The Washington real estate landscape witnessed robust activity recently, marked by a 2% year-over-year increase in the median home sale price, soaring from $590,100 to $602,100 in September.
The Washington real estate landscape witnessed robust activity recently, marked by a 2% year-over-year increase in the median home sale price, soaring from $590,100 to $602,100 in September. Concurrently, the number of homes listed on the market dwindled by 21% year-over-year, dropping from 29,461 to approximately 23,262 homes, resulting in a mere 2 months' supply. This scarcity prompts the question: Is Washington currently a seller's market? A closer examination reveals varying trends across the state, with Vancouver experiencing a 4.34% year-over-year increase in median sale prices, while certain areas like Seattle and Tacoma observed price declines.
Despite interest rates reaching record highs and a diminished pool of homebuyers, the scant inventory led to 30.2% of homes selling above the listed price. For prospective homebuyers, the current scenario presents an opportunity to circumvent bidding wars and secure seller concessions by making a purchase now. Although the 8.5% interest rate and mortgage payments are substantial, the likelihood of rates decreasing in the near future is slim, making potential refinancing a consideration.
Conversely, for home sellers, the existing scarcity of homes in Washington positions the market in favor of sellers. Homes listed on the Multiple Listing Service (MLS) not only sell faster but also command prices 17.5% higher than those not on MLS.
The prevailing statistics in the Washington real estate market align with the national trend of high demand and low supply. Despite robust housing demand, actual home sales witnessed a decline, possibly attributed to the 8% mortgage rate, a two-decade high reached in September 2023. Home values in Washington surged by 43.78% over the last five years, yet September 2023 saw a 27.5% year-over-year decrease in home sales. The market's bearish sentiment is attributed to the insufficient property inventory in the Evergreen State.
With a mere 2 months of supply, Washington is unequivocally a seller's market. Therefore, if considering selling a property in Washington, the current circumstances suggest that now is an opportune time to list it on MLS.
Average median home prices in Washington stand at $602,100, reflecting a 2% year-over-year increase. Projections for 2024 anticipate a marginal continued increase due to the state's tight inventory. The sale-to-list price ratio stands at 99.60%, marking a 0.7 percentage point year-over-year increase compared to September 2022.
Examining home sales data for September 2023 reveals a significant 27.5% year-over-year decrease, with only 7,191 homes sold compared to 9,919 in September 2022. Average rental prices vary across the state, with tenants in Vancouver paying $1,746 on average, while those in Seattle pay $2,260.
The median days on the market for homes for sale rose by 6 days year-over-year, reaching 19 days. Pending sales indicate a 21% year-over-year decline in the number of homes for sale compared to 2022, with approximately 23,000 homes currently available in Washington. The persistently low supply, evident in the 2 months of supply metric, characterizes Washington's housing market as more challenging than the national average.
Predictions for the Washington housing market in 2024 anticipate a return of home sellers who abstained in 2023, driven by factors such as new job opportunities or a desire to relocate to more affordable locales. Analysts, including Whitney, who accurately predicted the 2008 financial crisis, foresee the addition of up to 30 million housing units as baby boomers look to downsize.
Although mortgage interest rates surged to 7.79% in October 2023, the highest in 23 years, subsequent adjustments saw a drop to 7.35% in November. Forecasts for the second half of 2024 suggest stabilization above 6%, following the softening labor market and a slowing economy.
Anticipated shifts in 2024 include a rise in the number of home buyers as historically high interest rates recede, fostering renewed interest in the market. The trajectory of rising home prices is expected to persist until the supply-demand imbalance undergoes a substantial change.
Rise in New Home Construction Sales: According to the Washington Building Permits Survey, there has been a 12.8% increase, with 20,454 new private housing units authorized in comparison to 2022. The high demand in Washington's housing market is attributed to factors such as a growing population, a low unemployment rate, and a reduced housing inventory.
iBuyers Offering Lower Prices: iBuyers, who offered 104.1% of market value in 2021, decreased their offers to 86% in 2022 and approximately 70% in 2023. Notably, major iBuyers like Opendoor and Offerpad faced substantial losses in 2023 and are expected to continue making lowball offers as they navigate financial challenges.
Shift in Buyer Broker Commissions: A surprising development occurred with a jury in Missouri awarding over $5 billion in damages to the Sitzer-Burnett plaintiffs. This led to nationwide grievances against the National Association of Realtors' (NAR) Cooperative Compensation Rule. Lawsuits, including Moehrl, Gibson, Batton, Nosalek, and Batton 2, challenge the rule, accusing NAR and top real estate companies of collusion to maintain high agent commissions. While the potential obsolescence of buyer agents by 2025 is speculative, the expectation for 2024 is that buyer agents may be open to negotiating commissions.
Housing Market Stability in Washington: Despite concerns about a housing market crash, such an event is deemed unlikely in the Evergreen State. Washington's robust economy, with a median household income of $84,247 (above the national average by $6,000), continues to attract businesses and individuals. Cities like Redmond, home to major corporations like Microsoft and Nintendo of America, experience significant population growth. The state's job market remains strong, with a 3.8% unemployment rate and a 4.6% increase in private-sector employment over the past 12 months. Favorable tax policies, combined with the state's affordability, natural beauty, and recreational opportunities, are expected to draw in homebuyers in 2024.
Market Outlook for 2024: The real estate market in 2024 is anticipated to be favorable for both sellers and buyers. Home prices in Washington are on an upward trajectory and are expected to continue rising until there is a significant shift in the supply-demand dynamics.
In September 2023, the inventory of available houses for sale in Washington stood at a mere 23,262. This limited supply falls short of meeting the high demand from potential homebuyers, making the current period an opportune time for selling a house in Washington. Following a drop in mortgage rates from a two-decade peak of 8% to 7.35% in November, there was an increase in new listings. This indicates a shift as homeowners who were hesitant due to locked mortgage rates are gradually adapting to the new 7% rates. With Spring 2024 approaching, it is anticipated that more homeowners will follow suit and list their properties on the Washington Multiple Listing Service (MLS).
As the number of home listings in Washington rises, individuals who had been holding back on entering the market are expected to return. A recent surge in mortgage applications suggests a resurgence of buyers. Those who struggled to find affordable homes in 2023 are also projected to resume their home search in 2024. This surge in demand for Washington houses is likely to empower sellers and potentially allow them to dominate the market.
However, the increased competition will come from new constructions, as home builders successfully attracted buyers with mortgage buydowns totaling $30,000 in 2023. Builders are expected to continue offering concessions in 2024, potentially sparking competition between them and traditional home sellers. The market is expected to see a influx of new construction listings, properties from baby boomers looking to downsize, and homes from sellers in urgent need. Consequently, the overall properties available for sale in Washington are expected to rise. Whether one is in search of a condo in Independence City or a co-op in Jackson, the upcoming spring is anticipated to offer a variety of options to find a dream home.
For those looking for a new home, My Puget Sound Homes provides access to thousands of property listings. It's important to note that the information in this article is for informational purposes only and should not be considered an offer, solicitation, or advice. My Puget Sound Homes does not offer legal or financial advice, and the views expressed in the article are those of the author, not necessarily reflecting the views of My Puget Sound Homes, its affiliates, or employees. The author does not guarantee the accuracy or completeness of the information and does not recommend using it as the sole basis for investment decisions.
