The current housing market we are experiencing is NOT normal. Supply is relatively low and demand is moderate. Overall… prices are relatively unchanged, which is opposite of expectations.
Understandably, both Buyers and Sellers are left wondering what is driving all the confusing dynamics in our current market, and if/when will the market shift.
Typically prices increase with low supply, in the face of demand. So why aren’t prices rocketing up now now, with -32% and -48% falls in months supply of homes from August of 2022?
Today, the national average for 30 year fixed rate loan is 7.22%, compared with around 6% in January, 2023. Most current mortgage holders who bought in the past 5 or so years are paying about 3%-4% for interest on their loans. If sellers don’t have to sell now (death, divorce, relocation)… most are choosing not to. This is creating a drastic shortage of homes for sale (supply)
Meanwhile… these high interest rates have a lot of buyers sidelined, waiting for rates to come down… which is resulting in moderating demand.
In King County, the Median Sold Price for single family homes (all prices) was $910,000 (vs $900,000 for August 2022), while there is only a 1.4 month supply of homes on the market (vs 1.7 months for August of 2022). The average Sold Price to Original Listing Price was 99%
For Southwest Snohomish County, the Median Sold Price for single family homes (all prices) was $848,000 (vs $861,000 for August 2022) while there is only a one month supply of homes on the market (vs 1.5 months for August of 2022). The average Sold Price to Original Listing Price was 100%.
We don’t know when the mortgage rates will be coming back down into the 5% range. We are 100% confident of this, however… when rates do fall back into the 5% range…. there will be a surge of buyer demand and very likely the supply will not keep up… which will cause prices to shoot up… resembling the multiple-offer frenzy markets from Covid days.
Even though the picking are slim now…. there are relatively good deals to be had…providing those buyers with the opportunity to re-finance in the future.