Seattle Real Estate Market Update | August 2022

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

Video Summary

Recalibrating is a good term for what the market is doing right now. Both buyers and sellers are resetting their thoughts on what it looks like to buy or sell in today’s market.

Video Transcript

Hey, y’all, Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle real estate market update for August 2022. The housing market is recalibrating here as we’re in the middle of the summer. It’s been a few months since I was talking about how the market has been cooling down and adjusting. I recently heard somebody use the word recalibrating, and I like it, because what’s been happening is buyers and sellers both have been trying to reset expectations for what it looks like to buy a house in the Seattle area. And if we look at the data, and we’re going to go through that a little bit more in this video as we progress, we’re seeing that houses are selling for asking price or less, houses are sitting on the market for longer, and sellers had to adjust to that expectations and buyers likewise, had to figure out, “Wow, there’s not as much competition. I have more options. How do I go about this decision-making process?

So, on both sides, buy and sell, there’ve been some changes in recalibration, so to speak. As we jump into this update, I want to start off with a client story, as I do in all of these updates. And this month, we’re going to talk about the Flower family. And I am super excited for them, they are pastoring a church near the Woodinville area, and they just bought really close by. And originally, we started their search a few months prior, and we were looking at areas that were barely driving distance, at least within an acceptable driving distance for them. And really, they weren’t the best houses. And as the weeks went by and as the markets adjusting, they started their search at the beginning of that process, and we were able to get a house a lot closer in for less than what some of the neighbors had recently paid, and a better fit, ultimately, as a house.

So, really excited for them. I think the shifting market, they were able to take advantage of it. And I think there are other opportunities here for buyers, especially as we continue through the summer and into the fall this year. We’re talking about Seattle and Bellevue here, but again, this applies to all the King and Snohomish County area, in general. In fact, some of the suburbs are actually doing better than the cities themselves. But I think as we’re going through this update, if you want to see these regularly or even get some more information, so I have a King and a Snohomish County update as well, those are videos you’ll see on this channel, so if you want to follow along, please pause just for a minute and go ahead and hit that subscribe button. All right. So, Seattle’s median sales price last month in July 2022, again, this data’s right out of the MLS for those that are curious, $950,000, which is up 9.8% year-over-year.

And I’ve been talking about this for the past few months, but we’re seeing the year-over-year numbers are still quite a bit larger, at least in Seattle than they are in other places. And Seattle had appreciated a little bit slower during the pandemic years because people were looking elsewhere, bigger yards, more space, newer houses, and that was all found in the suburbs. So, some of those suburbs were just booming here over the past few years, whereas Seattle wasn’t as much. So, this year, when we’re looking back at numbers, Seattle’s actually been a little bit more consistent and steady throughout this adjustment than some of the suburbs. Those at the interest has cooled off quite a bit more. So, if we look at Bellevue, Bellevue’s median sales price, $1,700,000, again, huge median sales price, but only up 3.8% year-over-year. So, quite a bit smaller jump in the median sales price in Bellevue. Now, if we look at the numbers themselves, we’ve seen both cities slowing down here over the past few months, as is common during the summer.

I’m not seeing a drop that’s more dramatic than normal in the summer months. If you remember last year, even though it was the hottest year, arguably, in real estate across the country, but especially here in the Seattle area, we saw housing prices go down in the summer, flattening out in July, down in August, and then they started picking up again as inventory shrunk back down. But the summer stalled out and that’s typical in this market. So, we’ve been seeing this trend earlier, so I don’t want to lump this into the normal, but I do want to point out that it is normal, and I’m not seeing it dramatically different at this point. If we look though at some of the data, we are still up considerably, like we said from last year, and especially a couple years back. Speaking of prices, we saw that the percentage of the list price decreased this year from last year, 1.3% over asking price in Seattle last month, and get this, almost an entire percent, 99.1% of the list price in Bellevue last month.

Now, if we look at the numbers back in 2018/19, we’re right around the same ballpark, Bellevue was selling in 2019 at 99.2% of asking price, Seattle, 100.2%. So, just over the mark. But the past few years, we were seeing larger numbers. So, Bellevue is down 10.9%. If we look at another number, and I mentioned this last month, there’s a percent of the original asking price. And in Seattle, that number is even a little bit lower than the percent of list price at a 100.5%. So, just over that original list price. But Bellevue, 97.1%. So, we see that houses are actually selling for even more below the original asking price. That means there’s price drops happening, but houses are still selling relatively close To that original asking price. Closed sales, this is a big one. The closed sales have dropped off quite a bit in the Seattle and Bellevue market, Seattle down 40.3% closed sales, Bellevue, 52.1% down year-over-year. And if we look back farther, it’s still a significant drop off.

Now, in 2018, when the market was starting to shift, and I’ve compared this year to 2018 in some ways, just based on some of the fear about the housing market, stock market, interest rates going up, things like that. And we saw very similar numbers. Still, though, we’re still down on the closed sales and closed sales in 2019. So, we’re seeing quite a bit less in July. Something I pointed out here over the past few weeks is that we’ve seen an uptick in the pending sales versus new listings. So, I think when we look at August data and even September’s data, we’ll see the shift of more closed sales than we’ve been seeing over the past few months, but we’re definitely down as of July. New listings in Seattle dropped off quite a bit from last month. Last month, we were up at 1300 new listings, and this month down below a thousand new listings, and year-over-year, 12.6% down. So, we had fewer new listings this last month.

And we could come up with all sorts of reasons for that, I don’t want to speculate. I’ve shared some thoughts. But interestingly, Bellevue saw more new listings than the previous year, but still down from month-to-month. And that is again, typical in the summertime. You would think summertime is the time maybe people want to sell, but at the same time, people are traveling, doing other things, so historically in our market, it’s just usually a little bit slower time. So, a lot of that inventory picks up in the spring, maybe slowly trickles off in the summer and then picks up again early fall before the winter. So again, some normal patterns here, but it is interesting to note even year-over-year, Seattle has fewer listings. I’ve already discussed the closed sales being lower and pending sales are also down in Seattle and Bellevue. If we look at pending sales for Seattle, we’re down 32.3% year-over-year and in Bellevue 42.2%.

So, these are significant numbers, very significant numbers. I did point out that I think these numbers are changing, as I’m seeing the weekly data over the past three weeks, it’s shifting again towards maybe more pending sales than new listings, again, which changes that balance. But for now, we’re seeing the supply numbers ticking it up. So, in Seattle, we saw the supply numbers get up to 1.4 months of supply. Again, that’s still not very much historically, but compared to last year, up 55.6% in the supply category, Bellevue up over two months. And that’s a giant jump. Last year in Bellevue, there was 0.5 months. So, we’re seeing a huge number here, 320% increase in the supply in Bellevue. Again, there was just hardly anything last year, and that’s why that number is so big. If we look at though, the previous years, last year was an anomaly, super, super low. 2020, we saw 1.6 month supply in Seattle, which is just a little bit more, and in Bellevue it was equal.

So, very similar there. I wouldn’t say it’s abnormal, the amount of supply we have. It’s just a lot more than we had last year. Staying on the supply train here, if we look at the amount of homes for sale, that’s a part of that equation, pending sales and homes for sale or closed sales, either way, is how they come up with that supply number. But as we’re looking at Seattle, we see a jump, 30.6% in the homes for sale. Again, that correlates pretty nicely with some of these other numbers. Bellevue, giant jump, 265%. Crazy. Again, there was just nothing for sale. Last year, there were 55 houses for sale in Bellevue at the end of the month. Okay? 201 this year. If we look back at some other historical years, let’s take 2018, for example, there were 1,154 listings in Seattle compared to what we have now, 1059, so more. And Bellevue, there were 254 houses for sale, 201 last month.

So, still, if we look a couple years back, we have less homes for sale, but again, looking back at last year, considerably more. I mentioned as we’re going through the stats here, that prices have been coming down and the market’s been shifting and cooling. And the biggest indicator of that is just median sales price, right? And we’re also seeing more inventory, fewer pending sales, things like that. But as we’re looking at the weekly snapshots, we’re seeing that there are new listings, but we’re seeing more pending sales than new listings over the past three weeks. And we’re also seeing a lot of price reduction, so for me, that’s the big indicator there that we’re going to continue to see prices be lower here in the next month or two as those pending sales close. But what I also think we’re going to see is a shift to see a little bit less inventory and things tightening up again here as we head into the fall.

So, it’ll be interesting to see. I do think that the market is starting to normalize a little bit. I mentioned the word recalibrate at the beginning of the update. I think the word here, as we’re wrapping up, is normalizing. I think sellers are starting to have realistic expectations. They’re seeing that buyers just don’t want to pay the same price that they were willing to pay when there was competition and that fear of missing out. Right now, they have a fear of what’s going to happen if I buy this house right now? What’s going to happen to the market? Is my house going to be worth less in five months? Now again, the long-term horizon is what you want to have as a buyer. But there’s that fear, right? The fear shifted from fear of missing out to fear of actually participating, which sellers are now having to adjust in and price accordingly. And sellers were previously just putting their house on the market and lots of buyers were offering.

Maybe we’d have 30, 40 showings in a weekend, and what I’m seeing here is we’re having two or three. Okay? That’s a big difference. That takes to get 30, 40 showings at that pace, that’s going to take weeks and weeks, which is why houses are taking longer to sell right now. But it also means there’s not the same competition. There are more listings on the market, more supply, so people are seeing more and more homes and they’re able to choose which house they want. So, if you are the house that’s priced higher, you might have two or three other neighbors or nearby houses that are listed, maybe they’re a little bit better than yours, listed for less. Right? Buyers are comparing now versus just making an offer. It was that, “Hey, there’s one house for sale in Woodinville that meets my criteria. Now there’s seven. There’s only two houses in Edmonds that meet my criteria. Now there’s 10.”

So, buyers again, have options. So, instead of buyers competing, sellers are competing, which is a big shift. Now, we’re still in what I would call a sellers market. Okay. So, a sellers market historically is considered when you have less than four months of supply, and we’re well below that. But we’re getting to a more, let’s consider it a more equitable sellers market, right? Buyers have a lot of negotiating power, but they have some. And sellers also have some leverage still too, because, well, there’s still plenty of buyers out there. Now, if you are starting to see, and I don’t expect we will see, but if we see four to six months of supply on the market, that would be more of a normal balance market, where there’s a lot more equity in the negotiations. And then if we flip beyond that, that’s when we start to get into a buyer’s market. But as a buyer, you’re still in a seller’s market, but you do have some room for negotiation.

And some of the opportunities I’m seeing, and I did make a more detailed video on this, but for buyers, you have the opportunity to negotiate on price, potentially, the biggest part of that opportunity is just not the competition. So, you’re not having to pay a premium over the asking price. I think you’re also able to incorporate contingent contracts. Now, adding in contingencies and protections are great, but you’re also able to potentially buy with the stipulation of selling your house first, which over the past few years has been unheard of. And it’s a pretty sweet opportunity if you’re a buyer that wants to maybe move up or move down. And then I think the other big opportunity is just more selection. Instead of choosing the one house that’s there and just taking what you can get, I think you have opportunities to say, “You know what? I don’t really want to buy this house. It’s a 7. It’s an 8. I want to buy a 9. I want to buy a 10.” So, I think buyers have a little bit more opportunities there. I think sellers, you could still sell your house.

I think the rhetoric has been a little scary for sellers like, “Oh my gosh, the sky’s falling.” And if we look at some of the stats really, year-over-year, you’re doing pretty well, right? If you would’ve sold last year, it would’ve been actually not as competitive as you think this time of year, but even if you were to sell last year, you’re still getting quite a bit more this year by waiting. Now, the competition’s different, you have to price accordingly and have the proper expectations, but you’re still going to get more money for your house this year than last year. And I think an encouraging thing too, is that there are more pending sales now over these past few weeks than the new listing, so there’s definitely buyers increasing in confidence. We’re seeing this in the stock market. We’re seeing interest rates normalizing a little bit. I think a lot of that has to do with the Fed policy and seeing, at least people’s hope, that these things, the interest rate hikes are going to help slow down inflation.

But again, we don’t know what the future looks like. We don’t know exactly what’s going to happen. I wish I did. I wish I could tell you with exact confidence what will happen. But I think what I’m seeing right now is that there is a little bit more confidence among the buyers as well, starting to get used to, “Hey, interest rates are just going to be higher for now,” and, “Oh, okay. Yeah. It’s not going to be a competitive market on our end, so this is what the negotiations look like.” And I think sellers are also starting to have realistic expectations too. Thanks so much for watching my Seattle real estate market update for August 2022. If you enjoyed this video, please give it a thumbs up. And if you have feedback or thoughts about the video or content, I’d love to dialogue with you down in the comment section. And of course, if you want to talk about buying or selling in the Seattle metro area, King/Snohomish County, please feel free to reach out.

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