Seattle Real Estate Market Update - May 2023

May Market Update

It’s still very much a seller’s real estate market here in Seattle, despite what you may be reading in the news. However, sellers are having to work a little harder to engage buyers, and keep them engaged during the home sale. Inspection negotiations are harder than ever right now! That's a blog post for another day.

This month we’re revisiting sales ratios (we discussed this topic in December 2022’s update, so it may sound familiar) to see if our market favors buyers, sellers or is neutral. 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.

City of Seattle Stats

Total number of single family homes & condos for sale as of April 30, 2023: 1,217

Fastest-moving price ranges:

1. $1 million to $1.3 million - 112 active, 107 pending, 95% sales ratio
2. $400,000 to $700,000 - 320 active, 273 pending, 85% sales ratio
3. $700,00 to $1million - 376 active, 289 pending, 77% sales ratio

Slowest-moving price ranges: 

1. $1.3M to $1.6M - 96 active, 58 pending, 60% sales ratio
2. $1.6+ million - 221 active, 81 pending, 37% sales ratio

If using the sales ratio as an indicator, the market is favoring sellers, especially in the most competitive price ranges in Seattle.

Overall, single family home sales are up 89% from January 2023, but are still lagging behind April 2022 sales by 44%. Demand for single family homes remains HIGH, and inventory remains LOW with only 1.4 months of available inventory. The average days on market has returned to single digits, 6 days down from 25 days in January 2023.

Seattle’s median home price for a single family home is $875,000 and $525,000 for condominiums. With interest rates hovering around 6-6.5%, we expect that prices will remain flat for the remainder of 2023, and potentially well into 2024. There’s little confidence from the mortgage market that rates will dip significantly (more than 1 percentage point) within the next year or so due to the strength of the job/labor market, and the slow decrease of inflation. 

Is it still a good time to buy and sell?

Every homeowner and home buyer’s scenario is different, and the answer boils down to affordability.

For a seller, it’s crucial to have confidence that the sale of your home will help you reach your end financial goals. Will you be making enough money to move up into your next home while keeping your monthly payment affordable? If downsizing, are you able to afford your next purchase in cash or lower your monthly mortgage? Maybe you’re deciding to move into the rental market and quit owning all together? Whatever your goals are, we’re here to help you understand all potential outcomes so you can decide if now is the right time.

For a buyer, it’s all about that monthly payment and your desired timeline to own the property. Sure, you can “marry the house and date the rate”, but I hate that saying. Especially if there’s no guarantee that interest rates will shift significantly in the next year or two. For now, you’re marrying both the house and the interest rate, and you need to feel comfortable with both. 

The bottom line is that interest rates aside, homes are still selling quickly and for top dollar despite local layoffs and economic uncertainty. This is due to two things 1) sellers aren't incentivized to sell because their payments are low or nonexistent making inventory LOW, and 2) we live in an affluent area where buyers tend to have liquidity options - family money, stock options, robust savings, additional properties with tons of equity, etc. - which gives them more confidence in their purchasing power both in the short and long term.

We look forward to hearing from you and helping to answer your specific real estate questions when the time is right for you.