Is the real estate market still declining or have we hit the bottom? How will we know?

Is King County’s real estate market still in decline, or has it finally hit rock bottom? How would we know? What are the leading indicators of a market that’s on the rebound? So many questions and so much media press around it, many with conflicting information.

Seattle’s housing market has a higher median home average, even when compared to the rest of the country. Still, many local and regional outlets have reported a steady decline in home values for the past few months. In early January, the Seattle Times quoted Daryl Fairweather, chief economist for Redfin, saying that prices could plummet up to 10%, far outpacing the national average. By contrast, the real estate experts at Windermere expect prices to fall a little more than 5% in 2023.

It’s not just regional outlets reporting on a market in decline. At the beginning of February, US News reported that new home permits fell sharply by a precipitous 36% last year, indicating a market that’s rapidly stagnating.

While these predictions indicate doom and gloom for Seattle’s real estate market, realtors and sellers take heart: our own internal stats paint a far rosier picture.

A Different Take

As real estate professionals, we keep our thumb on the pulse of Seattle’s housing market. While news outlets may say that property prices are still in decline, we have a different take. Those prices have bottomed out, but they’re also on the rebound. Let’s look at Seattle’s housing market using some boots-on-the-ground metrics as a baseline.

While it’s true that you may see some homes retailing for less when compared to last year’s prices, you have to situate numbers like that within the correct context. Take the city’s Eastside, for example. The median sale price of a home decreased from last January’s figure of $1,515,000 to $1,320,000 this year. What’s important to note is that the figure is up from its all-time low of $1,299,000 in December. All things considered, it might not seem like a big difference, but it does signify the end of 2022 as the Seattle market’s lowest point. Further supporting that idea is that as of this January, 8% of all homes sold went for at least 3% over their list price.

Another leading indicator is the average median sale price across the entirety of the greater Seattle metropolitan area. This time last year, the average house sold for approximately $790,000. In 2023, the average sale price increased to $803,750, signaling upward momentum.

To truly understand the direction that the market is headed, let’s take a look at some of the stats. So far this year, 17% of all homes have sold for at least their list price. Additionally, 13% of all homes sold for at least 2% more than their asking price. Results like this show increased health and vivacity in the city’s real estate market.

The Return to a Competitive Market

So, what’s the bottom line? What does this data actually demonstrate? It signals that we’ve hit rock bottom, and the market is officially on the rebound. While the overall housing market might not be as robust or hectic as it previously was during the past two Spring selling seasons, the momentum has shifted in a positive direction. Here’s what to expect going forward.

The truth, for good or bad, is that interest rates will continue to propel the market forward. As we all know, the United States has been flirting with recession for some time now. Major companies, especially tech-based firms like Amazon and Microsoft in the Seattle and Bellevue area, have all announced major layoffs. These do have impacts on the local market, but often not in the same way that the media is spinning.

Inventory will also play a key role. According to MYNorthwest, housing inventory is still more than 30% below pre-COVID numbers. This factor alone will continue to drive housing prices skyward in the interim. The only thing that may offset the market’s growth is the diminishing level of job security cited above. We may very well see the market increase and then balance based on consumers’ general reluctance to buy. But that’s a bridge we’ll cross when we get to it.

Navigating Seattle’s Housing Market

The world of real estate, especially in the greater Seattle area, has been an ever-changing climate over the last 6+ months. Even with the numbers being different from the past couple of years, the market’s future looks bright for both buyers and sellers. Unsure how to navigate its changing waters? Reach out so we can chat about any questions you may have.

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Amy Alpeza Real Estate