Unveiling Real Estate Market Insights
July 22, 2023
Despite higher interest rates, the inventory is INSUFFICIENT to meet the demand in the Seattle area. According to a recent forecast by Fannie Mae, the average 30-year fixed-rate mortgage could potentially reach 5.25% – 5.6% by the end of 2023, potentially enticing more buyers back into the market.
Based on the current trend, it appears that the Seattle real estate market is not headed for a crash. Although not as robust as in 2020, we are still in a Seller’s market, experiencing the usual buoyancy of the Spring season.
While no one possesses a crystal ball, armed with good data and analysis, we can effectively navigate the twists and turns of the real estate landscape. Here, I present data that I have generated from Northwest Multiple Listing Services. I have also generated a separate graph for New Construction and Resale homes so you can get accurate information on the SUPPLY and DEMAND in the Redmond, Bellevue, Kirkland, and Sammamish areas.
- SUPPLY – Newly listed homes: The number of newly listed RESALE homes was down by as much as -33.6%, while newly listed NEW CONSTRUCTION homes were up by +31.5% from June 2022.
- DEMAND – Price per sqft: The median price per sqft of RESALE HOME is down by as much as -11.1%, while NEW CONSTRUCTION homes price is up by +25.6% from June 2022.
Don’t forget to click on the graph below to view the INTERACTIVE GRAPH version.
An Insight into SUPPLY: NEWLY LISTED HOMES
The New Listing data serves as a pivotal metric to gauge the supply/inventory of homes for sale in a specific area. Nevertheless, remember that it is just one of several metrics pertaining to supply/inventory.
NEWLY LISTED RESALE HOMES
A notable decline is evident in the number of resale homes in the market compared to June of the previous year. Many homeowners opt NOT to sell their homes due to the allure of low-interest rates on their current mortgages.
The data reveal a substantial drop in the availability of previously-owned homes, particularly in the Redmond area where it dropped by -33.6%.
NEWLY LISTED NEW CONSTRUCTION HOMES
Builders appear to dominate the inventory of homes for sale in the area.
Inventory remains low compared to pre-pandemic levels.
A Metric of DEMAND: MEDIAN PRICE PER SQFT DATA
The price per square foot of homes stands as a valuable metric to gauge demand in the area. However, bear in mind that other factors can also influence the median price per square foot.
PRICE per SQFT of RESALE HOMES
In the Eastside area, the price per sqft for resale homes experienced a decrease, ranging by -6.7% to -11.1% compared to June 2022.
PRICE per SQFT of NEW CONSTRUCTION HOMES
A fascinating observation reveals that, in general, new construction homes have seen an increase in price per sqft compared to June last year.
However, the Bellevue area recorded a decline of -13%, while the Sammamish area witnessed a significant surge of +25.6%.
FINAL THOUGHTS:
While it is tempting not to do anything or just wait, it looks like the inventory in our area will remain to be tight and will continue to decrease in the near future. Anticipate a reduced inventory of new construction homes in the future due to the mounting challenges faced by builders, such as high construction costs, limited availability of land, and stringent zoning and environmental regulations.
The 5-year graph still shows the strong demand in the area as the price per sqft continues to rise.
The Federal Reserve is expected to continue raising interest rates to combat inflation, but if inflation starts to subside, the Fed may slow down or pause its rate hikes. In such a scenario, mortgage interest rates could see a decline. However, it’s essential to remember that this is merely a forecast, and actual rates may differ.
Is it a good time to buy right now? Yes, especially if you are planning to hold the property for the long term. There is also a good window of opportunity to finally get your DREAM home! This current real estate climate can definitely reward those decisive buyers because of the competitive programs that lenders are offering, builders’ incentives, and presale availability.
Let me know if you would like to have an in-depth conversation about this information or have a quick question. As always, I love to chat with you about our real estate climate 🙂
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