Today's housing market looks different than it did a year ago, but if you've only been reading headlines, you might be surprised to learn that we are still experiencing a seller's market.
Yes, sales volumes are down (all real estate professionals are feeling the crunch!), but home values are showing signs of stability after falling for the 2nd half of last year.
At the beginning of 2022, the housing market was on fire. Bidding wars across the country led to record-high home prices as rates began inching up. Before rates jumped, the median sale price (excluding condos) in King County hit $1,000,000 last April, a new record high.
But after years of cheap money for homeowners, rates crested 5% last April and eventually hit 7% in October.
Median sale price past 3 years
Since last April mortgage rates have remained elevated and volatile. Affordability has eroded quickly due to the combination of high home prices and mortgage rates, causing a pullback by both buyers and sellers.
Mortgage rates (past 12 months)
In February, prices in King County were down 7.4% year-over-year but up slightly compared to January.
Number of pending sales past 5 years
Inventory is lower than ever
Most homeowners are in a great financial position today (low fixed-rate mortgages and lots of equity), and since most home sellers are also home buyers, the affordability crunch is keeping people in their homes.
Unless people are undergoing big life changes--e.g. divorce, death, job changes, changes in household makeup--most existing homeowners are simply staying put until the numbers make sense.
As a result, the number of new listings has fallen to its lowest point on record and bidding wars are back.
New listings in February were 33% lower than the same period in 2022
The # of homes for sale typically increases starting in January, but has been falling since September
From January to February, median time on market dropped by 14 days and may drop further when March data is available
Housing is seasonal
It's worth noting that prices almost always rise in the first half of the year. Here's a look at the median sale price of homes in King County during the past 10 years:
It's likely that we'll see prices soften in the 2nd half of the year this year, but few analysts or housing economists a forecasting a meaningful drop in home values in the years ahead based on the data available today.
Existing homeowners are just in too strong a financial position to suddenly flood the market with inventory as we saw during the GFC.
Hoping to sell in 2023?
Don't wait another second if you have the option to list sooner than later. Make a plan and get to market soon, but put in the prep to make your home stand out.
Hoping to buy in 2023?
You'll be disappointed with the lack of inventory and competition for quality homes. Take a long view and put yourself in a position to strike when the right thing hits the market. Now is the time to educate yourself so you know a good thing when you see it!
If you're hoping to buy and sell this year, let's make a plan that works for you and your household.
Thanks for reading!
Best,
Chad