Seattle home sellers are waiting longer to seek out a willing buyer despite lower prices, signaling a dramatic shift from the bidding wars of just six months ago.
Rising rates of interest, meant to slow inflation, are making life harder for homebuyers, leaving lots of them on the sidelines as their buying power shrinks. In turn, would-be sellers are holding off on listing their homes. The result: Across the Puget Sound region, fewer recent listings hit the market in October than a 12 months ago, and more homes were still lingering in the marketplace at the top of the month, in response to data released Monday by the Northwest Multiple Listing Service.
Look no further than Snohomish County, where there have been thrice as many homes still on the market at the top of October than at the identical time last 12 months.
King County saw 38% fewer pending single-family home sales in October than last 12 months, and 34% fewer than at the identical time in 2019, before the pandemic supercharged the market. Nationwide, applications for loans to purchase homes are dropping.
The slowdown began this summer. By September, the median Seattle house took 17 days to sell, up nine days from the identical time a 12 months earlier, in response to Redfin. In Bellevue, homes spent about 24 days in the marketplace, 18 days longer than last 12 months, and in Tacoma, homes spent 23 days in the marketplace, 16 longer than last 12 months.
Slower price growth
All those aspects have put the brakes on runaway price growth across Western Washington.
In comparison with the market’s peak in May, October median home prices were down 10% each in King and Snohomish counties, 8% in Pierce County and seven% in Kitsap County, in response to Northwest Multiple Listing Service data.
The median single-family home sold for $903,000 in King County, $730,000 in Snohomish County, $535,000 in Pierce County and $513,250 in Kitsap County.
Prices are still up in comparison with a 12 months ago, but the worth jumps are smaller than they were throughout the market peak. King County single-family home prices are up about 10%, while other nearby counties are up between 1% and 5%.
If the trends proceed, prices could find yourself flat 12 months over 12 months or begin to drop from last 12 months’s levels.
Zillow senior economist Nicole Bachaud predicts Seattle-area prices will stay flat between now and next fall. That’s partly because the massive price hikes in 2020 and 2021 were “completely unsustainable,” Bachaud said.
“We will’t have 20% growth every 12 months, and the explanation why is due to affordability,” Bachaud said. “Incomes have grown, but they’ve not grown nearly as much as home values did. So, there’s not going to be anybody left to purchase homes at a certain point.”
That turnaround has already arrived in Whatcom County, where a flood of distant staff helped drive up prices earlier within the pandemic. The median home price of $565,000 last month was the identical last October, even though it was 35% higher from 2019.
As homes linger longer, listing agents need to make their offerings more attractive. Sellers are lowering their prices and offering to cover closing costs, said Windermere agent Michael Doyle. Even with incentives, some houses are sitting unsold.
Facing that dynamic, “we definitely have loads of sellers who’re reluctant to get in,” Doyle said. Not only do they worry their home may not sell, but they’re hesitant to “surrender the low-cost money that they borrowed for that house” and take care of higher rates of interest, he said.
Poulsbo broker Frank Wilson had advice for potential sellers seeking to price their home right. “What your neighbor’s house sold for six months ago has little or no bearing on your own home’s value today,” Wilson, a John L. Scott broker, said in an announcement.
As sellers get more eager, buyers are gaining leverage, but they proceed to take hits to their budgets.
Nationally, it now takes about 39% of median household income to cover the monthly payment on a mean home, the very best share since 1984, in response to Black Knight, a mortgage data company. In Seattle, it took 50% of median income as of September.
The monthly payment for a typical home within the Seattle metro area is now greater than $4,000 a month, 71.5% higher than a 12 months ago, in response to Zillow.
“That’s putting loads of households ready where there’s no way they will afford a mortgage. You can’t apply and get qualified,” Bachaud said. “So we’re going to see demand pulling way back in consequence.”