Understanding the Slowdown in the Seattle Housing Market
The Seattle-area housing market continued its sluggish trend in November, grappling with high interest rates and the traditional slowdown typical for this season. Home prices experienced minimal changes compared to the previous month, and there was a limited influx of new homes onto the market.
In November, the median price for a single-family home in King County stood at $885,500, remaining relatively steady from the previous month. However, this price reflected a 7% increase from the figures reported a year earlier. Similarly, median home prices in surrounding counties showcased upward movement: around $725,000 in Snohomish County (up by 4%), $540,000 in Pierce County (a 3% increase), and $550,000 in Kitsap County (rising by 9%).
In all four counties, sellers listed fewer homes, with King County witnessing a 29% drop in new listings from October and an 11% decrease compared to the same period a year ago. Notably, the Seattle area stood out for one of the most substantial year-over-year declines in new listings nationwide, second only to Atlanta, tying with San Francisco.
This scarcity in available homes led to a decrease in sales across the region, especially noticeable in Kitsap and Pierce counties, where sales plummeted by double-digit percentages compared to the previous year.
Many potential sellers have been postponing listing their properties, concerned about being able to afford their next home with the current mortgage rates. This hesitation among move-up buyers has contributed to a stagnation in the market, as observed by Kelly Sublett, a Bellevue Windermere agent.
As winter sets in and the holiday season approaches, the supply of homes for sale is anticipated to dwindle even further, exacerbating an already limited inventory situation. Buyers, especially first-timers hit hard by the high rates, are adopting a wait-and-see approach, hoping for a slight dip in interest rates before making their move.
While there has been a slight easing in mortgage rates, which dropped from 7.8% to 7.2%, they remain considerably higher compared to the ultralow rates seen at the onset of the pandemic. The increase in rates has affected buyers’ budgets, elevating their monthly payments and undermining the potential benefits of unaltered or slightly decreased home prices.
The impact of high mortgage rates on the market has been felt nationwide, constraining home sales and discouraging mortgage applications. Mason Virant, associate director of the Washington Center for Real Estate Research at the University of Washington, highlighted how prospective buyers’ purchasing power has been stunted due to the current rates.
Amid a scenario of fewer new listings, homes are staying on the market for a longer duration compared to the frenzy seen a couple of years ago. Though the timeframe for selling homes is slightly tighter than the previous year, buyers now have more time to consider their options compared to the rapid turnover experienced in November 2021.
Developers and home sellers are adapting to the slower market by introducing incentives to attract buyers. For instance, a luxury Alki condo building announced discounts for the next few buyers under contract before the year-end, reflecting the efforts to align with market demands.
Some industry experts anticipate a potential uptick in market activity after the new year, as hinted by Kelly Sublett. Crystal Hill, a Keller Williams agent, has noticed a slight increase in home shoppers due to the recent drop in mortgage rates.
Looking ahead, while a further decrease in rates might draw more buyers into the market, it might also elevate prices, presenting challenges for budget-conscious hopeful buyers, particularly the younger demographic.
Amid these challenges, experts like Lisa Diehl advise buyers to adjust their expectations and explore alternative neighborhoods or smaller homes to navigate the current market landscape.
