Seattle Real Estate Market Update | February 2022

January’s stats are showing that Seattle is still lagging behind King & Snohomish County as a whole when it comes to competitiveness, but we might see it ramp up in the future, due to Seattle becoming more affordable comparatively. We are seeing an average number of homes available, but homes are selling very fast, and there are way more buyers than sellers! Going into 2022, we are continuing a very hot Seller’s market and it looks to continue that way for now.

Video Transcript

Hey y’all. Zach McDonald, your real estate agent with Real Property Associates. And this is my Seattle real estate market update for February 2022. Well, 2022 has started off just like I expected, and that means that there have been very few new houses coming on the market. And when we look over the data, we’re going to see that in January. I do think though, as we head into February and the rest of 2022, we’re going to start to see more and more homes coming on the market. So good news for buyers. I think things will start to loosen up a little bit, but right now, we are in a place where we’ve never been before. Before we jump into the stats, I want to share a client story here. And this month we are going to feature one of our clients, Nick Lovato. He’s an awesome client and repeat client.

We got to help him sell his house in West Seattle last month. And this month, he’s working on purchasing a house in Des Moines. So, really excited to get to work with Nick again. He’s somebody who we helped purchase this house that he had in West Seattle, helped him sell it now, and now he’s buying another one. So, it’s just fun to get to work with clients again and to go through that process and have that level of familiarity. And it’s also great to meet and work with new clients. So if you find yourself watching this video and you get a lot of value out of it and you want to connect and talk about your individual situation, please feel free to reach out.

All right, let’s talk about the stats because I know that’s why many of you are here and why you love this channel. And as we talk about the stats here, I mentioned earlier in the video that we’ve never been here before. And what I mean is, in January, starting the year, we’ve never had so few houses on the market to sell in the Seattle market. And that dates back as far as I can see in the MLS. And right now we find ourselves in a situation where there are about a normal amount of houses coming on the market, a little bit less, but about normal. We just have so many more buyers out in the market than there are houses and that’s the big challenge right now. So as we look at some of these stats, just keep in mind, this is unprecedented for us in a lot of different ways, the prices are unprecedented, and a lot of the other numbers we’ll be talking about are unprecedented in our market and in other markets.

And we’ll start with the median sales price. And this is what’s not going to be a shocker, I don’t think, as we’ve been talking about the Seattle market. And if you’ve been watching these videos, you might expect this. The median sales price in Seattle is actually slightly down, 0.6% down, so about the same as it was to start 2021. And that median sales price, 775. So we talked about in these videos over the last year, that Seattle itself is just not keeping pace with the rest of the area. And we’ll be talking about Bellevue here as well because I’ve added Bellevue into these markets. I think it’s important to give the context, right?

And when we’re talking in these videos, we’re talking specifically about the big cities, because that’s what people are thinking about, but all the suburbs feed off of this. So many of the suburbs on the north end and on the east side and some on the south end are more modeling what Bellevue’s doing and not necessarily prices, but as far as growth, versus Seattle. And if we look at Bellevue’s prices, Bellevue’s median sales price last month was $1,712,500, which is up 16.1%. So a lot of the rest of the area and region is up similar to Bellevue, in some places, even more, but Seattle really stayed about the same. And I think some of the things that we’ve talked about previously have been the fact that people are looking for different types of houses, maybe bigger yards, a little bit more space, something a little bit newer.

And that usually includes maybe an office space or an additional bedroom that could be an office, maybe additional space to just hang out in the house, right? A bigger house usually has more living spaces, or at least larger living spaces, and again, just a little bit more friendly to a stay at home environment. So I think those are some of the reasons. Seattle itself, I think this year, a prediction is that it will grow and continue to, maybe this year, keep up or be closer to keeping up. I think other people are now thinking about Seattle again. And because Seattle’s prices haven’t climbed as much, now it becomes a little bit more desirable, right? Well, maybe I will sacrifice on some of these things because it’s cheaper to buy in Seattle again. So, it’ll be interesting to see how the year plays out, but I do think that prices in Seattle itself will actually grow at a faster rate this year than last year, but maybe that’s not a hard prediction to make.

As we’re talking about median sales price, I think it’s important to talk about a few of these other statistics, and we’ll pair them together. As we’re considering median sales price, I think it’s important to consider a few other stats at the same time. I think the first one is how much over-asking price do I need to pay? Right? I get asked that quite all the time. This is what the list price is. What’s the house going to sell for? And it’s an impossible question to answer, but as we look at the data, in Bellevue, we’re seeing the average house is selling 20.8% over asking price. That’s an average. Okay? So some of the houses are selling quite a bit more. Some are selling on the lower side. From experience, I’ve been seeing a lot more on the higher side of this, right? And it really just depends on the house. In Seattle though, 2.8% on average.

So across Seattle, some neighborhoods or certain pockets are going to be more competitive. Maybe the townhouse that counts as residential is going to pull this down. Usually there’s not quite as much competition on the own townhouses, specifically the new ones, because there’s a lot of supply, right? There’s multiple coming in at the same spot at the same time. And some of the single family houses, the older houses, are actually getting more of the competition just because there aren’t as many of those as there are some of the newer townhouses. I think median days on market, it’s also really important to talk about here in Seattle, we had seven days on market median days, but 22 average. So there’s quite a big range on that scale. Bellevue, five days on market. 11 days for the average. So a little bit tighter, right? Still a big jump.

There are some house that sit, surprisingly. But the biggest reason a house is sitting right now, number one is, it’s just overpriced. Okay? Everything that we’re seeing, people are experiencing these multiple offer situations. And so when there are certain houses that are just sitting and sitting and sitting on the market, and it’s funny to say that two or three weeks is sitting on the market, but it does kind of feel like that. If you have an offer review date, which many people are using as a tactic, and you’re not getting offers, on the listing side, it feels like, “Oh man, did I screw something up?” And that doesn’t necessarily mean that’s the case, but I think a lot of houses are getting multiple offers and they’re selling fairly quickly. So I think if you’re pushing the price a little bit, you might be sitting on the market and you might not be getting the peak price.

You’re definitely not getting 20% over asking if your house is the one in Bellevue on the market for 11 days. So I think there’s some tactics and processes to getting this type of a jump on the price and some of the better terms that come along with it. I mentioned previously that we’ve had quite a bit fewer listings coming on the market, and year over year, that’s true. We had about 29% fewer homes come on the market in Seattle, and about 12% fewer in Bellevue. But really if we look back at historical data, the amount of homes that have come on the market in Seattle and Bellevue this year is about normal. Maybe just slightly below normal, but about normal. Last year, we actually saw larger numbers of homes coming on the market. And I think a lot of that was because people had waited to list their homes and now they were listing their homes.

So we just had a lot more houses selling in November, December, January last year, in 2021, than we normally do. So, I think the data’s a little skewed, but if we look back at historical averages, again, about normal. The last time… When we look back at 2018 and I want to talk about 2018 in this video, because I think the transition in from 2017 to 18 is the closest that we have to anything that we’ve experienced in this market, at least in the last 10, 15 years. And I think right now, we actually have fewer homes on the market at the beginning of 2022 than we did in 2018. And 2018, the first part of 2018, was the hottest our market had ever been previously. And we’re definitely experiencing that, plus some, right now. And if we look at the amount of homes for sale, we have about 0.2 months of supply in Seattle and Bellevue, right?

And again, in a lot of the surrounding suburbs, we have even less. A lot of them have 0.1 months, which pretty much just means there are no houses available. You might see two or three or four come up, and then they’re all gone. You might see another couple come up and they’re gone. So everything’s selling super quick. And that translates to the amount of homes that are currently for sale. So, I mentioned that the amount of new listings is similar, but it’s quite a bit different when we look at the amount of homes for sale. So as we head into February here, the amount of homes for sale, we had only 193 homes in all of Seattle that were currently for sale, right? Heading into the month, I think most of these are probably already pending, based on the way the math works.

And in Bellevue, we had 19. Okay? Pretty significant. About 66.9% down in Seattle and 47.2% down in Bellevue. So just a lot less houses for sale, which means people are snapping up what’s available. And if we look back at 2018, I mentioned, it was tight in 2018, right? We add all this momentum from 2017, headed into 2018. The market was the hottest it’s ever been. We had 349 houses in Seattle for sale. Only 193 this year. 72 in Bellevue in 2018, 19 this year. So huge, huge drop off, even from what was a super low inventory market, super hot market. So, fascinating as we’re looking at what’s going to happen here in 2022. Let’s throw one more statistic into the mix here, because I think it’s important to talk about net’s interest rates. So if we look at Freddie Mac’s primary market survey, they do this every single week where they’re surveying different mortgage institutions across the country, coming up with what the average rate is for the week. For the 30 year fixed mortgage, we saw 3.55%. And that was as of 02/03, so a little bit earlier in the week.

But if we look back at the most recent survey, we’ve seen rates remain about the same for the past few weeks. That’s significant because we saw quite a bit of a jump as we jumped into 2022. Now, we ended 2021 just over 3%, and now we’ve jumped up into the mid threes. So there’s been a lot of people like, “Oh my gosh, my payments are being impacted.” I have some clients that are talking about, “Hey, how does this affect my monthly payment in my budget?” Right? “Do I want to adjust my budget down at all?” So I think right now, people are starting to ask, “Well, what happens if rates keep going up?” And I’ve been getting this question for a while. There’s been people predicting rates are going to go up a bunch.

I don’t necessarily agree that rates are going to be like 5% by the end of the year, but I think there’s fear around that. If we look back to 2018, I was talking about 2018 in this video, rates did jump up close to 5% and there was a noticeable drop in home prices for about eight months in a row when we saw rates get up into that 4.5 to 5% range. And it took a little while for that to go back down, right? So there was a peak, and then they came back down again. And at that point, people were either priced out of some of the higher priced homes, or if they were barely able to qualify, they couldn’t buy, I think people are also a little bit nervous. Like, “What’s going to happen to housing market? Home prices are going backwards.”

And usually people, when they see prices going down, they pause, right? And they don’t buy. I think the people that did buy feel like geniuses now. Same thing with the stock market. But I think most people will pause when things get bad and buy when it’s good, but not buy when it’s bad. And if we look back at 2018, that’s the last time we saw home prices go back for a couple quarters in a row, right? It was a recession. I think the one that stands biggest in our mind or the one that stands the most is the great recession which we had in that 2008 to 2012 window where people are like, “Oh my gosh, the world’s going to fall apart.” And housing prices really did tank. So, I think we already had one in 2018, so people are like, “Well, what’s going to happen if prices correct a little bit or the market adjusts a little bit?”

I think we’re probably more in store for something like that than we are something catastrophic. But if we’re looking at interest rates and we’re using that as a metric, I think the biggest thing we can take away from interest rates is the amount of people that are interested in buying or able to buy. So back in 2016, rates were about where they’re at now. And then they slowly went up into 2017. And then they dipped a little bit. And then they actually started climbing into the low four’s, even to the mid four’s in 2018, and we were still seeing a lot of buyer activity, but it started to taper off in that zone. So I don’t know if there’s something magical about that four and a half percent. I think it just, the higher you get, the fewer people are able to buy.

And right now, we’re still in that three and a half percent range and a lot of people are still able to buy, so we haven’t really seen much of an impact of rates going up, aside from people being inconvenienced or a little bit frustrated that they didn’t get a 2.73% interest rate like they could have last year. But at this point, we’re still in record low type of numbers. But if we get up into those mid four’s to upper four’s, I think we might see a little bit of an adjustment, or at least a flattening of the market. Okay. So, we talked about a lot of stats here and we always do that in these updates because I think there’s some value in looking at the numbers, but what does it all mean? Right? I think for a seller, right now, you have the highest prices that you you’ve ever had pretty much anywhere in the area.

And as we head into the spring market, you’re also kind of hitting the ideal timing. Most people want to sell their house in the spring, early summer around here because it’s beautiful, the most amount of people are looking, we still have great rates, and you have a ton and ton of buyer activity. So I think if you’re a seller and you’ve been thinking about downsizing or relocating, or heck, you just want to sell and capitalize on the fact that you’ve got a lot of equity in your house and prices are in an all time high, I think you’re in a sweet spot right now. And I mentioned that about the same time last year, I thought we’re going to hit kind of our all time highs, we’re going to have a great year selling houses, and we did. I just think this year, you’re going to be getting even more for your house, and you might not get what we’re going to get this year over the next few years.

So, I think for sellers, this is definitely a time to think about and consider selling if you’ve been thinking about it and maybe take action on that. For buyers, I think this is just a time to really pay attention. So, if you’re somebody who wants to buy a house in 2022, let’s do it. I don’t think it’s a bad year to buy a house. I think it’s really hard to time the market. Okay? Even for sellers, if they sold last year, they were selling at all time highs, and now we’re even higher than that. And if they sell this year, it’s possible than in two or three or four years, they could have gotten a lot more money for their house. So it’s really hard to just perfectly time things. But I think if you’re a buyer, you want to have a little bit more of a longer term horizon.

So, I told people in the 2018, 2019 realm, and I’m going to give the same advice now, I think as a buyer, you need to have a little bit more perspective. So, if you want to buy a house and flip it in a year or move or relocate in a year or two, I don’t really think it makes sense to buy a house right now. I don’t, because you’ve got so much kind of on the line. Home prices are at all time highs, interest rates are starting to rise, so I think there’s things that would cause me to be a little cautious. If you plan to live here though and plant roots for the next five to seven years, and you’re thinking, “Yeah, I want to be here for a while,” then I don’t see any reason not to buy a house. Even the great recession didn’t last more time than that.

So, I would be less concerned about what’s going to happen in market in the next couple years if I had a longer horizon. So for me, investing is all about having a longer term horizon. I don’t buy into the stock market thinking, “Man, I’m going to sell my stocks tomorrow.” And I don’t want to do that in the housing market either. So if you’re a buyer, I think you want to be wise. I think if you want to buy a house this year, great. I think it’s a great goal. I just think we need to be tactical about it. So, if you’re thinking about buying a house in 2022 and you want to talk about your situation, you want to talk about the fact that interest rates are starting to climb up and you want to see how that applies to you and also what that might do to prices, if you’re a seller and you’re thinking, “Man, I think I might want to sell this here and take advantage of that,” I’d be happy to be a resource for you.