Seattle Real Estate Market Update | December 2018
I believe the dust has settled in the Seattle housing market.
Home prices have remained relatively consistent since the summer market correction (about 8.5%) and are still up year-over-year. Housing supply is declining as expected for the time of year. The US economy is still relatively strong and the Seattle economy is particularly strong. Amazon finally announced where they plan to build their HQ2 & HQ3.
I wouldn’t be surprised to see home prices climb again come springtime. Maybe not as dramatically as we’ve seen in recent years, though. But only time will tell.
–If you’re curious, here is what I had to say last month—
[Video transcript of December 2018 Seattle Real Estate Market Update]
Hey, all. Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle real estate market update for the month of December. This is the last one for 2018, so pay attention; this one’s important. What we’ve seen in the Seattle real estate market over the last year has been quite crazy. We saw a pretty steep, steep incline from January all the way up until May, where the median sales price actually got up over 800,000 for the first time ever in the Seattle area. We started breaking records in January in the area with the new median sales price, all the way up to May, and then what we saw is we saw a pretty steep decline, a cliff, if you want to call it that, and there was a lot of panic, in at least the news articles.
The headlines are pretty bold, and I’ll flash a couple of them up here on the video as well, so you can kind of see what things were being said, and over the last few months, since August, really, we’ve seen prices remain pretty stagnant, back right around 740,000. So, up over 800, 802,000 for the median sales price of residential real estate in the Seattle area, and then all the way down to $740,000 as the median sales price, and that’s kind of where we’ve remained for most of the year, since August.
Now, I’m going to dive into this a little bit more, share a little bit more of my opinion about this. I want to start, though, with stories, because I think these are powerful, and also just kind of illustrate the change in the market as you go back, and if you were to watch some of the older videos as well, you’ll see there are different stories, and back in March or April, I’m sharing a story of beating out seven or eight offers, maybe, but right now what we’re talking about is negotiating the price down and getting concessions from the seller.
So, the first story here is some clients that I actually … They just closed a couple days ago, buying a house in Snohomish, so they decided they wanted to buy a house with some more land, over 14 acres, which is pretty exciting, a pretty cool backyard to be on. It has a creek running through it. In this process of negotiation with the seller, we actually were able to negotiate the price down about $25,000 from the initial asking price, and it had been about 30 days on the market, and then, on top of that, during the inspection period, we were able to get additional seller concessions. A seller essentially credited money to take care of some work, so not only did we get the price down, but we also got, essentially, the buyer’s net down as well.
So, it’s interesting. That’s a story from a little over a month ago, right, because the process lasts about a month, month and a half for the closing. In this case, it was about a month and a half. This other story was a little more recently. We were a little bit north of Seattle, about 35, 40 minutes north in Snohomish, and now, we’re going to go about 35, 40 minutes south, to Maple Valley area, and some clients buying as well made an offer on a house about a week … Two week, excuse me, two weeks on the market, and they were able … We were able to negotiate the price to … We paid the asking price. Actually, we actually paid a little over, and this is what’s interesting.
There were three other offers on this house. We weren’t the only one, but the multiple offer situation was a lot different than what we’ve seen. So, instead of seeing the price going up above the asking price, what we were really seeing is the price going towards the asking price, which is more normal in a buyer’s market or a more … Would say more equitable market. We had a couple offers that were just way low, hoping that the seller would take it. Then, there were two other offers, and ours was one of them, that were right around that asking price. So, what we did is we actually were able to go over the asking price, but also negotiate a pretty large credit to help cover closing costs, buy down the interest rate, which is another strategy that
I’ve used a couple different times recently, and we’re going to see this maybe a little more. We’ll see what happens in the market in the next six months to a year, but sellers are more open to covering some closing costs, or maybe buying down an interest rate to help make the purchase a little more affordable for the buyer on the monthly basis. We’re seeing prices come down too, right. Sellers are a little more flexible. So, in this case, we were climbing up towards the asking price, but we’re not seeing that crazy … What’s the word? Frenzy that we were seeing before.
I’ll talk a little bit more about that here as we move along, so the stats. This is more of the mathematical part of it. I want to talk and highlight … Last month, I mentioned that what we’re seeing now is, in my opinion, pretty similar to what we were seeing in 2016, when a lot of people around the industry were starting to question whether we’d kind of hit the peak and we were just going to be done seeing the appreciation that we’d seen. Part of it was like, well, there’s no way this can be sustained. Granted, the situation is a little different because interest rates are higher than they were then, so please do … I am acknowledging that. Do note that.
But what we saw with prices was actually pretty similar, so we saw a decline in confidence in 2016 as well, so we had prices getting up to, at the time, a record high 650 and dropping down to a low in November, so right about same time, two years ago. The price difference was about 8.83%, so we went all the way down to 600,000 from June, all the way down to November. Last year, 2017, prices were done from the high to the low, so the high was in June, 735, all the way down to 700, 750. That’s about 5% down in December of 2017.
This year, we saw that decline a little earlier, right. So, we peaked in May rather than June, so these other two years I talk about June … Well, May was our highest in 2018, and we saw prices drop all the way to 740 in August, so that was our big drop, and it was pretty quick, rather than more gradual, which we normally see. It’s five, $10,000 on that median sales price towards the end of the year. This year, it was really quick and it happened more in a quick shot. So, people were starting to worry.
Rightly so, but what we’ve seen since August is prices have kind of continued to remain at that same level, right around that $740,000 mark, which I mentioned. This month’s number, 739, 500. So, we’re right there, which is still 2% up from the median sales price the same time last year, but we’ve seen prices kind of level off. I think the dust has settled a little bit. Now, it still remains to be seen what’s going to happen in 2019, and that’s a conversation for a different video, but in my opinion, what we’re starting to see here with inventory numbers, so inventory numbers of homes for sale. Homes for sale are starting to decline, so we’re seeing fewer listings, which is common for this time of year, and we’re starting to see those supply numbers go down.
We still have almost two and a half times more homes for sale this November than we did last November, but we’re starting to see those numbers decline, and December, I think, we’ll see the similar thing. Not many people list their home for sale in December unless they need to. A lot of people actually wait til January, or maybe even later, when the weather warms up, the days are longer. The house just looks better and people tend to be out. There tends to be more buyers out in the market at that time.
So, it’s interesting. I mean, the prices were about eight and a half percent down from where we were at the peak of the year, according to the median sales price number, which isn’t a perfect number, but it’s a decent number to work with, and it’s similar numbers to 2016. So, I mean, 2016 we saw the market kind of shoot up into the stratosphere in 2017 as well, as the year started. So, are we going to see that again? I mean, that really remains to be seen, and I don’t want to sit here … I don’t have a crystal ball; I left it at home. But I don’t want to pretend that I’m a prophet or anything and try to predict what’s going to happen with any kind of certainty, but I want you to just kind of think about it and ponder it.
I know if you’re watching this you have your own opinion, so you can feel free to share that down below. I love the comments and I love engaging with them as well. Some of you have really felt strongly that this is just the beginning and we’re going to see an epic crash, prices even lower than they were before, in 2012. I don’t share that opinion, but I do respect your thoughts and opinions as well. So, there are a few things I want to share, just kind of in parting with where we’re at in regards to just buying and selling right now. I think I’ve shared in the past, this isn’t necessarily your best time to sell a house, specifically right now, where, like I just said, about eight and a half percent below where we were at the top of the market in May.
If you do need to sell now, you can, just know that you’re not going to be getting the same price that you could have gotten earlier in the year and you might get, in 2019, as the weather warms up. If you are thinking about selling right now, you just have to be aware that the buyers are going to expect to negotiate with you a little bit. They’re not going to expect to be paying the asking price or above, they’re going to be expecting to have a little bit of negotiation room. So, just be aware of that. If you’re thinking about buying a home in the Seattle area, I’ve shared as well, previously, in a few different videos, but I think if you’re planning to live here for at least a few years, the average, at least four to five, maybe more.
If you’re planning to be here, this is a good time to jump in, and I saw an article pop up on the Seattle PI today, talking about that. Like I’ve said, it’s hard to be completely certain where the market’s going, but what we’ve seen, and now that the prices have kind of … I’ve going to say it, they’ve leveled off, and I think the dust has settled right now, and I think as inventory continues to drop, we’re going to see a little bit of a rebound in the prices here. If not, I don’t think it’s going to be as substantial as we’ve seen. I don’t expect home prices to up 10% come June, but if you’re planning to be in your house for a longer period of time, I think the cost benefit in the long run is going to be worth it.
For buyers, just a little bit of commentary here as we’re closing, what we’re seeing is interest rates are still above. They’ve been kind of hanging out above 5%, and buyers are being a little bit pickier. If you have more selection, there’s not that feeling of … That sense of urgency, and one of the more powerful influencing factors is that idea of scarcity, and what you’re not seeing is scarcity right now in the Seattle real estate market and housing options as you were seeing before. So, part of this frenzied, multiple offer situation is that idea of scarcity, and I’m not seeing that with my clients right now.
As a matter of fact, I think some of the clients that I’m working with right now are getting into the market because they don’t feel that sense of urgency and they don’t want to feel that sense of urgency where there’s so much pressure that they have to buy something and it has to be this week, and if I don’t do it this week, the house is going to cost an extra $10,000 next week. Those are the people that have jumped in. So, if that’s been your experience, maybe, and you’ve been sitting on the sideline, you got tired and you got burnt out, it’s a different market right now.
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