Home prices in the Seattle area fall as the market cools
The Seattle area housing market continues to cool.
More homes are sitting on the market waiting for a buyer. Fewer and fewer buyers are signing agreements. And prices are falling faster than usual, as a typical summer downturn is accompanied by higher interest rates, off-price buyers and economic jitters.
According to new data released Thursday by the Northwest Multiple Listing Service, more than twice as many single-family homes were still for sale in much of the region at the end of July than at the same time last year. The number of condos for sale in King County increased by 15.5%.
Median home prices in the area continue to decline. Since May, prices in King County have fallen 11% to $109,000. During the same period last year, prices were stable.
And while home prices are still up from a year ago, that growth is slowing. The median home price in Snohomish County rose 10%. Last July: 22%.
This is good news for buyers still in the know. But their budgets are still suffering.
The median single-family home sold for $890,000 in King County, $770,000 in Snohomish County and $575,000 in Pierce County last month. Across the water in Kitsap County, the median home sold for $538,000.
The average rate for the 30-year mortgage that many buyers need to buy a home fell slightly at the end of July, but still ended the month 2 percentage points higher than at the start of the year. A 1% increase in interest rates can reduce a buyer’s budget by 10%.
Add that to already high prices — median prices in Snohomish and Pierce counties are up $200,000 or more from 2019 — and buyers are in a rush.
As the market cools, it would now take almost two months to sell all the single-family homes for sale at the current demand in the area. The last time the inventory was at this level was in late 2018 and early 2019, when the region’s housing market was going through another downturn.
But “anything less than six months is still considered a seller’s market,” said Jed Kliman, a Windermere broker in Greenwood.
Combine it all — prices, sales and how quickly homes are flying off the market — and the Seattle area was cooling the fastest of all the nation’s major real estate markets in June, according to analysis by Redfin.
“The stock market and the tech sector in particular have weighed on all those metros that have a high concentration of tech workers,” said Redfin deputy chief economist Taylor Marr.
Tacoma ranked No. 10, in part because the area saw fewer price drops than Seattle, Marr said.
Despite the rapid change, Redfin economists predict Seattle’s housing market is less vulnerable to a dramatic plunge into a recession than many other cities, such as Boise, Idaho and Phoenix. This ranking is based on 10 measures of price volatility, debt-to-income ratio, turnaround, second homes and other factors.
Marr predicts that prices in the Seattle area will continue to fall this year, although their significance depends in part on the rest of the economy.
Kliman, Windermere’s agent, predicts landlords who locked in ultra-low interest rates earlier in the pandemic may be reluctant to sell. This would maintain a cap on inventory and force buyers to continue to compete.
The homes Kliman has recently put up for sale haven’t sparked the 10- or 15-bid bidding wars that have become common in the past year. King County had nearly 29% fewer pending single-family home sales and 34% fewer condo sales in July than the same time last year, according to the SEO service.
But Kliman said his ads still attract several competing bids each.
“The bidding wars that I’ve seen haven’t been 20 or 30 percent above the list price recently. They’ve been more like 5 to 10 percent above,” he said. reflects a more balanced market.”