December Market Update 2022

Market Updates

December Market Update

Is it a buyer’s market? Is it a seller’s market? The media is sending mixed messages, but the numbers aren’t. Traditionally, we lean into inventory numbers to determine if a market favors one consumer or the other, but my colleague, Paige Schulte of Neighborhood Experts in Gig Harbor, made an excellent point in a meeting last week (and in her article in Gig Harbor Now) that to know if a market favors buyers, sellers or is neutral, we need to also look at sales ratios, not just inventory levels. The sales ratio tells us how fast a market is moving, i.e. how quickly homes for sale are being absorbed (purchased) by consumers. To calculate the sales ratio, pending sales are divided by the number of listings on the market. A seller’s market has a sales ratio of greater than 55%, a buyer’s market has a sales ratio of less than 55%, and a balanced market has a 55% ratio. Let’s dig in.

Seattle Area Stats

Total number of homes and condos for sale as of Nov. 30, 2022: 1,459

Fastest-moving price ranges:

$1million to $1.3 million - 153 active, 73 pending, 48% sales ratio
$700,00 to $1million - 411 active, 180 pending, 44% sales ratio
$1.3 million to $1.6 million - 75 active, 31 pending, 41% sales ratio

Slowest-moving price ranges:

$1.6+ million - 194 active, 39 pending, 20% sales ratio
$400,000 to $700,000 - 479 active, 172 pending, 36% sales ratio

Snohomish County Stats

Total number of homes and condos for sale as of Nov. 30, 2022: 1,422

Fastest-moving price ranges:

$400,000 to $700,000 - 540 active, 317 pending, 59% sales ratio
$700,00 to $1million - 462 active, 188 pending, 41% sales ratio
$1 million to $1.3 million - 149 active, 61 pending, 41% sales ratio

Slowest-moving price ranges:

$1.3 million to $1.6 million - 65 active, 18 pending, 28% sales ratio
$1.6+ million - 77 active, 11 pending, 14% sales ratio

If using the sales ratio as an indicator, the market is slightly favoring buyers, but not by much. Especially in the most competitive price ranges. I hesitate to make a blanket statement like “it’s a buyer’s market” because market seasonality is also a contributing factor here. Q4 tends to be a slow time of year for real estate sales with less favorable inventory on the market. This is when buyers tend to get the best “deals” on pricing, this is also the time of year with the most price reductions.

What we’re seeing in the market

Overall home sales have slowed, but homes are still selling. The average days on market is 25 days, up from 11 days in May at the peak of the market. Fabulous homes that are correctly priced and beautifully prepared are still selling in 10 days or less. With upward pressure on interest rates, savvy sellers are adjusting pricing to attract qualified buyers quickly. Sellers should also be prepared to do a little more for a buyer these days. Inspection negotiations are back, which means sellers are having to cover costs of repairs, or further negotiate the sales price in order to keep a buyer engaged in a sale.

Outliers remain and we are still seeing multiple offers here and there on the fabulously prepared and priced homes, but honestly, the quality of available homes for sale the past four months is abysmal. Trust us, there are MANY pre-approved buyers on the sidelines waiting for sexy inventory to hit the market. Our spidey senses tell us that this pent up demand will create a surge of activity in the spring. However, it’s doubtful pricing will skyrocket. Purchasers will likely be more conservative with their money and less aggressive with offer terms.

Where are we heading in 2023?

The spring market is always the “hottest” time for home sales. It’s when the best properties are brought to market and when we see the most buyers enter the marketplace, which can result in multiple offers and higher prices. Interest rates are predicted to plateau in Q3, and it’s possible sales activity may not surge until summer as buyers “wait and see.” This happened in 2020 when we were greeted with COVID and no one knew how the economy would respond. Sales slowed dramatically in April 2020, by 20% in most price ranges, and didn’t pick up again until January 2021.

There are many contributing factors that impact real estate pricing and sales cadence, and it’s hard to predict exactly how the market will respond to external factors such as layoffs, pandemics, or the stock market. What’s most important when you’re getting ready to enter the market as either a seller or a buyer is that you do so when the time is best for you, and that you pick a real estate team that has their finger on the pulse to best help you meet your goals within your means.

We’ll be hard at work analyzing 2022’s data in early January - we can’t wait to tell that story! It will be a juicy one. Until then, wishing you a happy and healthy end to the year. Cheers!