14 May May Seattle Market Update
The spring market is in full swing and setting the stage for the height of the Seattle real estate market. After a few months of unpredictable numbers and uncertainty on both sides of the transaction, buyers and sellers are approaching the process with a new mindset. Check out our latest Seattle real estate market update for what to expect in the upcoming months!
Recovering From A Correction
One year ago the Seattle area real estate market was approaching the peak of a craze. The scales were heavily weighted in favor of sellers, in a market that was climbing at an unsustainable rate. Eventually leading to a correction that sent shockwaves through the Puget Sound real estate market. Market experts have been anxiously waiting for summer to gauge the scale of the correction’s ripple effect on the most lucrative time of year for Seattle housing market. Summer is traditionally the peak of real estate, with buyers taking advantage of school holidays, and time off to shop the best home prices. In the wake of market uncertainty, bright spots in the form of low-interest rates, and a strong job market have persevered to hold the market steady after the initial dip. The data is showing a stable market but buyers are apprehensive of diving into a process that left many fatigued a year ago.
After nearly two years of skyrocketing home prices and houses selling well over list price after competitive bidding wars, buyers are staying firm a carefully placing offers. A year earlier, buyers were forced to make multiple concessions and pay over asking price. Now, mortgage rates are allowing renters to look at buying a home, while buyers on the cusp of price ranges are able to slightly bump budgets into the middle ranges. Despite these advantages, the middle price ranges have seen a slight cooling effect, with sellers dropping prices, leaving a wider range of homes for sale.
Seattle Real Estate Year Over Year
Some local sellers are feeling a pinch with houses not moving as quickly as they would like to. However, experts say there is no reason to panic as we are still a far cry from a balanced market. With a current 3-4 month inventory, we are still months away from a 4-5 month supply that signifies a balanced market. Some of the confusion lies in comparing 2019 numbers with the year prior. According to the NWMLS April had a 78% increase in total inventory for King County compared to April 2018.
While 78% sounds like a baffling large increase, people need to put these numbers in context. The market in the spring of 2018 was heavily imbalanced, about to peak, and setting the stage for the correction at the turn of the year. Inventory was teetering on 3-4 days, causing buyers to bid above asking price and make emotional decisions on financial investments. Sellers were making huge profits on homes but creating unrealistic expectations for buyers, and future investors.
Buyers Are Getting Tough
According to the most recent press release from the Northwest Multiple Listing Service, an increase in inventory is giving buyers more time, eliminating emotional and sometimes irrational bidding wars. Based on April numbers, King County is running on a three to four-week inventory after a new flood of sellers hit the market last month. The NWMLS saw a 28.5% jump in active listings and a 5.8% gain in pending sales for the month of April.
This year buyers and sellers alike are viewing the market from a new perspective requiring a higher caliber of research and local knowledge. Buyers have put their foot down on overpaying, and sellers need to be representing and pricing their homes accordingly in the middle price ranges. The days of listing a home, and receiving multiple offers within one week are over. Sellers need to adapt to a normal market and understand that they will need to put in the effort for a successful sale. Even at the height of the new market, placing a sign in the yard does not guarantee multiple offers and a quick sale.
Sellers were starting to show concern in April as the average prices in certain areas fell as much as 6.3% for homes in the middle price ranges. While the middle price range is the largest, this fall is median prices do not mean that the market is heading towards another correction. In fact, other price points are showing signs of stability. Homes in the lower price ranges, under $500,000, are showing increases in average sales, especially as buyers move along the I-5 corridor. Some experts attribute this to first-time homebuyers competing with buyers looking to trade down. This competition is spreading outside of the major metropolitan areas to locations in Southwest King County.
The upper end of the spectrum and luxury markets appear to be unaffected by recent market shifts. In the latest data, Queen Anne/Magnolia saw a 7.6% jump in median prices. Similarly, the Bridle Trails region in Bellevue also saw an 11% jump in price. At Heaton Dainard, one of our own listings in the high-end market went pending in Bridle Trails after just five days on market.
What this means for investors:
The market has changed, but that does not mean that real estate isn’t profitable. With a strong job market, plans for Amazon and Facebook expansions, more companies and people will continue to flood the market for single-family homes, as well as multi-family rentals, and purchases. Market forecasts are showing signs of continued growth as the job sector continues to grow. Investors would do well to begin looking at areas where job growth is highly likely. Additionally, looking into the extremes of prices ranges. The market for homes priced $500,000 and below, does not show any signs of slowing down. As more and more people move to the region, areas are upzoned, and the city sprawl increases, investors should look to expand their portfolios to incorporate the new populations.
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