Seattle Real Estate Market Update | January 2023

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

Video Summary

Higher interest rates continue to soften the real estate market in the Seattle/Bellevue area. Seattle and Bellevue experienced a new median sales price low in December. Inventory has not started to build up, so there are still active buyers!

Video Transcript

Hey Y’all, Zach McDonald, your real estate agent with Real Property Associates, and this is our very first Seattle real estate market update for the year January, 2023. Can’t believe we’re in a new year here already, but if I’m honest, I’m ready to put all the craziness of 2022 behind us.

I do have some predictions. If you haven’t had a chance to watch the, uh, Seattle Real Estate Market predictions for 2023. That video is up on the channel, so go take a look at that. I’m not going to spend time in this video talking about predictions. What I want to do in this video is what we always do and that’s talk about the housing market stats, talk about some application for buyers and sellers, and also share a story as we kick it off from one of our clients. Last month we were privileged to help, uh, the pitcher off family. There’s some dear friends of mine for quite some time, and they just sold their house in Seattle and moved out of town. They bought a house in Wyoming, so congrats to them. It’s always bittersweet to be part of a real estate transaction where somebody’s moving away and in particular when they’re near and dear to the heart.

So I always tell people I’d rather be involved in that than not, but at the same time, it’s still equally sad for me. So I’m happy for them, but sad for myself. All right, let’s jump into the stats here for the end of December. And just as a reminder, we’re jumping back and looking at stats from the previous month in these updates. So we’ll be looking at the Seattle and the Bellevue stats from December, 2022, kind of wrapping up the year. It’s almost like a end of the year recap, if you want to call it that. The first stat we’re gonna start with is median sales price and median sales price in Seattle as we wrapped up the year was $875,000. The high of the year in 2022 was in April at $996,000. And last month, uh, the median sales price was eight 90. So down a little bit from last year in down quite a bit from the high in the spring, it is normal to see the undulations in the market, but this year more dramatic than normal.

With that being said, we finished the year in Seattle up 6.3% year over year, so going into 2023 home prices in Seattle are still about 6.3% higher than they were last year at the same time. Now, Bellevue can’t say the same thing as we wrap up the year in Bellevue, the median sales price $1,370,000 down 17% year over year in Bellevue. Um, March as high was up at 2,250,000. Um, wrapping up the, the year where we just mentioned quite a bit lower than that. So a lot more dramatic swing in the prices in Bellevue and still down, like I said, 17% from the same time last December. If we look at a two year period and we jump back to 2020 and look forward to 2022, as we wrapped up 2022, Seattle had the most consistent growth. So I looked at, uh, Seattle and also Bellevue.

Seattle saw 6% increase in 2021 from 2020 and saw a 6.3% increase from 2021 to 2022 in December, and a cumulative of 12.65% gain in a two year period, which was the equivalent of $98,250 in increase. So over two years, even with all the craziness up, down, sideways, wherever we’re at again up, uh, 12.65% in a two year period, Bellevue was up more money, $145,000, but percentage wise, 11.84%. You’ll see if we look at our graph, we had a massive jump from 2020 to 2021 of 34.7% in the median sales price. And we see that dropped off last year, um, and brought our, our number down. So if we look percentage wise, Seattle had larger percentage growth, but even with percentages, if we’re talking about raw dollars, the higher sales prices in Bellevue is going to net somebody the, the higher dollar amount. So if you bought a house in Seattle or Bellevue even a couple years ago, you’re sitting pretty, uh, I think the challenge is for some that just bought in the spring, probably sitting on um, not necessarily um, negative equity, but definitely not uh, worth what they paid at the moment back in the spring.

I think that will be short lived. So I hope, hopefully there’s a little hope there for you. If you did buy a house this last year when home prices were near their peak, it’s something that happens every few years where somebody buys at that point, whenever there’s a drop off, there’s always a little bit of a, ah, but just hold on, hold on. It’ll bounce back. It might take a year, it might take two years. We don’t exactly know how long it’ll take for those prices to get back to where they were, but it will bounce back. So take heart in that. A few stats that you’re going to hear in the news that I would argue are more attention getters than anything else are things like Seattle had 45.1% fewer close sales year over year, which is true. <laugh> 393 closed sales Bellevue was down 24.7%, 55 closed sales.

If we look back at a two year period, um, you know, in 2020, if we look back over three years in 2020, we had 792 closings in Seattle, 716 in Seattle the following year, and then 393. So massive drop-off, um, for sure in the closed sales, but we’ve also seen a drop-off in the new listings though as well. So 27.5% fewer new listings in Seattle last year in December. And Seattle saw a massive drop off in new listings the previous year too of 32%, so the 32% and then another 27.5%. So we saw significantly fewer listings. And if we looked at the amount of listings that came on 245 versus the amount of closings 393, we actually saw the supply numbers shrinking and Bellevue Bellevue’s in the same boat, there were 31 new listings in 55 closings. The pending sales are also higher, so Seattle’s pending sales 303 are down year over year 29% and again from the 28% decrease from 2020 to 2021.

Um, again, 2020 ones numbers are a little, um, higher maybe than normal at at the end of the year just cuz there were some listings coming on that we’re waiting until the end of the year because of the pandemic. But even looking at Bellevue, uh, year over year, fewer pending sales, but there were significantly fewer pending sales the year prior as well. Um, so just not a lot of sales activity happening, but there’s still more selling than coming on here in December. And we talk about that in the holidays because now we’re heading into the new year with low inventory, not like what we had last year. And if we look back at a few year snapshot here, again, you’ll see that in 2021 we had the lowest inventory heading into the new year that we’ve ever had, but our inventory numbers, at least in Seattle, are almost the same as 2020 heading into 2021.

And in any given year, if we were to take a a sampling, it’s going to be more similar to the numbers that we would be used to seeing in a still a seller’s market. So heading into 2023, we have one month of supply in Seattle and 1.2 months of supply in Bellevue. So it’s not like we have a ton of inventory available, but we’ve been talking about how the activity’s been down on the buyer side, there’s been fewer listings and one of the things we’ve been talking about here on the channel recently, um, is that we’re gonna have fewer transactions most likely in 2023 even than we had in 2022. So if the transaction numbers are down in 2022, I expect them to be even farther down. One of the big drivers is interest rates. It’s something that causes the affordability for buyers, especially on the higher end homes, to not necessarily be there.

It’s a little bit more of a, a stretch to make a purchase. Now there are different tactics to help buyers, uh, get better rates. Um, and that’s something that we’ve talked about in some other videos, things like a buy down mortgage rate buy down by the seller. But the other part is it affects sellers because some sellers won’t want to sell because then they would be buying with a much higher interest rate. So if you locked in a record low interest rate, it becomes harder to justify essentially doubling your interest rate and having a significantly higher payment. So unless you are really making a huge leap or a huge jump back, it doesn’t necessarily make sense to execute that purchase, at least if you have, uh, the, the affordability as the main focus in the short term. So there’s just been a little bit of pause on both sides of the equation and we haven’t really seen a flood of listings all of a sudden with lower activity levels.

So as we head into 2023 here, we’re gonna have an interesting next six months I think because we’re still in a higher interest rate environment from where we’ve been historically over the past 10 to 20 years. And we’ve seen interest rates trend down here recently, but they’re still in the low to mid sixes and buyers are getting used to higher interest rates is just part of the deal. And prices have come down to a place where the buyers and sellers are transacting a lot quicker. There’s still some homes that have been sitting on the market for a while, uh, but homes are starting to sell a little quicker. I’ve seen multiple offers becoming more frequent. Again, a lot of it because there’s just less supply out there. So I think that might return here a little bit in the lower inventory season, but I would expect that we would see those inventory and supply numbers building up as we head into the spring for buyers.

I made a video couple weeks ago about how I think 2023 is gonna be the year of the first time home buyer. And I think there are going to be a lot of opportunities for buyers to get themselves a house at a lot better price. And if we can, and if you can couple that with some of the opportunities like a, a b buy down on the mortgage rate from the seller, you can get the best of both worlds with the lower price and the lower interest rate in the short term. Um, and then the idea would be that interest rates would come down in the next couple years and then be able to refinance out of that higher interest rate into, uh, a lower rate, maybe similar to what the, the buy down equivalent would be. So that’s a tactic for buyers that I think is out there right now.

And for sellers, I think you’re still in a position to be able to sell your house and it’s certainly going to be selling for less than what your neighbors sold for last year, but you’re still selling. As we look at some of these numbers near some of the highs, unless you’re in some of the places, places like Bellevue where things got really, really outta hand, I would argue in the spring with some of the multiple offer situations. But uh, for the most part you’re still selling near a peak and the act, the buyers are there, they definitely want to purchase, uh, but there has to be some negotiating back and forth. So I think that’ll be another trend here in 2023 is more equity, uh, among buyers and sellers as they negotiate the deals. And if you wanna hear some more of my thoughts and predictions for the year, you can feel free to check those out.

I mentioned the 2023 predictions video early on and I’ll just bring it up again. I think that’s a great resource for people that just want to kinda get a feel for what the year might look like. But if I was a seller, I’d be wanting to get my house ready to sell earlier in the season versus waiting until kind of late spring, early summer, maybe as as tradition because I think by that time there’ll be more inventory and supply available and potentially less, uh, competition over each listing and it will be more spread out. So if I was a seller, I’d probably be shooting for earlier in the year versus later in the year this year. But again, I don’t think there’s gonna be a flood of inventory, um, or houses coming on the market. I think it’s going to be a little quieter in that department than normal. Thanks so much for watching the first Seattle real Estate market update for 2023. If you’re new to the channel, please consider subscribing so that you can see updates like this on a regular basis. I also put out weekly real estate updates as well. We call them market watches. They’re a little bit of a quicker hit on what’s going on with less detail. And if you know somebody who might be able to benefit from this video, please consider sharing it with them.

 

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