The housing market in the Seattle area continues to cool.
More homes are on the market waiting for the buyer. Fewer buyers sign deals. Prices are dropping faster than usual, as the usual summer slowdown caters to higher interest rates, overpriced buyers and economic turmoil.
According to new data released Thursday from the Northwest Multiple Listing Service, more than twice as many single-family homes were still for sale across much of the region at the end of July compared to the same time last year. The number of apartments for sale in King County increased by 15.5%.
Average home prices across the region continue to fall. Since May, prices in King County are down 11%, or $109,000. During the same period last year, prices were flat.
And while home prices are still higher than a year ago, this growth is slowing. The median home price in Snohomish County is up 10%. Last July: 22%.
This is all good news for buyers who are still in the game. But their budgets are still hurting.
The average single-family home sold for $890,000 in King County, $770,000 in Snohomish County, and $575,000 in Pierce County last month. Across the water in Kitsap County, the average home sold for $538,000.
The average 30-year mortgage rate that many buyers need to buy a home dropped slightly in late July, but still ended the month two percentage points higher than the beginning of the year. A 1% interest rate hike can cut a buyer’s budget by 10%.
Add that to the already high prices — average prices in Snohomish and Pierce counties have risen $200,000 or more from 2019 — and buyers are shrinking.
With the market calming, it will now take approximately two months for all single-family homes for sale to be sold at current demand across the region. The last time the stock was at that level was in late 2018 and early 2019, when the region’s housing market was going through another downturn.
“Anything less than six months old is still considered a seller’s market,” said Jed Kleiman, a Windermere broker in Greenwood.
Combine all of this — prices, sales, and how quickly homes are off the market — and the Seattle area cooled the fastest of any major housing market in the country in June, according to an analysis by Redfin.
“The stock market and the tech sector in particular have been weighing on all of these metros with such a high concentration of tech workers,” said Taylor Marr, deputy chief economist at Redfin.
Marr said Tacoma ranked 10th, in part because the area saw less price drops than Seattle.
Despite the rapid change, economists at Redfin predict that the housing market in Seattle is less likely to slip into a dramatic recession than many other cities, such as Boise, Idaho and Phoenix. This ranking relates to 10 measures of price volatility, debt-to-income ratio, volatility, second homes, and other factors.
Mar expects prices in the Seattle area to continue to fall this year, despite how highly dependent they are on the rest of the economy.
Kleiman, a Windermere agent, expects that homeowners who closed ultra-low interest rates earlier in the pandemic will be reluctant to sell. This would keep a cap on inventory and force buyers to continue competing.
Kliman homes for sale recently didn’t attract the 10 or 15 offers that became popular last year. King County saw a roughly 29% decline in pending single-family home sales and 34% fewer apartment sales in July compared to the same time last year, according to the listing service.
But Kleiman said his rosters still attract many competing offers each.
“The bidding wars I’ve seen haven’t been more than 20 or 30% off the list price recently. They’ve been more than 5 or 10%,” he said. “This is a reflection of a more balanced market.”
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