Seattle Market Update June 2022

Listings are experiencing price cuts! Homes are sitting on the market past a week! What does all of this mean? In this video, I talk about the latest Seattle real estate stats and market conditions.

VIDEO TRANSCRIPT
Hey, you all, Zach McDonald, your real estate agent with Real Property Associates, and this is my Seattle real estate market update for June 2022. Can you say price reduction? That’s been the theme of the past few weeks in the Seattle and Bellevue real estate markets, and I think a theme that we’ll see here as we head into the summer months. It is typical that we see home prices stall out a little bit as more inventory comes on the market. May and June are typically the months in the year where we see the highest median sales price. So, if it’s not this month, it will be most likely next month. But typically, in a given year, we’ll see more houses coming on the market in the spring, and into the summer, a little less demand. And then we see prices flatten out or even go backwards a little bit as we try to figure out where the average person wants to pay for a house, versus those ones that really just want to buy a house in the spring when inventory is low.

So, right now, we are starting to see price reductions. And I think that’s important just to talk about now, because the market has been shifting over the last few months. And I’ve talked about in my videos, how I don’t think we’re going to see some kind of cataclysmic correction in the housing market, or prices are cut in half, and home values are gone, and everybody’s got negative equity, but I do think we’re seeing what we historically see in a given year, that the market’s slowing down a little bit. And I think it’ll be a little bit more pronounced here with interest rates being a little bit higher. I think what’s happened is demand has slowed down a little bit. And we’ll talk about some of the stats here as we go through, because I don’t think what we’re seeing right now is showing a massive amount of new homes on the market.

I don’t think what we’re experiencing is pointing to a massive fallout in prices, but I do think what we’re seeing is a little bit less demand because of those higher interest rates right now. So, we’ll talk a little bit more about that as we head into the rest of the update. Well, before we jump into the update, I want to share some good news. We had a client who reached out to us a few months back after watching and following this YouTube channel, and then receiving one of our just listed, just sold postcards nearby his house. And it sold. We got it sold. We had a listing in Kenmore here about a month ago and we put it on just as the market was starting to shift, and we ended up getting them a great price for the house. It did get one offer. So, we’ve been talking about the multiple offers.

We ended up getting one really solid offer and closing within a month. So, I’m really excited for them. This listing was one of my favorites to market, just super gorgeous house, really great remodel done, mainly by them, which is pretty cool. So, the couples both walking away with some pretty good equity and money in their pocket as a result of the sale. I’m really excited for them, and also just super grateful to get to work with another person from the YouTube community. Now it’s time for the Seattle and Bellevue real estate market stats, because I know that’s what lots of you want to talk about, and that’s why you continue to follow this channel, because we talk about the stats. So, if you haven’t subscribed yet and this is your first time, or maybe you’ve watched a few of these videos, but haven’t subscribed to the channel yet, please pause and go ahead and get that done right now.

The median sales price in Seattle last month was $995,000, which is 11.4% up year over year, and pretty much flat from last month at $997,000. So, Seattle’s price leveled off this month. Bellevue’s median sales price was up slightly from last month, but still down quite a bit from April’s number, or excuse me, from March’s number, at a over $2 million median sales price. And last month, Bellevue’s median sales price was $1,850,000, so still up 15.6% year over year. And last year, in these videos, we were hearing huge numbers up year over year. We’re hearing 20s and 25% most of last year. I think this year we’re going to be seeing this 10 to 15% trend through the rest of the year. It might even be a little bit less as we trickle towards the fall, where we had prices skyrocketing last fall and into the winter.

I think what we’re going to see is just a lot less of the craziness that we’ve been experiencing over the past few years with lots of multiple offers, way, way, way over asking price. We’ve seen this before multiple times in our market, where it’s really low inventory and we have tons of offers and we see houses selling way over asking price, and it was even more so than ever. But I think what we’re going to see this next year or so, year or two years, is going to just be a little bit more of a, I’m not going to call it a normal market because across the country, it’s still going to look really competitive. But I think we’ll just see some houses selling with multiple offers, some houses not, some houses getting a price reduction. We talked about that at the beginning of the video. So, I think we’re going to see that trend here as interest rates remain high.

I think what’s really happened is demand’s just been tapered a little bit. There’s still a lot of buyers, lots of houses going under contract, and we’ll talk about some of that here right now. So, outside of the interest rates, which I mentioned are a little bit higher right now, the interest rates, by the way, Freddie Mac’s primary market survey, which they do every week of lenders across the country, 5.09% for 30 year fixed was their average. And then bank rate was 5.46 for their average. So, this is still an environment where rates are higher, but they’re actually down slightly from where they were earlier in the year. So, we still are in this higher rate environment, at least what people are used to. Right rates are not at all time highs. They just feel dramatically higher, and it does affect affordability quite a bit, and especially as we’ve seen so much growth here over the past few years. So, rates are a little bit higher, but some of the things that we’re looking at outside of rates are what’s happening with new listings?

How many listings are coming off the market? I think there’s a pretty basic way to see, okay, what’s the supply and demand look like? How can we project that forward? Let’s take a stat like average percentage of list price, which is one that people like to hear about, how much over asking price your house is selling. And in Seattle last month, 10% over asking price on average for a house. And in Bellevue, 10.2% over asking price on average. And Seattle’s actually up a little bit from last year, two percentage points, and Bellevue down two percentage points from the previous year. But if we look at that stat, that stat’s influenced by supply and demand. How many people are there in the market that are looking for houses, and how many houses are there available? Let’s look at the new listing numbers here. So, in Seattle, we saw a 10.7% decrease in new listings and 19.2% decrease in pendings.

So, we didn’t have quite as many pending sales, but we had quite a few less new listings as well. In Bellevue, we saw almost twice as many new listings. So, 137 listings in Bellevue last year. In May, 205 in May this year. So, considerably more, which again, is putting downward pressure on the prices. You don’t see as much competition when there’s more houses. And pending sales in Bellevue were down slightly, 121. So, we saw a lot more new listings in Bellevue than we did pending sales. And as we look at the rest of this, that’s going to affect how many houses are currently on the market, what the supply number looks like. And that’s going to have a direct correlation with how much competition there is and how much people are willing to pay for their houses. As I mentioned earlier, there were fewer houses for sale in Seattle at the end of the month, 12.3% fewer houses for sale and available than there were last year.

So, this number’s actually going down in Seattle. But in Bellevue, the number’s been going up. So, 59.2% more houses available to purchase in Bellevue than there were in Seattle, which is why we’re seeing the supply numbers increasing 200% in Bellevue. So, last year, 0.6 months of supply in May. And this year, 1.2 months of supply in Bellevue. So, there’s definitely some more houses on the market in Bellevue. But if we look at Seattle, it’s the same, 0.7 months of supply, same supply numbers that we had last year.

And part of this is because I think in Seattle, we didn’t see as much of the craziness that we saw around the rest of King and Snohomish counties, which are the two counties that I service. And I think as we’re looking at the numbers, Seattle was a little bit insulated from that because people were looking in these other places. And now Seattle is, well, it’s staying the same. There’s still that same demand to be in Seattle. But in some of these other places, there’s a little bit less demand than there has been, which is causing some of these numbers to be impacted. The application part here, I think is one piece that many of you want to hear right now. And people are asking me, “What’s happening to the market? What’s going to happen to the market.” And I just have to say, I don’t know. I don’t have a crystal ball, but what I can do is share some thoughts and that’s what I’m going to do because that’s what you want to hear.

And I think as I’m looking at the market and I’m thinking about the market right now, I’m seeing the weekly snapshot. So, as of the last seven days recording this video, it’s June 7th, filming this early in the month. So, at the beginning of June, most recent, we’ve had 1,172 new listings in King and Snohomish counties combined, and we’ve had 933 pendings. So, they’re still going off the market quickly. And 1,061 solds in the first week. So, lots of sales, lots of houses going off the market, lots of new listings. But again, it’s not like we have a ton more new listings than we have people purchasing.

But I think there’s one stat that I want to share that’s interesting, and that’s the list price reductions. So we had 1,172 new listings in King and Snohomish county. 600 price reductions. Okay. 600 price reductions. Now, why are we having price reductions? I think every year you have people, ah, the beginning of the year, trying to figure out what the market is. You got really low inventory, and this is just normal for us in the winter and into the spring. Again, this year was not normal. We had even less than we normally do. And you have all these new buyers starting to buy houses for the year. And you have the influx of millennial buyers, which has been a huge piece of why the market has been so hot recently. And then you have, huh, you have more houses coming on the market, and all of a sudden, there aren’t as many buyers trying to pay the premium that they were paying earlier in the year.

So, you have fewer buyers per house in the market. So, that ratio isn’t as high. And you also have this massive push, or at least this year we did, this massive increase in prices from the beginning of the year, or even the end of 2021, up until now. And the people getting the houses were the one or the two people out of 15 or 20 that were willing to pay that price. But then when it comes to pricing your house and you’re in May, you don’t really want to sell your house for what the list price was that your neighbor listed their house for in March. You want to get what they got. So, every year, you see this happen in the summertime where you start looking at, okay, the neighbors sold for this, the other neighbors sold for that, and the other neighbors sold for that.

But they all listed for, in our case, maybe 100, 150, $200,000 less than what the sales price was. And again, there were a couple buyers willing to pay those prices, but not all of the buyers. So, right now, we find ourselves in a situation where money’s not as cheap, interest rates are a little bit higher. It’s affecting affordability. There’s a little less of the, “Ooh, I got to get a house.” And so, we find ourselves pricing houses higher, and this is normal, again. And I think it’s wise too. If I’m a seller, I probably don’t want to sell my house for 20% less than what my neighbor got. Especially if three or four neighbors got similar prices. But what that means is, you got to play the normal old school real estate game, where it’s a more balanced market. You price it on the higher side of the value, and then you have to find that price with the buyers.

And so, that means there’s price reductions, and we’re seeing 600 price reductions. That’s a ton. We were hardly seeing any last year and at the beginning of the year. And everything just seemed to sell no matter what you priced it at. But what happens is buyers become a little bit more discerning. And the reason that we’re still seeing 10% over asking price in Seattle and Bellevue is because there are still some houses that everybody wants to buy, and certain neighborhoods that everybody wants to buy in. And those houses always are going to be like that. But then the rest of the houses, the average houses aren’t doing that. They’re pulling the average down. They’re maybe not selling even at asking price. They might be selling for 95% of asking price, or maybe the asking price is reduced before they sell for asking price. So, I think we’ve even had a few listings over the past couple weeks where we priced them higher, because as professionals, we don’t want our clients to get less money and there’s the risk.

Some sellers are willing to take the risk where they list their house for what their neighbors did and hope to get that multiple offer frenzy. But the reality is, it’s just not there right now, in general. So, unless you have one of those houses in one of those neighborhoods where you just know you’re going to have the activity, it makes a lot more sense to price on the higher side and hope to get closer to that number, versus trying to price low and hope for the big bang. I think these are a big reason why we’re not going to see a massive drop off in home values like we did between 2008 to ’12 here in the Seattle area. And number one, we just haven’t had enough houses built. And I think I got to make another video about this separately, but we haven’t had enough new construction over the past decade or more to keep up with the demand.

And it’s not like we’re going to be able to solve it overnight. So, if you have purchased a car recently or anything that’s back ordered, you know once you get into that supply issue where you don’t have enough supply, the only way to get enough is to not have any more demand, and catch up or over produce. But it’s really hard to over produce new construction. So, if you have over a decade of under production, it’s not like it just changes itself overnight. And you also have the millennial generation buying houses, and it’s the largest generation ever purchasing houses. So, you have all this new, fresh demand, not enough new construction over the past decade, not even enough to keep up with what was already going on. So, I think, especially in markets like ours here in the Seattle area, you just don’t have enough new construction.

In some places, they’ve been able to build a little bit easier, but we haven’t been building enough for the demand, and that’s why it’s already been a hot market and one of the hotter markets in the country. But what that does is it keeps more pressure on the resale properties, because there’s not enough new construction. So, do I think the sky’s falling? No. Do I think that we are going to see an adjustment in prices? Yes, we always do, every year, seasonally. I just think it’s going to be a little bit more pronounced this year. But if we look back at 2018 to ’19, when we saw the most recent adjustment in the housing market, we saw prices level off for a couple years. So, if we look back from May to May, from May 2017 to ’18, we saw prices jump a bunch.

And then from ’18 to ’19, and even to ’20, pretty much stayed about the same in King county and Snohomish county. And I’ll talk about that a little bit more in those updates. So, if you want to pay attention to those county updates, you can find some more information there and I’ll dive a little deeper into those numbers. But in reality, historically speaking, most of the time when you see these recessions, the housing market is more flat, and then it picks back up again when interest rates go back down. And in the most recent example, the one that sticks out in our mind, the housing market and the mortgage lending industry caused the crash, and that’s the reason it was so much more dramatic.

I hope this video was valuable for you and helpful for you. These are just some of the things that are going on in my mind that I’m personally thinking about, and talking about with people, and dialoging with them about, so I figured I’d capture it here for you, my audience here online. If you want to talk about your situation and how all of this might apply to you, I’d be happy to be a resource for you. Feel free to reach out to me. My contact information is down below this video, and also pretty much anywhere online if you Google Zach McDonald. And I just want to say thank you so much for your attention. I really value it, and I value all of you here who continue to follow along and support the channel. And if there’s any way that I can bring value to you or be a resource, I want to do that for you.