Summary
- Buyer Demand is Back: While buyer demand never really went away, buyer activity slowed significantly toward the end of 2022. With mortgage interest rates around 6%, and increased inventory across the Puget Sound, buyers are actively looking and buying again.
- Increased Inventory is a Good Thing: Our most populated counties (King, Pierce, and Snohomish) are still sitting at one to two months of inventory, which is indicative of a seller’s market. However, a few outlying counties (such as San Juan) are now near six months of inventory, which is at the upper edge of a balanced market.
- Home Prices are Up Slightly: Prices on last month’s closed sales across the Puget Sound edged up a bit from the same time last year, at +0.41%. The median price in King County was $723,000, Snohomish was $645,000, and Pierce came in at $510,000.
- Some Advice for Sellers: Homes priced appropriately (at market value) are starting to see much higher traffic (visitors) as well as an occasional multiple-offer situation, but not the frenzy we observed throughout 2021 and 2022. Be sure to get expert guidance regarding price and strategy when selling in this more balanced market.
Details
Northwest MLS brokers encouraged by declining mortgage rates with some saying pent-up demand is triggering multiple offers
Pending sales around Washington state reached the highest level since October and surged nearly 44% from December, according to the January report from Northwest Multiple Listing Service. Last month’s 5,776 mutually accepted offers were down about 9% from a year ago, but brokers seemed encouraged by the “favorable spike.”
Prices on last month’s closed sales edged up slightly, at 0.41%, compared with twelve months ago. The area-wide median price on January’s 3,264 completed transactions was $557,250; a year ago, when there were 5,085 closed sales, it was $555,000. Nine of the 26 counties in the report had year-over-year price bumps.
The selection of properties, based on the number of total active listings in the MLS database, improved significantly from a year ago, rising from 3,092 listings to 8,220 at month end. That total, which includes 7,179 single-family homes and 1,041 condominiums, was down about 13.2% from December’s selection. Brokers added 4,925 new listings to the MLS database in January, about 1,000 fewer than the same month a year ago. Last month’s additions outgained December when 2,980 properties were added, as well as November, when 4,890 listings were added.
A few reporting counties are approaching 6 months of inventory, which is at the upper edge of a balanced market. Our most populated counties – King, Pierce and Snohomish – are still sitting at one to two months of inventory, which is indicative of a seller’s market.
The January report from Northwest MLS shows Adams, Columbia, Grays Harbor, Okanogan, and San Juan counties each had more than six months of inventory. Ten counties had less than three months of supply.
A combination of pent-up buyer demand, attractive prices, and low inventory across King, Pierce, and Snohomish counties seem to be driving sales.
On Thursday, Freddie Mac (the Federal Home Loan Mortgage Home Loan Mortgage Corporation) reported the U.S. weekly average for a 30-year fixed-rate mortgage was 6.09%, down about a full point from November when it peaked at just over 7%. According to its research, this one percentage point rate reduction can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, the median home price in the U.S.
Last month’s median price for homes that sold in Kitsap County was $487,000, well below the median price in both King County ($723,000) and Snohomish County ($645,000). Prices in Kitsap are down from both a year ago and December, but inventory is tight with slightly more than two months of supply.
The National Association of Realtors (NAR) Chief Economist Lawrence Yun suggested the “recent low point in home sales activity is likely over.” Commenting on pending sales for December, he stated, “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
Northwest MLS statistics for January show there were 757 pending sales of condos, about 24% fewer than the same month a year ago. Last month’s volume was the highest since October when brokers reported 823 pending sales.
Condo prices system-wide were down about 2.5% from a year ago, declining from $435,000 to $424,000. Only four counties (Kitsap, Pacific, Skagit, and Thurston) reported year-over-year price increases for last month’s condo sales.
Last week, the U.S. Labor Department defied expectations by reporting the addition of 517,000 jobs on a seasonally adjusted basis, the largest increase since July. The unemployment rate fell to 3.4%, the lowest level since 1968. Washington’s Employment Security Department reported a statewide unemployment rate of 4.2% for December. (January figures are not yet published.) In that report, the U.S. unemployment rate was 3.5%. ESD’s county snapshot shows unemployment rates range from 2.8% in King County to 11% in Ferry County.
We continue to move toward a more balanced market. That is good news for both buyers and sellers. Yes, sellers often need to find a new home as well… hence sellers are also buyers. In this more normal market, it’s important for you to hire a professional real estate advisor with experience. Whether buying, selling, or investing in real estate, be sure to utilize the expertise, talent, and professionalism of our trusted real estate team, The Goelzer Home Team.
Let us know how we can help you achieve your real estate Wants, Needs, and Dreams!
Data
*Information and statistics compiled and reported by the Northwest Multiple Listing Service.
