As the final quarter of 2022 rolls on, it’s clear that these last months will be anything
but typical for home buyers and sellers in King and Snohomish counties. In a real estate
market that’s been defined by high competition and low supply for the last number of
years, buyers and sellers are changing tactics as market dynamics shift due to rising
mortgage rates and growing inventory.
While some buyers are waiting to see if rates and home prices drop, others are getting
creative with their financing by utilizing buydowns, adjustable rate loans, carrying back
second deeds of trust, and closing cost allowances to make their purchases. Sellers
have been slower to adjust, with many resisting the idea of lowering their asking price
to meet the constraints of buyers dealing with high interest rates. However, for sellers
willing to correctly market and position their listing, successful sales – and even
occasionally multiple offers – can still be attained.
King County as a whole saw the median price of a single-family home increase from
$875,000 in September to $903,000 last month. This was largely a function of price
gains in Seattle, where single-family homes sold for a median of $950,000 in October —
up from $900,000 in September. Seattle and King County both have about two months
of available supply, which is the most balanced inventory level the market has seen in
years.
The Seattle condo market has slowed a bit more than residential sales, with over 3
months of inventory and a median price of $522,500 — down from $525,000 year over
year. On the Eastside, the median price for single-family homes has remained
constant, sitting at $1,350,000 for the third month in a row.
The average monthly mortgage payment on the Eastside dropped 19% from $9,226 in
April 2022 (when the median price was $1,722,500 with a 4.98% interest rate) to
$7,430 in August 2022 (with a median price of $1,350,000 at a 5.22% interest rate).
However, while the median price has remained the same since August, the 30-year
interest rate rose to 6.9% in October. At that rate, the average monthly payment is
$8,891 — only 4% off the peak payment of $9,226 in April; this is despite a 22% drop in
prices since then.
Snohomish County saw prices fall slightly from a median of $735,000 for single-family
homes in September to $730,000 last month. With a little less than two months of
inventory, that market remains slightly more competitive than the Eastside or Seattle,
possibly due to lower prices making it more accessible for buyers as they combat the
higher interest rates.
Windermere’s Chief Economist Matthew Gardner weighed in on the effect of mortgage
rates on buyer behavior. While he believes many buyers may be forced to wait (either
voluntarily or not) for interest rates to stabilize, he advises would-be buyers not to wait
for prices to bottom out. “Those who hope to pick up a home ‘on the cheap’ are likely in
for a long wait,” he said.
For many buyers, the answer to this conundrum is a pivot to adjustable rate mortgages,
which are currently set around 5.9%. With the 30-year fixed mortgage rate currently at
6.9% or higher, adjustable rate mortgages offer a more affordable inroad to
homeownership, with the possibility of refinancing to a lower rate in a few years.
As we navigate these changing market conditions, your Windermere broker can help
you assess the best path forward for your home sale or purchase.
If you have questions about how home inventory or inflation could impact your
position in the real estate market, please connect with me!
Jeanette Eide