue specifically, it’s significantly, as we’re seeing, cheaper here in Bellevue over Seattle, and really Seattle’s more in line with the rest of King County.

Let’s hone in here on the average percent over asking price, as I think this is a good indicator of how hot the market is. That’s how much people are paying above that asking price. And in Seattle we saw 11.9% above asking price on average. In Bellevue 17.5%, which is actually down a little bit, last month I said over 20% above asking price on average in Bellevue, which is crazy. King County as a whole, 13.4% over asking price. In Snohomish County, 12.4% over asking price. A big reason that we’re seeing houses selling above asking price is the idea that there aren’t enough houses on the market. So you have people competing for the same houses. Now, not every house is selling above asking price, but a lot are. And if we’re looking at new listings from last month, in March, we had a decline in Seattle of new listings of 13.3%.

We saw an increase in Bellevue of 16.1% in listings, King County as a whole, 3.6%. And Snohomish County as a whole, 21.1% jump in new listings. We also saw a large jump in the pending sales, which is an indicator of how many of those listings are selling and the last quarter of those listings came on just before the end of the month. So theoretically, those are going to get sucked up next week, or this week as we’re recording this. Just like we saw a large jump in the new listings this last month, February to March, we also saw a big jump in the pending sales in Seattle, Bellevue, King County and Snohomish County. Now year over year, we saw a little bit of a decline in Seattle, 13.4% in the pending sales. Bellevue 5.6% jump, King County as a whole, 7.4% decrease in pending sales. And Snohomish County was an 8.2% jump.

So, this all brings us to one of the two key indicators right now, I would say, and why the housing market is so hot, and that is the supply. How many houses are there for all the buyers? And we found ourselves here, as we’re looking at the data, 0.4 months of supply in Seattle, which is just slightly up from last month. Bellevue 0.5 months of supply, just slightly up. It’s actually 25% up year over year because last year was 0.4 months. So yikes, we got so much more new in inventory. King County was 0.4 and also Snohomish County was 0.4 months of supply. So we still find ourselves in a super, super constricted market. And, I mean, even looking back at 2020, so two years back, we were up over one month in the month of March heading into April. Like we find ourselves now and we’re finding ourselves with more than half, or less than half of the inventory. Excuse me.

So, as we’re thinking about the market and how we are getting more listings, we’re still having all these listings sell and that’s in spite of interest rates continuing to rise. So we talked about one of the key factors of the market being the low inventory or lack of inventory. We also have had really low rates over the past few years. And I think right now there is a lot of fear, or can be for buyers about interest rates, because the idea or the thought is interest rates go up, supply goes up and prices go down, right? If those two things are driving the competition, then what happens if you have one of these factors upset? And right now we’re seeing the interest rates rising and that’s the biggest factor that’s being impacted right now, but we still have not enough inventory or supply for all the buyers.

So, the conventional thought is that over time what’s going to happen is that we’re going to see interest rates, if they continue to rise, less demand, more supply’s going to build up. And then we’re going to see one month, two month, three months of supply. And then what happens is we go from a seller’s market to a buyer’s market. Now I’m not going to get too far into this, in this video, because I recorded another video on this last week, that I want you to go watch. And I’ve linked it up down below in the description and it is, How will Rising Interest Rates Affect the Housing Market? And I think you’ll get some really good value and some good nuggets out of that video. But what I want to point out is that the inventory, if I look back at the last seven days for King County and Snohomish County as a whole, this is what I’m seeing just as a one week snapshot, and this is pretty much all things that have closed in this last week, in the beginning of April.

So, new listings, 654 in Snohomish County and King County combined. Number of pending sales, 1014, double. Almost double. Listings sold, 856, more than the new listings. But again, I think the pending sales is more of a leading indicator of what’s happening, but we’re seeing a huge jump in the pendings over the new listings. So, it’s not like we have inventory building up. So I mentioned, we went from 0.3 months to 0.4 months over the last month. And if you were to look back at last month’s video, that’s what you would see. But what I’m seeing over the last week is we’re starting to see that supply that was built up going away. So we’re not seeing at this point yet inventory starting to build in any way, because I think that rates are still in a point where there’s plenty of people that can afford to pay these prices.

Now, if we get into the upper fives and the sixes, I think earlier I was thinking around the 5% mark might start to cause some issues for some buyers. And I would say I’m experientially seeing a little bit less competition in the market, but it’s not impacting pricing yet. And I think it’ll be a little while, because we’re still multiple buyers for every house. And I think we’re probably going to have to push up closer to 6% interest rates, which is still more of a historical average in order for us to start to see any kind of inventory building up. So, we’re going to see that over the next few months, three, four months, we’re going to see more and more houses coming on the market and we’ll get to experience that together. Are we going to see enough buyers in the market, but as I’m sharing this and recording this, we still have plenty of buyers out there.

And the interest rates have not caused it to be that there’s not enough demand for all the housing. So, I think in my other video I mentioned that there are just a lot more buyers in the market now, and it’s not going to change anytime soon. There are the interest rate factors and bank rates, average rates as of April 5th, when I’m recording this video, 4.85% was their surveyed average. And the last week’s Freddie Mac survey, their primary market survey was 4.67%. Also, a high for the year. So we’re still hovering in those upper fours.

So if you’re a buyer thinking about getting into the market, you’re most likely going to be experiencing a little bit higher interest rate than you would’ve six months, a year ago. You’re still though experiencing that competition, so you’ve seen interest rates go up, which is less favorable. It would make your payment higher, at least in the short term. If rates come back down, you can always refinance out of that rate. There’s no guarantee that will happen by the way, as historically rates have been closer to that 5, 6% mark, but over the last 10, 15 years, rates have hovered in this range or lower.

So this would be an opportunity, potentially to lock in a rate for now and maybe refinance in a later date. Again, no guarantees of that, but you are definitely going to be facing a little bit higher payment right now than you would’ve if you were looking six months ago, but there’s still that competition. So, that hasn’t changed. So as a buyer, don’t think that you’re going to just go out there and be able to buy a house like that and not have that competition. And for sellers, I think I’ve had a lot of sellers that are like, “Shoot, we’re got to get our house on the market like today.”

And I would say, “Take a breath. It’s okay.” There may be, and this typically happens every summer, a little bit of a seasonal slowdown when we get to the end of the summer and into the fall. And that’s just a normal experience, the prices tend to climb more in the springtime as we try to figure out what’s the market, where are buyers wanting to pay. And that’s why you see so much over asking price, because buyers are figuring out that price together and helping set the market. But as we head into the summer and into the fall, we’ve already had that set and established for the year and we’re able to kind of go off of that. So it’s a little bit less crazy as the year goes on historically. So, if you’re thinking about buying this year, you’re going to want to start the process early and start getting yourself set up for success, because there will be a lot more houses coming on the market.

And you may be in a position too, if there are a lot more listings, capitalize on that and maybe have a little less competition. And if you’re a seller and you’re thinking, “Hey, I want to get my house on the market.” It’s not a bad time to do that. And this is still a good time to do that. It may not be as great later on in the year. There’s no guarantees about that. It might continue to get better, but what we’ve seen over the last few years has been a pretty crazy jump in prices. So, if you’re thinking about downsizing or relocating, this might be the time to capitalize on that. And I think if we’re going to try to time it for the year, these next few months will likely be that point where you’ll get the highest prices.

That’s typically when we see the highest prices, is in this spring and early summer market. So if you have questions about this, if you have questions about your situation, feel free to drop a comment down below. If you want to communicate and connect with me personally, over cell phone, my information’s down below. I’d love to talk about your individual situation and I just super appreciate your attention here and that we get to talk through these Seattle market updates every single month. And if you haven’t subscribed yet, please consider doing so, so that we can see each other on a monthly basis.

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