March 2024

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

Happy St. Patrick’s Day! This is your March 2024 update.

Please check out our monthly video that serves to accompany this newsletter:

"Kate, How's the Housing Market?" MAR 2024 (youtube.com)

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. I also reference a CNBC article talking about Jerome Powell’s speech clarifying the Fed’s approach to rate cuts this year. My business coach, Brian Buffini of the real estate coaching company Buffini & Company, also had a live presentation about where the market is heading in 2024. He references Mark Zandi, the chief economist at Moody’s, and his housing outlook. I also reference the Luxury home market report. All of these have a link following this paragraph.

Cautious market optimism as seasonal changes take shape - Northwest Multiple Listing Service (nwmls.com)

Powell reinforces position that the Fed is not ready to start cutting interest rates (cnbc.com)

Do It N.O.W. Brian Buffini LIVE - March 6 (facebook.com)

Luxury Market Report - Institute for Luxury Home Marketing

February saw a slight decrease in activity with a 2% decrease in closed sales year-over-year for the whole NWMLS. Though King County specifically saw no significant increase or decrease. By the end of the month, interest rates have increased slightly to 6.94% from last month’s approximately 6.7%. Slight fluctuations like this are expected and people’s predictions for rate cuts throughout the year remain unchanged. Only 184 days ago rates were at 8% so we have clearly made progress to see interest rates fall just under 6% by the end of the year.

King County had the highest median sales price in the NWMLS last month at $820,000. Condominium sales are also showing strong growth in February with unit sales increasing 9% year-over-year and the median sales price increasing 15% year-over-year. In King County, the months of inventory leveled out at 1.79 for February. This means that if no new houses went up for sale, at current demand levels, all houses would sell in 1.79 months. A healthy market is generally considered to be between 4 and 6 months.

For the luxury market specifically, we are seeing rising time spent on the market. Days on market seemed to be steadily increasing since July 2023 but this is in accordance with seasonal trends. We believe that the average days on market in the luxury space will also come down as we enter the spring season.

Recently, the Federal Reserve Chairman Jerome Powell came out to talk about rate cuts this year. While the Fed doesn’t have a specific timeline to announce, they are noticing the continued decrease in the inflation rate and want to take a cautious approach. People are now predicting two rate cuts from the Fed this year and the majority of economists believe the first will happen around June. This will signal to many people that they need to start the process to sell their home, but this strategy may lead many to miss the optimal window for selling. As I have mentioned before, when rates hit 6% and below the market will take off.

We often talk about the market’s seasonal patterns as important indicators for when you should put your house on the market, but because of the mid-year expected rate drops the selling pattern will be altered. Brian Buffini illustrates this change with the Dhulaigh Curve which comprises historical data for when homes are listed on the market. Typically, 40% of listings happen in the first quarter of the year with 20% in June and July then another 25% in the last quarter. However, Brian predicts that the pattern in the first and fourth quarters will be flipped. This is due to the rate cuts later in the year motivating buyers and sellers. However, this doesn’t mean that the fourth quarter is the best time to buy. Prices are expected to decrease as well so beating the crowds will be advantageous for sellers. For buyers it is also good to start early since you will get a better selection of houses and an opportunity to refinance after rates drop. In the meantime, you can “rent the rate” which allows you to see the entire range of houses being put on the market and not having to compete with other buyers later in the year.

Currently prices are increasing, so why are we predicting prices to come down slightly later this year? It’s because, like buyers, sellers are also waiting for rates to drop. Many of the people looking to sell are currently in homes that don’t fit their lifestyle but they like their mortgage rate and don’t want to trade it for a higher one. Many sellers in real estate also become buyers since they are moving from one home to another. So, when rates drop, and they themselves have an opportunity to move, they will allow a small decrease in price to catch the wind and get their home sold. Mark Zandi, the chief economist at Moody’s also sees this coming in his housing outlook.

In previous months we’ve talked a lot about the demand from first-time buyers looking to buy a home. There is another significant group of people who have outgrown their current home and will both buy and sell a home this year. Since 2020, how people use their homes has changed greatly. They not only need a place to live, but also to work, have kids attend online classes, and even have a space for recreation or a gym. In King County many of our tech companies are taking a hybrid approach where people will come into the office but also do a significant amount of work from home. The rule of thumb for decades was that people moved on average every 7 years. Now since people have been putting off a move from the high interest rates many have been in their house for 10 or more years and need to upsize. This will blend harmoniously with older people whose kids have moved out and are looking to downsize. We are seeing one of the greatest transfers of wealth in history as Baby Boomers give way to millennials. In the next 20 years it is expected that $90 trillion in assets will move from the older generations to the younger generations.

This year will prove busy for real estate as everyone is trying to time the market correctly. If you or someone you know is looking to move this year, get them in contact with me and I’ll help them adjust their schedule so that they don’t miss their window of opportunity. It is always better to get a head of the crowd to make sure you get the best deal you can.