February 2024

Tyler Warden February 16, 2024

 

"Kate, how's the housing market?" – February 2024 King County Market Update for You

 

Welcome to the kickoff of the spring housing market after the Superbowl! No matter which team you cheered for, the Chiefs, the 49’ers, or Team Taylor (ha ha), I hope your team won!

We are already into the second month of 2024 and time only seems to move faster! Starting this year we are introducing a video segment to “Kate, how’s the housing market?” which will help deliver big ideas and insights into an easily digestible format. We now have two videos up on our website, one for January and one for February. In case you missed the last video, I have both linked after this paragraph.

January Video: "Kate, How's the Housing Market?" JAN 2024 (youtube.com)

February Video: "Kate, How's the Housing Market?" FEB 2024 (youtube.com)

Here is your monthly summary of the market.  I realize there is a lot of news that would make anyone confused about the current market conditions.  Let me help you out as we look backwards to understand what’s ahead.  As always, I am available to review your own personal market conditions. 

Many of these insights are taken from the Northwest Multiple Listing Service’s (NWMLS) Monthly Market Snapshot which gives insights for all of Western Washington. I will focus on the Seattle Suburbs area but if you want the full report, I have a link following this paragraph. We also have some insights from Mark Zandi, the Chief Economist at Moody’s, in a good article from Fortune magazine about the Millennial perspective on the housing market. I also have that linked below in case you want to read the whole article. Here we go!

Prices and number of sales increased despite reduced inventory - Northwest Multiple Listing Service (nwmls.com)

Housing market has millennials feeling 'disenfranchised' and 'locked out,' economist Mark Zandi says | Fortune

You may remember last month we predicted an increase in activity as we head into the new year. With 45.5 million potential first-time home buyers entering the market, housing demand has never been higher. January saw a 3% increase in year-over-year closed sales compared to December’s 11% decrease in year-over-year closed sales. The increase in closed sales is even more startling considering active listings are down 14% year-over-year. Despite less inventory from January 2023 closed sales are up showing people are clamoring for a move. We are entering the new year with a big turnaround in activity we only expect to increase in February.

 

Median sales price also increased year-over-year in 19 of the 26 counties listed on the NWMLS. King county specifically was the most expensive at $760,000 with San Juan being the second at $757,000. Normally it is the other way around and San Juan County is the most expensive. The Months of Inventory recovered slightly in January, increasing to 1.6 from December 2023’s 1.2. This means that if no new houses went up for sale, at current demand levels, all houses would sell in 1.2 months. A healthy market is generally considered to be between 4 and 6 months. Despite this slight recovery, January 2024’s value is lower than January 2023’s of 2.1. The number of closed residential listings for King County in the month of January was 756. Historically, January is the worst performing month for real estate sales, but this just means that activity will increase greatly as we head into the spring.

This year will show 45.5 million first time home buyers enter the housing market. With unprecedented levels of demand to buy a home, and disproportionately low supply, many Millennials are feeling the pressure of a hyper competitive housing market and are worried they may potentially miss out. Mark Zandi, the Chief Economist at Moody’s, believes that “the anxiety this generation feels about the prospect of never owning their own home affects their entire perception of their finances and the economy.” The two major events that inform the Millennials’ economic perspective are the 2008 Financial Crisis and the 2020 Covid Pandemic, both of which completely changed the environment of the housing market. They “already feel disenfranchised” and will “lose faith in the economy” if they continue to struggle with the prospect of home ownership. “When interest rates are at 6%, people feel like they have a chance of becoming a homeowner at some point” Zandi says. Right now, we see mortgage rates at about 6.7% with expected decreased throughout the year.

Homeownership is much more than about having a roof over your head. For the majority of the middle-class it is a “critical source of wealth building,” notes Monisha Rana, a real estate agent with Coldwell Banker Warburg in New York. The National Association of Realtors says that “the typical homeowner’s net worth is 40 times higher than someone who rents.” If large portions of Millennials fail to own a home, it will have a great negative effect on their lifelong financial standing. Bank of America Research found that “homeownership is more important to millennials than it was to their parents when they were the same age.” Between the 2008 financial crisis, the pandemic, and the frustrations of high interest rates, Millennials are uniquely eager to own their own home because “homeownership... is a way for people to insulate themselves from other forms of economic turmoil.” This look into the Millennial psyche will help us understand what the market is doing and where we need to focus our efforts as buyers and sellers.

I believe that conditions leading into 2024 will create a mutually beneficial environment for buyers and sellers. Decreasing interest rates will bring back interest from buyers who held off last year because rates were just too high. Then the increased demand will drive prices up helping sellers, who are mostly older and looking to downsize, during their retirement age. I can’t wait to help many buyers and sellers in 2024! Let’s get people into some homes! If you or anyone you know is looking to move, please don’t hesitate to let me know. I’d be happy to serve them.


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