A Simple Summer Slowdown, or a Sign of Something Sinister?
For several months, we’ve enjoyed leading the nation in appreciating home prices. However is this recent cooldown natural, or a sign of something bigger?
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Are the latest market trends a sign of a typical summer slowdown, or do they signal something bigger?
One thing that hasn’t changed is that Seattle continues to lead the nation in home price appreciation—we held that streak for 21 months.
However, that data is two months old, and local data suggests that we are cooling considerably. In Seattle, home prices are down to $805,000 in residential homes; condo prices are down from $535,000 to $514,000; and Eastside median home prices are down from $960,000 to $948,000.
What’s the cause behind this cooldown? There are three factors:
1. Inventory in King County is up 44%. There are a lot more homes for buyers to choose from, so there is less competition and fewer bidding wars.
2. Rents have stabilized across our area. There used to be a shortage of rental homes available in addition to the rising rent prices. Now they’ve stabilized and we’re even seeing incentives being offered to consumers.
3. Interest rates are high. While still low by historical standards, rising rates have decreased buyer affordability.
What does this mean for you?
Sellers: You should temper your expectations for sales prices and the time it will take to sell your home. Do not take shortcuts in preparing your home for the market; you’ve got more competition in the marketplace, so your home must be priced competitively and in great condition in order for it to sell. If your home is not compelling, it is not selling.
Buyers: Don’t be afraid of the market. Interest rates are still at historic lows, there are a lot more choices in the marketplace, and real estate is always a solid long-term investment.
"Very few experts believe that we’re in for a significant real estate downturn."
Here’s an interesting statistic: Of the last six recessions, how many would you guess had real estate depreciation?
The answer is only one—the 2008 recession caused by the housing market crash. Fundamentally, what was going on then is a lot different from what we’re seeing today. Very few experts believe that we’re in for a significant real estate downturn, and most see real estate appreciation coming in both the short- and long-term.
We understand that everyone’s situations are unique; we’re not trying to paint with a broad brush. If you have any questions about your specific situation, feel free to reach out to us. Helping you is what we’re here for.