The Seattle-area housing market experienced a lackluster performance in November due to the combination of high interest rates and the usual slow season. Home prices remained stagnant compared to the previous month, and there was a limited number of new homes entering the market.
Sellers in all four counties listed a reduced number of homes, with King County experiencing a 29% decrease in new listings compared to October and an 11% decrease compared to the same time last year. According to Redfin, the Seattle area had one of the largest year-over-year declines in new listings in the United States last month, tying with San Francisco and only surpassed by Atlanta in terms of the drop.
The decrease in available homes also resulted in fewer sales. In November, the number of pending sales declined throughout the region, particularly in Kitsap and Pierce counties, where sales were down by double-digit percentages compared to the previous year.
Many potential sellers have been hesitant to list their homes for months due to concerns about affording their next home with current mortgage rates.
“The move-up buyer is hesitant… They are not willing to leave behind a 2.5% or 3% interest rate,” stated Kelly Sublett, a Windermere agent in Bellevue.
The supply of homes available for sale is expected to decrease further during the winter season as homeowners prepare for the holidays, according to Sublett. “The already low inventory is becoming even scarcer.”
Mortgage rates continue to remain elevated, although there has been a slight easing. Last week, the average 30-year fixed-rate mortgage stood at 7.2%, a decrease from 7.8% in late October. According to Freddie Mac’s chief economist Sam Khater, this trend is encouraging for potential homebuyers. However, it’s important to note that rates are still higher compared to a year ago, averaging at 6.5%. These rates are significantly higher than the exceptionally low rates of 2.5% and 3% that buyers were able to secure during the early stages of the pandemic. The impact of higher rates is evident in the increased monthly payments, which can strain buyers’ budgets. In the Seattle area, where home prices have not seen significant declines, the effect of higher rates is particularly pronounced.
Throughout the nation, the housing market has been hindered by high mortgage rates, resulting in a slowdown in home sales and a decrease in the number of people obtaining mortgages. According to Mason Virant, associate director of the Washington Center for Real Estate Research at the University of Washington, the current rates have limited the purchasing power of potential buyers compared to just a few years ago.
While there is a shortage of new homes available in and around Seattle, the homes that are listed for sale are taking longer to sell compared to the peak of the market frenzy a couple of years ago.
A high-end Alki condominium complex revealed in late November its intention to reduce prices by as much as 20% for the subsequent six purchasers, provided they sign a contract before the year’s end and finalize the deal by January 31. Additionally, the buyers will enjoy various other advantages.
“We recognize the current situation faced by developers, and we are committed to adapting to the market demands,” stated James Wong, the CEO of Vibrant Cities, the company behind this project.
While there may be potential buyers visiting open houses during this season, many of them express their intention to wait until January,” Sublett mentioned. The decrease of half a point in mortgage rates has already enticed some home shoppers to return to the market,” stated Crystal Hill, a Keller Williams agent at Chill Homes in North Seattle. “I have certainly observed an increase,” Hill added.
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