October 2023 Market Update

It's the first week of November, which means the October real estate data is in. Let's take a look at how Q4 started off here in Seattle. It's not all bad news, we promise! The Seattle real estate market remains resilient amidst volatile interest rates and low inventory.

Inventory at a Glance

The available inventory hovers at a 2-month supply for single family homes and a 3.7-month supply for condos. This is an indication that we're still very much in a strong seller's market. A 6-month supply indicates a balanced market and anything over six months' supply swings into a buyer's market.

Despite October being the 17th consecutive month where the number of homes for sale has outpaced sales, the supply scarcity continues to keep pressure on values. We're not experiencing a dramatic drop in pricing. This is a much-needed correction from the inflated values of 2021 and 2022.

Housing Prices

October's Median Sales Prices:

• Single-Family Homes: $880,882 - down an average of 5.6% from 2022.
• Condos: $570,000 - up an average of 3.6% from 2022.

Historically, September/October is when home prices begin to really taper off until the spring. Below, you'll see the numbers begin to dip each year in the fall, with January being the lowest and ramping back up again in the spring. Values tend to peak in May and remain stable through September. It's hard to know if 2024 will present the same cadence. We anticipate that history will repeat itself, but with the volatility of interest rates, it's impossible to predict future market conditions with any certainty. My prediction is that we will see the seasonal uptick in sales and values in the spring, but that prices will remain rather flat due to the fact that interest rates aren't slated to improve much in 2024.

Interest Rates

The interest rates are presently ranging between 7.5% to 8%, varying with different loan products (conventional vs. jumbo vs. ARMs). These rates, while reflective of broader economic policies to curb inflation, have undoubtedly impacted both buyer and seller enthusiasm.

Sellers are hesitant to list for a couple of reasons: 1) they feel they may be able to make more money if they sell when rates improve, and 2) many aren't eager to sell and abandon their low interest rates in lieu of a new mortgage at a higher rate. Long story short, sellers are staying put until things improve.

Buyers are hesitant to buy because it's just so darn expensive to borrow money at the moment. Many are taking time to consider if a home purchase is feasible in today's market conditions. Unfortunately, this is putting pressure on the rental market, and rents aren't getting cheaper. This factor is what is pushing many buyers to pull the trigger and pursue a purchase. That, and less competition in the marketplace. 

Prices have softened, and there is promise of better interest rates in the future. Savvy buyers are taking advantage of the lower values and plan to refinance within the next two years. Many buyers are also capitalizing on seller-paid discount points on their mortgages. If you can afford to buy now because in two years time, we think you will be pleased you did.

What does this mean for you?

For Sellers:

• Strong Position: Sellers remain in a strong position due to the low supply, with properties still fetching competitive prices.
• Market Movement: The slight dip in single-family home prices could be a signal to list now before any further market adjustments.

For Buyers:

• Interest Rates: The higher interest rates necessitate careful financial planning. It’s crucial to consult with a mortgage broker or loan advisor to understand the long-term implications of a purchase at these rates.
• Market Opportunities: The market presents unique opportunities, especially in the condo segment, which continues to appreciate in value.

For Investors:

• Condo Market: The strengthening condo market suggests a strategic opportunity for investment, especially with rental demand remaining high in urban areas.
• Long-Term Outlook: The Seattle market retains its desirability, and current trends may offer purchase opportunities that will be looked back upon favorably in years to come.

The Seattle real estate market, while adapting to the national economic climate, continues to demonstrate fundamental strength. We advise our clients to engage with these market conditions proactively and with the support of our expertise.

We are committed to providing strategic guidance and support tailored to your unique real estate goals. For a deeper discussion of how these market conditions affect your real estate portfolio or purchasing power, reach out to us! We're here for you as a resource.

This market update is provided for informational purposes only and should not be construed as financial advice. Always consult with a financial advisor before making any significant real estate decisions.