Change is upon the Seattle Real Estate Market!
2018 was the year that we hit the top of the frenzied market. The year that the lack of inventory, the intense price increases, and the sellers winning in every situation finally hit the breaking point. Before we get into specifics, let’s take a look at the median sales price for a house in Seattle over the past 10 years:
What a powerful visual of just how HUGE of price gains we saw in 2016, 2017, and the first half of 2018. These increases are more than double our average year-over-year gains, even in the recovering markets of 2012-2015. We all knew this wasn’t sustainable. we just didn’t know when the madness would end.
Now we know…
For single family homes, the tides turned in June. Median sales prices were just above $800,000 in April and May, and then started a fairly steady decline through the rest of the year. We ended 2018 with a median sales price of $715,000. That is 4% less than the beginning of the year, and 12% less than the peak of May.
Funny how inventory started to change about the same time:
Inventory (the number of available homes for sale), doubled from January to May. It doubled from April to July. And it increased 50% from July to September. In September, we had 1,435 homes for sale, which is 475% MORE than we had at the start of the year. Notice that the number of sold homes peaked in April, when inventory was just starting to increase. As we saw the number of available homes for sale go up, we saw the number of homes that were actually being purchased go down.
By late April, the interest rate had jumped up over 0.5% since the start of the year. We all know the impact of rising interest rates on the buyers ability to afford a home directly impacts sales prices. We are now a full percentage higher than we were just one year ago. The interest rates were at a historical low, and some would say artificially low, rate for many years. An increase in interest rates was both inevitable and needed. But there is no denying that it had an impact on our local real estate market.
Now Let’s Get To The Specifics:
We started the year in a frenzy. Homes selling in less than two weeks, and for 107%+ of sales price. We had big month-over-month price growth for the first 5 months of 2018. Then like a frustrated teenager slamming their bedroom door, our market made a very noticeable shift. Seller panic started in July and August, when our local media started making mention of the softening real estate market. All the sellers that had been waiting to sell “at the peak”, jumped into the market. All those additional homes for sale made market conditions change even quicker. Sellers were trying to time the market. Buyers were beat up by all the competition of the first quarter, distressed about rising interest rates, and worried about a market crash. We are still all getting settled into this new real estate market environment, and we may have a few more months of ups and downs while the buyers and sellers acclimate.
Now Let’s Talk About Condos:
Condos also had quite the ups and downs this year. Unlike single family homes, we ended the year with slightly higher prices than we started with. Although we have a modest gain from January, the median sales price ended 2018 at 10% less than the peak prices of May. We have more available inventory (when adjusted for demand) for condos than we do for single family homes, and condos are seeing a higher percentage of price drops, and selling for less than the list price when compared to the single family home market behavior. I think condos will see a slower pace, both for price increases, sales volume and length of time on market than single family will in the coming year.