The Seattle-area housing market is dragging. Here’s why

The Seattle-area housing market remained torpid in November, as excessive rates of interest converged with the sometimes sluggish season. House costs have been basically flat in comparison with the earlier month and few new properties hit the market.

The median single-family house in King County offered for $885,500 in November, roughly the identical as a month earlier. Even so, that value climbed 7% from a 12 months earlier, in line with information the Northwest A number of Itemizing Service launched Wednesday. Median house costs reached about $725,000 in Snohomish County, up 4% from a 12 months in the past; $540,000 in Pierce County, up 3%; and $550,000 in Kitsap County, up 9%. 

Sellers listed fewer properties in all 4 counties, with new listings in King County down 29% from October and 11% from the identical time a 12 months in the past. The Seattle space recorded one of many greatest year-over-year drops in new listings within the U.S. final month, in line with Redfin. Solely Atlanta recorded a sharper drop, and San Francisco tied with Seattle.  

Fewer properties meant fewer gross sales. The variety of pending gross sales was down all throughout the area in November, notably in Kitsap and Pierce counties, the place gross sales have been down by double-digit percentages from a 12 months earlier.

Many would-be sellers have been holding off for months, nervous about affording their subsequent house at right now’s mortgage charges. 

“The move-up purchaser is parked … They’re not going to depart a 2.5% [or] 3% rate of interest to leap in,” mentioned Bellevue Windermere agent Kelly Sublett.

The availability of properties on the market is prone to get even slimmer as winter arrives and householders hunker down for the vacations, Sublett mentioned. “Stock, which was already low, is dwindling even decrease.”

Patrons going through pricey mortgage charges are sitting nonetheless, too. That’s very true for first-time consumers who’re hit notably laborious by excessive charges.

“Everyone is sitting on the fence simply ready. I’ve so many consumers who won’t purchase proper now as a result of they only can’t,” mentioned Poulsbo John L. Scott agent Lisa Diehl.

Many, she mentioned, are “ready for that rate of interest to only dip just a little.”

Mortgage charges stay excessive, however have begun to ease barely.

The typical 30-year fixed-rate mortgage carried a 7.2% price final week, down from 7.8% in late October. “The present trajectory of charges is an encouraging growth for potential homebuyers,” mentioned Freddie Mac’s chief economist Sam Khater in a press release. 

However charges are nonetheless increased than a 12 months in the past, once they averaged 6.5%, and much increased than the ultralow 2.5% and three% charges consumers secured early within the pandemic. Larger charges erode consumers’ budgets by driving up their month-to-month funds. For many consumers within the Seattle space, house costs haven’t declined sufficient to offset increased charges. 

Everywhere in the nation, excessive mortgage charges throttled the market this 12 months, slowing down house gross sales and main fewer individuals to take out mortgages. 

Given present charges, “the buying energy of potential consumers stays stunted relative to some brief years in the past,” Mason Virant, affiliate director of the Washington Middle for Actual Property Analysis on the College of Washington, mentioned in a press release.

Though consumers are discovering fewer new properties available on the market in and round Seattle, many properties on the market are lingering longer earlier than they promote than on the top of the market frenzy a few years in the past. 

The itemizing service estimates it could take between six and 7 weeks to promote all of the single-family properties on the market in King County, given present demand. That dynamic is a bit tighter than a 12 months in the past, when it could have taken about two months, however presents consumers extra respiratory room than in November 2021, when it could have taken lower than two weeks.  

Greater than half of single-family properties and condos listed in October within the Seattle space didn’t go pending inside 30 days of itemizing, in line with John L. Scott.

In a slower market, some builders and residential sellers are scrambling for brand spanking new methods to entice consumers. 

A luxurious Alki condominium constructing introduced in late November it could reduce costs by as much as 20% for the subsequent six consumers if the consumers are underneath contract earlier than the tip of the 12 months and shut by Jan. 31, amongst different perks.

“It’s an indication of the instances for builders proper now, however we have to do what it takes to satisfy the market,” James Wong, CEO of the venture’s developer Vibrant Cities, mentioned in a press release. 

Some brokers count on the market to choose up after the brand new 12 months. 

Whereas potential consumers could stroll into an open home at the moment of 12 months, “quite a lot of them particularly say, ‘I’m going to attend till January,’” Sublett mentioned.

The latest half-point drop in mortgage charges has already pulled some house customers again to the market, mentioned Crystal Hill, a Keller Williams agent with Chill Properties in North Seattle.

“I’ve undoubtedly observed an uptick,” Hill mentioned.

If charges proceed to drop and extra householders determine to promote, “come spring, we’re going to have a reasonably boppin’ time,” Hill mentioned.

However affording a house received’t get a lot simpler for these hopeful consumers on a decent funds, notably if a drop in charges boosts demand and pushes costs up. 

“The younger people are going to actually wrestle,” Diehl mentioned. “In the event that they’re shopping for, they’re getting much less of a house and in worse situation … That’s the fact of the market now”

Hill advises cash-strapped customers to make an “adjustment in your expectations” and search for different neighborhoods or smaller properties as a beginning place.