Seattle Real Estate Market Update | December 2022

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

Video Summary

As we wrap up 2022, we are not seeing housing inventory buildup in the Seattle area. There are fewer listings coming onto the market, which is expected during this time of the year. Buyer activity has continued to soften, which I expect to change as we get closer to the Spring of 2023.

Video Transcript

 

Speaker 1:

Hey all. Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle Real Estate Market Update for December 2022. All right. Y’all, this is the last update of 2022 and I can’t believe that we’re already here at the end of the year, but I’m kind of ready for this year to be over if I’m honest.

It’s been quite the roller coaster on my end and I know it’s been a roller coaster on your end. It started off with a crazy jump in prices and we’ve seen pretty much all of those price gains disappear. So when I look back at 2022, I think of number one, the kind of crazy buyer frenzy earlier in the year.

And then I think of the slow down and Seattle being one of the slowest real estate markets or the biggest to correct in the entire country. There’s been a lot of news articles surrounding this and data surrounding this, but it makes complete sense to me that the place or one of the places that sees the most growth quickly would also see the decline.

But looking back at some of the numbers and looking back at the graphs, pretty much ending up around where we were to start the year. And if we look back now at the median sales price, which we’ll come to, we’ll see Seattle’s up a little bit, Bellevue is down a little bit overall in King County, barely up at all.

So pretty much flat, and we’ll talk about that here in a sec. But before we talk about some of the data, I just want to share a story. We had some clients that we were introduced to by a lender and they had been looking kind of casually, but seriously made offers during the beginning of the year when it was really hot and were struggling to get into a house.

And recently this month we were able to get them into a house at a better price than they would’ve paid in the spring, but also get a new roof on the house and get a buy down for their mortgage interest rate for the first couple years. So they were pretty pumped about all those things.

I assured them that the market has a big part to play in the terms and the price and contingencies, inspections they were able to do versus earlier in the year. But I think a good kind of microcosm of the year, they couldn’t buy, they weren’t able to.

They were able to buy with a higher interest rate, they could afford that and they could have afforded, but it was the competition that they couldn’t compete with other buyers. So getting to make a purchase now and get into a house, we’re really excited for them.

And again, I think this next year is going to be the year of the buyer versus the last few years being the year of the seller. Let’s jump into talking about some of the data here because I know that’s why many of you are following this channel. And maybe it’s because you like me, I don’t know.

But I think Seattle, I mentioned earlier in the video is up year over year. So when we look at pricing, month over month has some relevance in real estate, and that’s what a lot of the data is showing now and talking about this is where prices were, this is where prices are, there is a seasonality to real estate.

So the year over year numbers is helpful to compare, hey, where were we at last year? Where are we at this year? And again, we want to take into consideration those month over month numbers, but today we’re just going to look at those year over year numbers.

Seattle’s median sales price of 889, so just under 900,000, where we were the last few months, we’ve kind of been hovering in this same spot, 7.8% up year over year. If we look at Bellevue, $1,510,000 median sales price, down 8.5% year over year.

Now if we look back two years, both of these are up considerably, Seattle, almost 100,000, Bellevue, more than $200,000 up. So both are up in a two year snapshot, but if we look back at last year, Seattle up, Bellevue down.

I would say I think Seattle, and there are a few other places in King County where prices are not down, but Seattle was one of those few places during the pandemic the last couple years where it really didn’t appreciate at the same rate.

People were moving out of Seattle, maybe into bigger houses, bigger yards, newer houses, taking advantage of the lower interest rates, but a lot of it was more what they wanted in a house. Well, now people are buying in Seattle, and because it didn’t see as big of a jump in prices, we didn’t see as big of a fall.

And so interestingly, Seattle’s the one doing better in this situation than Bellevue and a lot of the east side and some of those more expensive areas. So I think the market has had a bigger adjustment or correction in those places that saw the biggest gains the past couple years.

So I mentioned prices have come down in Bellevue, gone up in Seattle, and when we look at days on market or how long a house is taking to sell, I think that’s another stat people want to know on a regular basis. 14 days on market is the median in Seattle, but 24 is the average.

So we’ve got quite a range there. It has been trending up, still lower than King County’s average in Seattle and Bellevue the same way. 13 days on market in Bellevue for a median, 25 for the average. Again, both of those are below where King County is.

And if we’re looking at the percentage of list price, so what are homes actually selling for? And I think that’s when people see those asking prices last year or even at the beginning of 2022, we were talking about, well, this is the starting point and it’s most likely going to sell for more, and then we’re talking about 10, 15, 20%.

And in some cases it was 30, 40% in the spring above asking price, and now we can see data that’s showing the opposite. So the listing price is still the starting point of the negotiation. The seller gets to choose that anchor point, and that’s just how it works in real estate.

But as the buyer, there’s opportunities to get the house for less than asking price, and that’s pretty much across the board in all of King County and Snohomish counties. But if we’re looking at the city specifically, Seattle, 98.4% of the list price, and that’s slightly lower if we look at the original list price.

Bellevue, 95.1% of the asking price. Again, same there. If we look at the original asking price, it’s going to be a little bit lower. And some months I talk about that percentage as well. Closed sales are down, I think we’re going to go with the percentages here. Closed sales in Seattle down 45.5% year over year. Bellevue down 35% year over year closed sales.

If we look back at 2020, we had 823 sales in Seattle, 827 and 2021, 451 last month. So huge drop off, and that’s fairly consistent across the board. Bellevue was at 123 in 2020, 2021, 103 and 67 this year. The other thing I think is important to look at because this is all building towards where’s our supply numbers? What’s going on?

We’ve seen housing prices have been coming down, are people still buying houses or is there a whole bunch of houses sitting on the market? And if we look at the new listings, we had in Seattle 5.4% less new listings than previously. And in Bellevue we had 7.1% fewer new listings.

But really if we look back historically, it’s pretty normal and more similar to what we saw in 2018 and 2019 when the market had slowed down as well. And so far, I would say it’s fairly similar to what we saw back then when rates started climbing at that point.

Again, we’re going to see what’ll play out here in the long run, but I have this sense it feels very similar to that 2018 and 19, and that’s what the data’s kind of mirroring at this point. I think that if we’re looking at the listings though, we’re seeing fewer listings coming on in the city, but we’re seeing even fewer in the suburbs, and we’ll talk about that.

If you want to follow along with the King County update or the Snohomish County update, just depending on where you live or are interested in buying, those might be interesting too, if you’re not specifically looking at the city. And I’ll talk a little bit more about some of that data in those videos.

Pending sales are down even more than the new listings. So again, just not seeing as many houses coming off the market. 42.2% less pending sales in Seattle, 37.2% less pending sales in Bellevue. And I guess the big question is, what does this mean? This means there’s less people buying houses right now.

Prices have come down, we’ve already talked about that. They may come down a little bit more, they may not. We’ll see what happens in the future, but we know they’ve already come down, but there’s still a lot of people sitting on the sidelines. They’re waiting maybe to see what’s going on.

Maybe they’re afraid. Again, there’s a million different scenarios we could start to talk about, but right now there’s just less people buying houses. And that might have to do with affordability. Let’s just throw out another one while we’re at it. But when we look at the homes for sale, that’s the amount of houses available.

We’re seeing a huge increase in Seattle, more than double in Seattle and more than quadrupled in Bellevue. All right. So lots of houses available, but if we look back historically very similar to 2020, Bellevue has quite a bit more houses available than in 2020. 78 in 2020 versus 147, so that’s quite a big difference.

But Seattle 909, 19, but last year, 2021 was a huge drop off. There were 357 houses available in Seattle and 15 in Bellevue. So that’s why we started off the year so hot. There was nothing available heading into the new year. And all the people that wanted to buy houses and take advantage of the low interest rates were essentially competing over a very few houses and pushing those prices up.

But if we look back historically, again, very similar to 2019 and even lower, I would say, lower inventory numbers than 2018, which was kind of the year where we saw rates jump at that time into the fives, and it was like, oh my gosh, we haven’t seen 5% rates in a while.

And at that point, rates jumped and we started to see those numbers. So again, maybe 2023 might look a little bit like 2019 where it wasn’t quite as high of a inventory environment. Some of the competition was still out of the picture, and it was a little bit more of a flat year if we look back at the data.

But again, we’ll talk about predictions in another video. I think the last thing here to talk about is that supply number. So last year’s supply numbers were ridiculous. We had a 0.4 months in Seattle and 0.1 months in Bellevue. This year we’re up at 1.4 months supply heading into December for Seattle and 1.8 months heading into December in Bellevue.

Now again, historically speaking that’s not a lot, but it is more than what we’ve been experiencing here over the past few years. But again, perspective 2018, 1.9 months in Seattle, and 2.2 months in Bellevue. So more then than we have now, supply 1.4 and 1.3 were the numbers in 2019. All right.

So just again, perspective, I think it’s important to have that. Let’s talk about mortgage rates here briefly as well, because I think that’s something that people want to know about and hear about right now. And again, that’s been one of the reasons that we’ve seen prices cooling off because mortgage interest rates are higher.

Now quick reminder, the Fed funds rate and the mortgage interest rates are not directly connected. There is some indirect connection, but that is not the direct correlation. So again, for example, last month we saw a increase of three quarters of a percent in the federal funds rate, but we saw in the last month almost a 1% drop in mortgage interest rates.

So interest rates were up near like seven, two to seven, three, somewhere in there as kind of the average according to Mortgage News Daily and the Freddie Mac surveys, but then they dropped. As of 12/5, the data for Mortgage News Daily, 6.33% interest rates for a 30 year fixed.

And if we look at Freddie Mac’s kind of revamped primary market survey, 6.49 was their data as of 12/1 for that week. The previous week were, it was about flat, but they were up at their high at 7.08% for our weekly average. And Mortgage News Daily was at 7.37 for a daily average high.

So we’re definitely trending below where we were at. We’re still seeing activity from buyers. And again, the supply numbers are not continuing to balloon. And I think a big part of that is because people are not putting their houses on the market for various reasons.

Again, too many reasons maybe to talk about in this video. But I think the general feeling in the market right now, as I’m out in it on a regular basis and talking with people daily, I think people are cautious. They’re not rushing into a decision.

There are a lot of buyers that I’ve been talking with for the past couple years that are thinking, maybe now’s the time to jump in. Maybe I can buy without all this competition. Maybe I can take advantage, get a little bit better price. And sellers are thinking, well, when’s going to be the best time to sell next year?

And I would say as a seller, you might want to be looking at early 2023 before more people are putting their houses on the market. Because I think as we head into the spring, we’re going to see the inventory build up again and probably even more so than last year since we’re starting at a higher place.

So I would say that as a seller, you might want to consider starting to do some of that work right now to get your house on the market. And for buyers, this is the time to be starting to do some of that busy work as well. Getting pre-approved for a mortgage, having buyer consultations, things like that.

Because then when it does come spring, summertime, fall, if it does end up being what I think will be a really good time to be a buyer, I would want to be ready for that and I’d want to capitalize on that. So those are some thoughts for buyers and sellers as we’re heading into the new year.

But again, if you have questions about buying real estate, selling real estate in the Seattle and Bellevue areas, King County, Snohomish County, I’d love to be a resource for you and talk through some of those questions you might have, discuss scenarios, whatever it is, no pressure. So if you want to connect with me, feel free to reach out. I’m happy to be a resource for you.

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