October 2023

Happy October!

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!

Indicators point to a continued market slowdown, optimism on the horizon - Northwest Multiple Listing Service (nwmls.com)

The real estate market is seeing a typical seasonal stagnation that is being amplified by high interest rates giving buyers weaker purchasing power and sellers hesitant to give up low mortgage rates. When we get out of the seasonal slump, next year with even more pent-up pressure from buyers, many of which are first time buyers, suggests prices will rise. Selma Hepp, executive and chief economist with CoreLogic, predicts about 5% by next September.

For King County, in September of this year, the median list price (the number seen when a house is for sale) was $797,000. This is nearly equal with 2022 levels and shows a stagnation from the continual increase in listing prices over the last couple years. This is a 34% increase from September of 2019 in a pre-pandemic world.

There was also an increase in Months of Inventory (market supply) for September. The months of inventory is a metric used to gauge the health of a real estate market. It is calculated as a ratio between active listings and closed sales for the month. A “healthy” market is usually between 4 and 6 months of inventory. The first chart, which shows the amounts of inventory for each month in 2023, shows a bit of recovery from earlier in the year. Though the second chart shows us that we are still not quite to pre-pandemic levels with monthly inventory. For September, King County has 2 months of supply with the lows of this year being in March, May and June with 1.3 months of supply. Keeping the metric of a healthy market in mind, these charts show just how much demand there is for housing, and how little supply is available.

From the Luxury Market Report, which pulls data from all over the US and parts of Canada, trends show a stagnation in prices, and a possible upward trend in the Days on Market. The Days on Market is a count of how long a home is listed for before it goes pending. This was also mentioned in my “Kate, how’s the market?” for August when Dick Beeson, the managing broker at RE/MAX NW Tacoma|Gig Harbor, notes that high priced homes have “taken a hit” and that many luxury homes that are coming on the market are being priced too high to begin with. This stagnation and subtle increase in the days on market shows this remained true in September.

All of this may sound a little gloomy but there is hope on the horizon. Many of these problems are seasonal stresses and not inherently permanent. There is still the fact of high demand, especially from first time buyers, but in the mid to long term, the other stressors will strip away. The CEO and President of the NWMLS, Tom Hurdelbrink, says “I see this as a transition period, post pandemic, after a year of steep inflation and rising interest rates. It suggests there may be a more balanced market coming in the near to mid-term future.”