Seattle Real Estate Market Update | June 2023

Hey y’all, Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle real Estate market update for June 2023.

What a crazy last year we’ve had. And you know, looking back to March, April, May last year, we were at the peak of the market in the Seattle area. And according to a lot of news outlets and the data as well, we had one of the biggest drop-offs in home values across the country. And looking at a lot of the places where they had similar drop-offs, a lot of the higher priced markets were the ones that suffered the most, maybe the most rate sensitive, as some would say. And looking at what’s happened so far this year is fascinating to me because although we saw the massive correction in home values and the, and the sales prices, now that we’re looking at the data year over year, it’s not as big of a gap as it was. We’re already starting to see the housing market bounce back here in Seattle, in King County housing prices have already jumped since the end of January through now end of May’s data, 14%, 14% interest rates.

Interestingly, over the same period of time, were hovering around six and a half percent, a little bit less, a little bit more. We’re seeing rates now hovering around 7%. A little bit more, little bit less, but prices have been going up. Snohomish County, county, same thing. Home prices are up almost 10% in that same time period, end of January, till end of May. And we’re still again, experiencing the same interest rate climate. So what’s changed, right? Why are we experiencing this? And we’ll dig into that more in the data, but the main thrust, I’d say the main driving force is the low inventory. And it surprisingly, even with all that’s been going on, the higher interest rates, there aren’t enough houses for all the buyers we’re in that same type of situation we were dealing with, which really puts upward pressure on the prices and drives competition.

Um, but before we talk about the data, I wanna share something with you. And I did this last month, and I’m gonna do it again this month, and I wanna share a video that I made earlier in the month and that videos titled, don’t convert your primary residence into a rental property. Now, this is a great strategy for some that wanna amass rental property. So this video isn’t for that person, but the, the conversations I’ve been having with people here recently, as they’re considering maybe buying another house and they have one with a really low-interest rate, they start thinking about, okay, well what if I keep this really low-interest rate and then I buy something else, right? People also have that same thought process when maybe the economy’s down and they don’t wanna lose money on their house or they can’t sell it.

Well, do I keep my house? Do I sell it? Do I rent it out for a little bit? Do I buy something else? Sell it later. And in this video I talk about some of the reasons why you might keep it right if you want to become a landlord and have rental properties. But I also share a few reasons why you might not want to keep it. And the main one being capital gains taxes. Um, as a primary residence, according to the IRS, you do have some exemptions on paying capital gains. And the, uh, video I’ll link up below as well as the IRS tax code if you want to take a look at it. But if you own a primary residence and you’ve built up a significant amount of capital gains, there are exemptions for people that own the house by themselves or married couples filing together that exemption’s even larger.

Uh, typically two up to 250,000 of gain for a person filing by themself and up to 500,000 filing together. And that’s just money that you don’t have to pay taxes on, which is pretty sweet. So that’s what I talk about in that video if you want to take a closer look. But it’s a conversation that I’m having with people that might not apply, right? If you’re down or haven’t really made much on your house purchase, maybe you bought it a year and a half ago, two years ago, two and a half years ago, hasn’t appreciated as much in this current climate, but you want to sell it and get out of it, maybe move on, maybe you’re moving out of the area. Again, the conversation doesn’t apply to everybody, but I think that video would be helpful if you’ve lived in your house for a substantial amount of time and have a lot of equity built up.

All right, let’s jump into the stats, which is, well, it’s one of my favorite parts of these videos too. And let’s look at median sales prices first in the Seattle and Bellevue area. So last month, median sales price in Seattle was $885,000. About the same as last month in Bellevue, the median sales price was 1,654,500, and that was down significantly from last month. There’s a bit of a spike in the past couple months, but still about 10.6% down in Bellevue year over year, right? And year over year is a great way to look at the data here. So we can see, you know, from the seasonality of real estate, right? You typically have this, you know, peaking of prices in the spring, and then they kind of slow down towards the summer and the fall and the winter. So you get to see at the same time in the year where were prices at and how do they compare?

And 10.6% down in Bellevue, Seattle, about 11.1% down year over year. So even with all the ups and downs, things have started to bounce back, as I shared at the beginning of this video. And a big part of that is the amount of houses coming on the market. So when we’re looking at new listings here, 822 new listings in Seattle, uh, 110 in Bellevue, and I won’t read all these different numbers, but I think the percentage is a significant 21.7% fewer new listings in Seattle than last year. At the same time, 43.3% fewer in Bellevue, if we look at pending sales, all right? So we have fewer listings if we look at pending sales, 22% down, almost the same as the amount or the decrease in new listings in Seattle and Bellevue, 27.2% down. So in Bellevue, you’re actually seeing more houses, um, selling than are coming on the market.

And if we look at the, the close sales, close sales are also down 24.3%. Again, let’s keep with that theme. It’s very similar, right? The decreases, um, and in Bellevue, 23.6% and that puts us at this Homes for Sale number. All right? The inventory, because I think that’s a huge part of why prices have started jumping recently. Homes for sale in Seattle are up 30.9%. There’s 30.9% more houses for sale in Seattle than there were last year in Bellevue. 18.4% more houses available. So there’s more houses on the market. And that brings us to our supply numbers. Now, if we look at this number, we’re seeing the amount of houses that are available versus the amount of houses going pending. That’s how this number’s calculated Last year in May, if we’re looking at our graph, we see that there was about seven months of supply in Seattle and there were, there was 1.2 months of supply in Bellevue.

Now we also see that that number balloons up over two months of supply in Bellevue and almost to two in Seattle. We’ve also seen that that number has dropped off dramatically down to the one about one month of supply these past few months. And then it’s been increasing. That is normal to see during the spring. And we are at higher levels right now than we were at the same time last year. But we’re at a low enough point where we have competition in the market. And specifically this past few months, we’ve had that pressure on pricing because there just haven’t been enough houses. Now again, that’s starting to change a little bit. We’re starting to see some more houses coming on the market, but that puts us then at this days on market, right? Things are starting to, starting to feel this pressure on the supply.

So we have houses selling faster again, back in May, 2022, last year, five days on market in Seattle and Bellevue. And this last month, six days on market was the median days on market. And if we look at our graph, we saw that that number spiked. It was pretty large towards the end of 2022, heading into 2023, it’s been declining as supply has dwindled. Average days on market has also declined substantially from earlier in the year. But you’ll see it’s hovering higher. Last year, the median and the average was almost the same. Very little variation. Everything comes on the market, it sells quickly, not the case right now. Some things are selling quickly, some things are taking a little bit longer, and that’s why there’s so much more variation between the median or the middle number and the average. So some houses are still taking time to sell, but they are selling a lot quicker.

So about 20 to 25 days if you’re in Snohomish, in King County overall for the average. But that median is quick, it’s quick, it is not on the higher, higher side. So that’s why people are feeling pressure now to act quicker. And what that’s doing, we talked about less inventory. There’s still enough buyers for the inventory, even though there’s less buyers. And now you have price pressure. So last year in May, we’re looking at our graph over 10% in Seattle and Bellevue area and really across King and Snohomish County, very similar. We saw that houses started selling below, asking price and way below asking price. And they’ve been climbing. So that opportunity window where things were selling below and there was opportunities to negotiate if you’re a buyer, maybe get some closing costs paid, those things have gone away. Now, not only do you have upward pressure on the pricing with houses selling over asking price, 2.6% in Seattle and a little over asking there 0.8% in Bellevue, but you also have higher interest rates.

So you have higher prices and higher interest rates than you did at the beginning of the year, which is rough, right? So now the affordability is even more off, it’s even harder to make a purchase. I wanna add another stat in here as we’re looking at the average percent of the list price, and that’s the average percent of the original list price. And I think this adds a little extra context, and I did that with one of our stats earlier when we were talking about the days on market to add some layers to it. And if we look at the original list price, we’ll see that in 2022, the amount that thinks we’re selling over asking price and the original were pretty much the same. You didn’t really have price reductions, things were just listed. And then within a week and a half, they were selling way over asking price.

And right now we’re seeing that there’s still price reductions because the originalist price percentage is less. It’s even less than asking in Bellevue. And in Seattle, it’s less than the percentage asking price, current asking price. So if we’re looking at those numbers, we know that some things are still selling below asking price, some things are taking longer to sell, right? So we’ve got both sides of the coin, some things sitting a little bit maybe priced on the higher side, some things priced on the low side and getting some competition. But I think the general plum line, if you want to call it that in the housing market right now, is that things are picking up. It’s obvious with the data that things are picking up. Buyer activity is still low, listing activity is still low, but their competition is there because both of those things are equally low.

And for sellers, that’s a good thing because you want the housing market to be picking up. You want to have competition for your house, you want to have a lot of people coming through. I had almost 30 showings on a listing last week and I had a similar experience a few weeks back with another listing. The listing last week in Kirkland, the one before that in Edmonds, things are picking up buyers in multiple offer situations. Shoreline Lake, Stephen, Seattle, over the last week and a half, two weeks, it’s there. The pressure’s there on pricing. And for sellers, that’s great, especially if you bought in the last couple years and you want to be number one, uh, walking away maybe with the money you put into it or coming out a little ahead. For buyers though, it’s rough because interest rates are still higher. And we talked about that.

That just means that it’s going to cost more, at least in the short term, um, until rates come down to make a purchase. And I talked about a window of opportunity probably seven, eight months ago, and that was the theme. I think there’s still an opportunity. Prices are still lower, but it’s not as good of a window as it used to be. So for buyers, I, you know, the rest of the year is going to be interesting. We’re going to see, we have seen an increase in inventory, but we’re still, again, seasonably way lower. And I would think that trend continues through the rest of the year. And all that means is that we’re gonna continue to have this pressure. Now, inventory has been picking up a little bit, but the buyer activity has also been picking up. And if interest rates adjust in a positive direction for buyers, I think that brings a lot of people back with these lower prices and puts a lot more pressure all of a sudden on the inventory, which will shift things really quickly in favor of sellers.

So today I just want to share honestly that I think we’re starting to see the beginning of the end of this window of opportunity for buyers. So if you haven’t bought and that’s a goal of yours, I would start to think about whether it makes sense for you to do that right now or continue to hold on and wait. I don’t know if there’s going to be a better window of opportunity coming up. I don’t think there will, but some would disagree with me. But I think if the continued theme for the year of fewer listings continues, there’s just not an opportunity to have the large correction that we had last year in the market when we had a lot of people trying to sell all a sudden and a lot of people trying to sit on the sidelines, right? Right now we have people sitting on the sidelines as sellers and people sitting on the sidelines as buyers, and it’s been almost in concert. So as things have adjusted, it’s leveled out a little bit. Thanks so much for watching this month’s Seattle Real Estate Market update. If you made it all the way to the end and got some value out of this, please give the video a, like, maybe drop a comment. I’d love to engage with you and converse about some of this data and info. And if you have your own personal real estate situation that you want to talk about and you’re in the King ins, the Hamish County area, I’d love to be a resource for you.