Stabilizing Prices, Recalibrating Expectations, and 7% Interest Rates.

Stabilizing Prices, Recalibrating Expectations, and 7% Interest Rates.

What I’m about to share will initially sound alarming, but I’m not scared and I don’t think you should be either. Across Seattle, the median home price has fallen 13% since its peak in May 2022. This is an expected correction as a result of the Fed’s attempt to tamp inflation. The interest rate hikes have put a cork in the astronomic price escalations we experienced the past 2.5 years and potential buyers are stepping back to reevaluate their goals and finances. In many ways our team is relieved to see this–the excessive growth was never sustainable for our buyers OR sellers.

The current median home price in Seattle is $899,000. For the median home purchase in Seattle, today’s interest rate (7.14%) compared to October 2021 (3.25%) has increased the monthly payment on a 30 year conventional mortgage by $1,750. A small sum for a few, but a large sum for the majority of the buyer pool. With that knowledge, I’m sure you can see why home prices have fallen so quickly since May. Meanwhile, it is notable that home values in Seattle continue to remain strong. Home values are up 12% since January 2022, and up 6.4% from September 2021. 

Inventory is on the rise, but it hasn’t been the highest quality. Sellers appear to be hanging on until the spring market in hopes of a changing tide in interest rates. As a result, there are fewer pending sales (homes that were for sale, received an offer, and are in the process of being purchased) than this time last year. I want to be clear, there is still a BIG demand for property. For single-family homes, Seattle has 2.1 months of available inventory (how long it would take to sell every home currently listed for sale). A balanced market is when a market reaches 6 months of available inventory. I repeat, we’re still in a seller’s market! Due to the continued demand for property, we expect home values will remain steady as interest rates rise. It’s more likely that we will see fewer home sales, which creates opportunities for buyers to purchase with less competition and stronger purchase terms (ta-ta for now contracts with zero contingencies and earnest money released at mutual acceptance). 

All that to say: listen up Dear Seller! Now is the time to double down on a strategic plan to prepare your home for sale! With increased competition (more available inventory) and fewer purchasers in the marketplace (those would be buyers who are taking a beat to see how things pan out in the next six months), you need your home to stand out amongst the others to attract the buyers who are still willing to pay top dollar for quality property. A strategic plan to sell your home is more than a fresh coat of paint, staging, and open houses. So. Much. More. In fact, the biggest draw right now for a buyer is a seller who is willing to work with them to help buy down their interest rate. 

As always, we’re a click or phone call away to answer your specific real estate questions, and we can’t wait to hear from you.