January 2024

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

Welcome to the New Year! I hope you had a great holiday season, with family, friends, and good food. We are already seeing the market waking up and vendors and contractors are booking up. So you are prepared, I wanted to take the time to reach out to you with an update on the real estate market coming in to 2024.

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. Here we go!

Signs of optimism despite reduced inventory - Northwest Multiple Listing Service (nwmls.com)

As expected, the seasonal slowdown continued into December as people were out celebrating the holidays. Like November and October, December saw a decrease in activity from previous years with an 11% drop in closed sales in the whole NWMLS region. 16 of the 26 counties in the NWMLS experienced this decrease, including King County. But as we continue into the spring season and 2024 more broadly, activity is expected to increase. Why? Because 45.5 million potential first-time home buyers are poised to enter the housing market. Millennials are the largest generation in history and many of them are still looking to buy their first home as they start their families. When first-time buyers enter the market, it causes a ripple effect of move up buyers.

Pertaining specifically to King County, the median sales price was $775,000. Of course, averages for individual cities can be much higher. King county ranks second in the highest priced counties in the NWMLS region beaten only by San Juan at $1,450,000. The total months of inventory in King County has dropped to 1.2 in December compared to the approximate 1.7 value during the fall. 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. Last year saw higher levels of inventory in King County in December, but 2023 still shows more inventory than 2019, 2020, and 2021 at this time. The number of active listings is 1,217, down from last year’s 1,881, an approximately 35% decrease.

Last month we had a segment on interest rates, which continue to be the talk of the town going into 2024. Back at the start of December, interest rates were around 7.1% now interest rates have lowered to 6.61%. Wow! That’s a big drop in that short amount of time, and there are signs from the Fed that they will continue to fall. While interest rates are still not low enough to break some of the mortgage rates held by reluctant sellers, we are on our way and are anticipating a productive spring and summer seasons in 2024. Mason Virant, the associate director of the Washington Center for Real Estate Research at the University of Washington agrees. He believes “inventory levels continue to be low as current owners with low-rate mortgages remain reluctant to sell. This has led to a continued decline in year-over-year transaction volume and inventory levels in the market.” We refer to this as the “golden handcuffs” when your mortgage rates positions are too good that you don’t want to leave them!

Now is the time to reflect on historical market conditions. While many people got used to the abnormally low interest rates of the last couple of years these shouldn’t be considered normal and were in the context of a general bull market in the years leading up to COVID. Over the last 30 years, rates were consistently between 5 and 10% so our current market conditions at 6.61% is far more normal than the 3% rates we were seeing in the past. Keep this in mind before you try to chase a market condition that we may not come back to for many years.

Attention to sellers! I want you to know how much I appreciate you. I strive to build positive business relationships by working exclusively with people I admire and respect, and who value the service I provide. The reason relationships are so important to me is because my business is run entirely by referrals. Working by referral is all about trust, and let’s face it, when we’re seeking a service, we look for someone we can trust – someone proven, who comes highly recommended and is already on our side. So as we enter 2024, you need someone by your side if you are planning to sell your home. The time is right for you! The chief economist for CoreLogic, Selma Hepp, believes that “strong home price gains over the course of the year indicate that home prices in most Washington state markets have fully recovered from 2022 losses and are reaching new highs once again.” Their Home Price Index forecasts another 3.5% appreciation over the course of 2024. Feel free to contact me with any questions you may have so you are prepared for 2024!