If we let the media determine the mood regarding the housing market, it would be time to shut the party down and call it a night. I’m here to report that the celebration is far from over and there is still fun to be had! While it is not all shiny and bright (it never is), we are seeing a pattern of consistent growth and the sky is far from falling.
The latest headline from the Seattle Times claims that prices “have tumbled” from last year. While prices are down from a year ago the story is much more nuanced. The Fed rate hikes slowed things down, but properties are still pending and demand is strong!
In King County, the median price peaked in May 2022 at $1M and is currently at $919,000 (May 2023), which is down 8% from peak to current. Prices hit bottom in January 2023 at $800,000 which was down 20% (the actual tumble) from the peak but are now up 15% from the bottom!
In Snohomish County, the median price peaked in April 2022 at $830,000 and is currently at $767,000 (May 2023), which is down 8% from peak to current. Prices hit bottom in February 2023 at $685,000 which was down 17% (the actual tumble) from the peak but are now up 12% from the bottom!
This was a relatively quick correction that is trending in a positive direction as the market gets used to higher interest rates. Quantitative Easing could not last forever and rates had to go up to combat inflation. During the same time frame above, interest rates dramatically changed.
In May 2022, they averaged 5.5% (the peak) and in January 2023 they averaged 6.75% (the bottom). In fact, they started 2022 at 3.5%, a level we will likely never see again! Currently, rates are hovering in the high 6% and are predicted to slowly recede as we enter the second half of 2023. Proof that buyers have become conditioned to the new normal of rates is that prices have grown from the start of 2023 (January – May 2023): 14% in King County and 11% in Snohomish County, despite rates remaining in the 6% and at times cresting 7%. When they drop to the lower 6% or even the high 5%, expect prices to climb at a faster rate. Buyers should be weighing these effects as they choose when to act. Rates can always be re-financed, but the sale price cannot.
While the homeowners that purchased during those peak months have some time before they regain their home’s value, it will happen. We are a year out from the peak and the last time we had a correction in 2018 it took 17 months to recover. That subsection of sales aside, overall equity levels are strong. Prices are up in King County by 27% from March 2019 to March 2023 and in Snohomish County up 46%. Ten-year gains are astounding at 140% in King County and 179 % in Snohomish County.
While real estate is an investment, we shouldn’t forget it is also where we live, grow, love, heal. It is our refuge, our security, and our joy. Change will always trigger moves despite the rates. This correction and recovery have been challenging and confusing, especially after the disruption of the pandemic. If you think perhaps you are ready for a change and want to know how the current real estate market relates to your plans and goals, please reach out. I am happy to help whether you or considering a move soon or well in to the future. It’s never too early to have the conversation. I look forward to hearing from you!
Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.
This Friday, my office will spend the day with the Snohomish Garden Club working to put fresh produce on the tables of local families who need a little help. We will plant over a half-acre of veggies and fruits that will be harvested over the summer and into the fall.