Seattle Real Estate Market Update | May 2024

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

Video Summary

Here are my latest thoughts on the Seattle housing market.

Video Transcript: 

Hey, I’m Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle Real Estate market update for May, 2024.

Welcome back to another episode here of the Seattle Real Estate Market Update. If you are new every single month, we look at the stats from the previous month on the Northwest Multiple Listing service. We look at Seattle and Bellevue Stats here to give you a flavor for the west side versus the east side of Seattle. We talk about the mortgage rates as well, and then we make some application for buyers and sellers and even homeowners in the Seattle area. Now we have been talking about over the past few months, just the competition picking up in the Seattle real estate market and that continues as we look at our data and also is continuing as we look at what’s currently under contract. Now let’s look at the mortgage rates here, and as a reminder, every single update when we talk about rates, we’re looking at mortgage news daily survey and they survey some of the largest lenders in the country and that data is just a average of the rates provided.

So today, 7.06%, that’s down a little bit from yesterday, but nearing some of the highs from February earlier in the year. Now rates are not where they were at last year back in the eights, but we’re still seeing rates hovering in the upper sixes, low sevens. We’ve been having this conversation going back and forth here for the past few months, and even with rates where they’re at, we are seeing that the market is starting to pick up and get close to where the highs were previously. Now we have not made it back and we will look at that here in a minute, but the data is suggesting that we are recovering even with the higher rates, and for me, that only causes me to imagine what things might look like when rates start to come down. They will eventually come down. I think at this point it’s a matter of when.

Now let’s look at the first stat that I think most people are curious about and that is, what are houses selling for in Seattle? What are they selling for in Bellevue? So last month, the median sales price for a single family house in Seattle was $917,950. That is up 8% year over year. If we look at Bellevue, the median sales price last month, $1,984,500, that is up 8.1% year over year. So in both cases, right about 8% growth. If you’re buying a house in Seattle versus Bellevue though, you’re pretty much paying double plus to buy a house in Bellevue versus Seattle. And if we look back at a two year snapshot here and we see where prices were two years ago, $960,000 in Seattle in March, 2022, we’re looking at 9 17, 950 in 2024. So again, we’re not quite there, but we are better than last year.

Last year we were at eight 50, so we’ve seen quite a big jump there from last year, but again, not quite back to the 2022 numbers. And if we look at Bellevue, Bellevue was at 2.25 million for the median sales price. March, 2022, we saw that drop off quite a bit to 1 8, 3 6, and now we’re back up to just under 2 million. So again, just getting a good little map of the recovery in prices. Again, not all the way back up to the high prices in March, 2022, but getting closer, and that is even with the higher interest rates. Let’s look at the close sales. So in Seattle we saw close sales were just about the same as last year, just slightly below. We saw in Bellevue that the buyer activity was a little bit higher. We saw a larger amount of close sales, 13.8%, but the numbers, if we look back to 2022, we see quite a steep drop off last year.

Pretty similar but not anywhere close to the amount of close sales that we saw back when the market was at its peak. And that goes the same for the pending sales, and we’ll look at those here in a minute. Let’s focus in on the median days on market. So this is how quickly houses are selling. Again, this is the middle number, not the average as the average tends to pull things up. So this gives you an idea of where the middle is. So six days in Seattle, five days in Bellevue, which is pretty similar to the five and the four back in 2022 for the median last year they were at seven and 11 respectively. So we’ve seen that homes are selling quicker. I’ve been talking about that than they were last year in the spring and the average days on market is also down from last year.

But as we’re looking at these numbers 24 days and 18 in Bellevue, they’re not anywhere near where they were in 2022. So in 2022 the average was nine and seven in Seattle and Bellevue, which was a lot closer to the median. We’re not seeing that quite yet, so we haven’t fully recovered, right? We’re not seeing everything selling in one week or one and a half weeks, but the trend is back towards that. We’re not anywhere near that yet. Now, average percent of list price, this is interesting. So last spring we saw that in Seattle homes were actually selling over asking price in March just above 1%, and we were seeing that they were right around asking price 99.3% of asking price in Bellevue, when we look at the numbers this year, 2.3% above asking price in Seattle and 4.2% above in Bellevue. So things are selling for over asking price now and they have for the past few months in the Seattle Bellevue kind of metro area.

If we look back though at 2022, again, just for comparison, I think this is interesting information here today. I’m enjoying this too. Hopefully you are 11.9% over asking price, man. Sometimes it’s hard to remember what it was like 11.9% over asking price was the average in Seattle back in 2022 and 17.6% over asking price in Bellevue, and this was the case on much of the east side. It is wild to think about that again, and there were a lot of other things that were difficult, I would say about that. Yeah, things were selling over asking price, but it was really hard to get into a house. Were you paying 20%, 25%, 30% over asking price? We’re not there right now, but things are starting to trend in that direction. Again, new listings similar in Seattle, just a little bit less than last year. If we look back at 2022 though, we’re seeing quite a bit more listing activity and Bellevue again, slightly more than last year, but still quite a bit down from 2022.

So the biggest thing I’m seeing, and we were talking about this last year and we’re continuing to talk about that, is that although there isn’t as much buyer activity as there was, there’s also not as much listing activity. So the amount of homes coming on the market is less, and what we’re seeing is that those numbers are fairly similar. The decreases and the competition is there because there are more buyers now in the market and they are competing again for the listings, even though the listings are less and the buyers are less, there’s still competition because those are fairly close to each other. The pending sales, we saw an uptick from last year. I mentioned that that number was going to be something we’d look at here too. 10% jump in Seattle for the pending sales and in Bellevue, 35.2% jump in pending sales still, again, not really anywhere close to where we were in 2022, but improvement from last spring, things are heating up.

Now let’s look at homes for sale 659 versus 82 in Bellevue. There are just significantly more houses in Seattle than in Bellevue. The general city is quite a bit larger, but as we look at a bar graph, looking back a couple years, we see that the homes for sale ballooned from 2022 to 2023. Interestingly, they’re about the same here this year. Not that much different, at least in Seattle in 2023 and even 2024. These numbers aren’t like any type of record in the area. It is just a lot more than what we’ve been used to seeing, but the amount of supply or the inventory is still really low even though there are more homes available. If we look at Seattle, we’re seeing 1.4 months of supply. This would be considered a seller’s market still. Now, I don’t think we ever really got out of the, well, maybe we got out of a seller’s market.

I don’t think we ever got out of more of a balanced market in the Seattle metro area during these past year and a half, two year period. So we never really transitioned into a buyer’s market. The Bellevue market here, 1.1 month of supply. The reason I think that we never transitioned fully to a buyer’s market in this area is just because there never was a massive influx of homes for sale. I kept the market from changing or transitioning as much as it could have. If that would’ve been the case, if there would’ve been more homes coming on the market, then we would’ve seen prices dropping more than they did. But the fact that we’re still seeing tight inventory here is why I would suggest that we’re not going to see any type of big drop off here right now because even with the higher interest rates, we’re still seeing a low inventory environment and even with considerably more homes starting to come on the market, those homes are still selling and the market is still heating up as we speak.

So back in 2022, we were seeing that those supply numbers were quite a bit lower, and that’s a hyper sellers market. We saw those numbers picking up and even here it looks like it’s about the same as last spring or a little bit higher, but the spring was really hot last year in the Seattle area. If anybody has been following along for a while, if you look back, even if you haven’t, you could look back at some of the older videos from last spring and we were seeing competition now we saw that competition die off as we hit the summer and headed into the fall, so it slowed down again here in the Seattle area. A lot of that had to do with rates continuing to climb up into the low eights, but we’ve seen rates drop considerably since then. They haven’t continued that trend this year so far, but they’re still quite a bit lower than they had reached in 2023.

So where are we at headed? I think right now we’re still waiting for rates to change and adjust. I think there’s a lot of speculation and hope that that’s going to happen. We don’t know when that is going to happen yet. The Fed is still signaling for rate cuts in 2024, and that will be good news for the mortgage market as well as that will signal that inflation is under control if we start seeing rates dropping and that is going to be the signal for the mortgage rates to be dropping a little bit as well. If we see that not happen, right, if rates don’t drop and we’re still battling with the inflation concerns, then I would say that we’re going to stay in a higher mortgage rate environment. So that’s what I’d be paying attention to if I was watching this and I was curious about when we might see rates dropping.

It’s going to have a lot to do with the inflationary data and that will also affect the housing market and the interest rates for mortgages. Now, I think for buyers, homes are, as we’ve just talked about, still selling for below what they were selling for at their peak. And as a buyer, that’s an opportunity. The opportunity is while things are lower to make a purchase, if you wait as a buyer for rates to be better, yes, your rate will be better, but your price that you’re paying for the house will be more. And you could make the argument if you pay more and you have a lower interest rate, you are going to end up paying less over the long term. But statistically, very few people keep their mortgage for 30 years, and if you were able to buy with a higher rate and a lower price and then get a lower rate later, you’re kind of getting the best of both worlds.

So for a buyer, I think the opportunity is there to buy with prices being lower still. But for sellers, there’s hope. If you want to sell your house and you’re looking to maybe relocate or downsize or maybe buy something bigger, you can make that upgrade in this market with a lower price. You’re not going to get as much for your house. Maybe you make a purchase and hold onto your house a little bit longer. Some people have done that or elected to do that. I personally sold my primary residence last year when I made a new purchase. Others would say they would want to keep it as a rental or at least ride it out a little bit longer before making a sale of their former primary residence. I think both of those are legitimate strategies if you were thinking about a sale, but I think we will see more of that this year than we did last year.

We’ll see more people making an upgrade purchase, but the large majority of that will happen when interest rates start to come down, and that’s the group of buyers that’s been missing. The biggest group of buyers I think that has been missing in the housing market in Seattle and probably other markets too, are those that are maybe making the upgrade purchase because it’s not only taking on a bigger mortgage, but it’s also taking on a larger payment than you would at a lower interest rate, if that makes sense. Yes. When you buy a bigger house, you’re going to have a bigger mortgage. It makes sense. But that mortgage isn’t just a little bigger. It’s a lot bigger because of the interest rate jump. So I would suspect as rates start to come down, we’ll see more of those people coming back, and that’s going to be a lot more buyer demand in the market, even just from that subsection of buyers. If you have questions about the Seattle housing market or buying, selling here in the Seattle metro area, I’d love to be a resource for you, even if you have questions just about living here. I’m a local, I’ve lived here my whole life and would be happy to talk with you about the ins and outs of the Seattle area.

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