Seattle-area housing market stuck as mortgage rates and prices stay high
At present, the Seattle housing market is facing a slow down as buyers and sellers both are sitting out the cold weather that is approaching. According to recent data from the Northwest Multiple Listing Service, pending single-family home sales in King County dropped by almost 15% compared to the same period last year.
The decline is a yearly feature before the snow hits but this time the downturn is significantly larger. Last month an average of 44% less deals were closed in the Seattle area as compared to last year. The rate also looks very low when compared to the Covid era when interest rates were lowered to lure buyers into buying real estate.
Experts believe that market has moved from the 24 hour decision window in which it once operated and bidding wars are becoming rare by the week. This has also brought down the price of property which soared due to high demand. This slowdown has translated into mostly stagnant Seattle-area home prices for several months. In October, the median single-family home in King County sold for nearly $883,000, representing a 2% decrease from September and a 2% decrease from the previous year. Similar patterns were observed in Snohomish and Pierce counties, with minimal changes in median home prices.
However, there are some exception to the rules as well since Kitsap County showed an 8% increase in the selling price of single family home as compared to the same period last year. The outlying areas of King County also maintained stable pricing. However, the Seattle urban area shows a 5% decrease in the median price of a single family home.
Due to high interest rate, many home buyers are looking outside the Seattle area finding affordable options. While mortgage rates saw a slight leveling off in early November following the Federal Reserve's decision not to raise interest rates, the average rate in late October reached 7.8%, the highest since 2000 according to Freddie Mac. Nationally, these rates contribute to a broader slowdown in home sales, with Redfin economists predicting that this year's volume is on track to be the lowest since the Great Recession in 2008.
Even with high interest rate and sluggish demand before the winter hits, experts believe that a dramatic decline in process of Seattle based property is highly unlikely as excess supply is not available in the open market. The scarcity of new listings in King County last month, a typical occurrence in the slower fall and winter months, contributed to a 26% drop in the number of single-family homes listed from September to October. Condo listings also dipped by 24%. Many homeowners with ultra-low interest rates are delaying selling, fearing higher rates once they re-enter the market as buyers. This reluctance to sell is limiting the supply of homes and preventing a significant drop in prices.
Buyers and sellers are currently at a standstill, leaving the market's future uncertain. As winter approaches, traditionally slowing real estate activity, economist Matthew Gardner anticipates a focus on interest rates to determine if sales will rebound next spring. Gardner predicts a potential rate decrease to 6% in the coming year, with a range of 5% to 6% in 2025. However, he warns against expecting a return to the 3% mortgage rates seen during the pandemic, emphasizing the likelihood of an extended waiting period.
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