Seattle Real Estate Market Update | August 2020
Here are my latest thoughts on the Seattle Real Estate Market: The median sales price was up again in July and prices were up overall in King and Snohomish Counties. In July, we’ve seen many sellers decide to place their homes on the market and higher demand from buyers. This increased demand from buyers means housing inventory has remained low, which has heightened competition and homes selling above asking price.
Why are prices continuing to increase during a pandemic? Mortgage rates are still at an all-time low and homeowners are faced with the choice to refinance or sell and buy now. These rates are also driving more buyers into the market. Currently, there are more buyers than sellers, which has made for a hot market.
Hey, I’m Zach McDonald your real estate agent with Real Property Associates and this is my Seattle real estate market update for August 2020. If you’re new to these updates, we start off with a story, we talk about the Seattle market stats, and then we talk about some application for buyers and sellers. This month, I want to feature [Ujwal 00:00:19] and [Porti 00:00:20]. They are some clients that just purchased their first house here in America. They bought in Everett, Washington, a little bit north of Seattle. They were referred to me by another past client, somebody who met me right here on YouTube and they had a great experience and connected me with Ujwal and Porti. What’s really fun, is that this month I had three different buyers that were able to get into a home and all of them were referred to me by past clients. I want to shout them all out here really quick, so Josh and Katie, [Ashwin 00:00:56] and [Ieshwa 00:00:57], and Oak and Betsy. I’m super, super appreciative of all of you and for making those introductions.
Last month in the city of Seattle, the median sales price was $778,500 up 5.1% year over year, a little bit below our high in April, which was 799,000, almost 800,000 this year. In King County and Snohomish County, the two counties that I service, prices were also up overall. In King County, the median sales price was $727,500, so up 7% year over year, and in Snohomish County prices were up almost 14% and they came in just under $570,000. Now I’m going to spice up the other stats here a little bit and compare the July stats, so that’s what we’re talking about, the July stats with the stats from April so if you went back and watched my May market update and compared it with my August market update, you’ll see some of these differences.
In Seattle, the new listings last month came in at 1,237 new listings. That’s 46% more listings that came on the market in July this year than last July. To contrast, in April this year we had 36% fewer listings, so 36% fewer listings in April but 46% more listings in August. We’ll talk about this trend, it’s going to continue through the rest of these stats. Pending sales in Seattle were up 35.5% in July. In April they were down 32%. In July, closed sales in Seattle were up 13.9% and in April they were down 33%. Homes for sale on the market heading into August came in at just over 1,000 homes on the market, down 25.1% and in April they were down 31%.
What we’re seeing here is in April, aside from the homes for sale amount, which stayed relatively low this year as a theme, we saw a great, great, great decrease in the number of new homes coming on the market and we also saw a really dramatic decrease in the number of people buying houses too. This is something we could trace back to when COVID-19 first came onto the scene and we did see a slowdown for multiple months. I’m just referencing April here. There was a slowdown in the number of new houses coming on the market and also the number of buyers. People were just kind of pumping the brakes, trying to figure out what was going on, making sense of things, but what we’ve seen over these last couple months, and this month even more so, is that a lot of people that were maybe holding off on putting their house on the market are deciding to put their house on the market now.
Despite all of the new listings and inventory, new houses coming on the market, we also have a really steady demand from buyers. Even though there’s a lot of houses now kind of flooding onto the market, there’s a lot of buyers that have been waiting to buy those homes so we’re still seeing houses sell really quickly. For example, in Seattle, seven days on the market is the median days on the market, which is actually 30% below the time last year, so last year we’re looking at about 10 days on the market. The supply, amount of homes for sale, so I’m talking about almost 46%, right? 46% new houses coming on the market. We’re actually at 27% down on the supply so we’re at 1.6 months of supply. Even though we have more houses coming on the market, we actually have a lower supply number based on the number of buyers, that ratio between buyers and sellers, and homes are selling above the asking price now so we’re at 2%, a little bit over 2% above the asking price as an average.
What is going on? Why are home prices in Seattle and all of the surrounding regions continuing to go up in the middle of the pandemic? Why are people still shopping? Why are people still selling? What’s going on? Those are questions that people are always asking me so I figure I’ll answer this with a little bit more clarity maybe than I have, but just continuing to build on the steam. Last week, as of August 6th, the mortgage rates hit an all-time low for the eighth time this year. This year, eighth-time! This is a survey that Freddie Mac does every week. They survey lots of mortgage companies and rates and they come up with an average essentially. Last week mortgage rates were down 0.72% year over year, which is huge. Mortgage rates came in last week on their survey at 2.88% on average. Now some people are getting better rates, some people are getting a little bit higher rates, depends on credit score, down payment, things like that. Some people I know, certain clients are getting quoted even lower rates right now than this survey and that’s crazy. Absolutely crazy.
For example, I refinanced my loan in April I think? It was like April, yeah, and it was 3.25% is what I got, which was an amazing rate at the time and now I’m seeing clients getting an additional half percent off their rate and I’m like, oh man, why didn’t I wait? Homeowners are facing a choice. Do I refinance and get the lowest rates we’ve ever had and continue to stay in my house or do I sell my house and either downsize or get a little bit bigger house, upgrade. Essentially everybody’s facing that choice if they’re a homeowner because it doesn’t make sense not to refinance right now, unless you’ve got a super low rate already but most people I know have either refinanced or have a rate that they should refinance out of if they’re planning to stay.
The catch is it costs money to refinance. Most of the time to get a better rate or get the best rate, you’re going to have to pay a little bit to refinance and in my situation it’s going to take us about a year to break even. You have to do the math, if you’re planning to sell within a year doesn’t make sense to refinance, so you’re in this decision point. People I’m seeing are deciding, okay, either I’m going to stay put and refinance for a little while or I’m going to make that move and I’m going to capitalize on these low rates. Either way, people want to capitalize on these rates so if you’re planning to do something different, get a bigger house, get a smaller house, do it now so you can get the really awesome interest rates and save all that money in the long run.
People are in this decision process and I think that’s what’s continuing to drive the buyer demand, and what we’re seeing, some of these new listings coming on the market, I think some of these new listings are people that have decided to buy and also have something to sell. I have quite a few clients that are in this boat right now, people that either already have bought and are now selling or people that are in the process of kind of doing both at the same time and I think other people are in this same situation. Now, some of the people that own houses and maybe were thinking about selling this year or moving have decided not to because maybe they already refinanced or they’ve just decided to stay put because of COVID.
It’ll be really interesting to see the rest of the year. My thought was that we would see more houses coming on the market and then we would see a prolonged buying season and selling season, which is what I talked about in my last couple updates. I do suspect we will continue to see a hot market here for the rest of the year in Seattle. Again, I don’t have a crystal ball, so something could happen, the stock market could crash, the presidential election could have some impact on the housing market and the stock market depending on who wins the election. I don’t want to get too much into that or speculate too much, but I think there are some variables that are uncertain.
We also have the unemployment numbers, which have been going down, which is great, but we have a lot of different complicating factors, risk factors as we look at the economy and housing market going forward. It’s definitely uncertain times, but what we know right now and what I know right now is that the housing market is really hot here specifically in Seattle. There are still people that need to buy and still people that need to sell and really there are a lot fewer people selling than people buying, which is what’s continuing to drive the prices up.
If you’re someone who found yourself watching this video all the way to the end, I know you got some value out of it today. If you are somebody that’s maybe considering selling or considering buying, I’d love to be a resource for you and if you don’t have somebody to talk with about your real estate goals and your situation, I’d love to bring value to that situation. You can find my information down below in the comments and if you know somebody who could benefit from this video, I’d really appreciate it if you’d share it with them and help get the word out.