Market Update — October 2022

With the data from September 2022 in, here’s a snapshot of the key aspects of the local market. The data is collected from Northwest Multiple Listing Service (NWMLS):

• Median price: The median closed price for residential homes and condos increased by 5.1% year over year (YOY) to $599,000. Since our buyers typically buy properties in King, Snohomish, and Pierce Counties, here’s the YOY median closed price increase in these counties:

  • King: +9.6%

  • Snohomish: +16.7%

  • Pierce: +14%

  • As a couple of points of reference from an investment perspective, note that S&P 500 and Nasdaq have moved by -12.6% and -23.7%, respectively.

• New construction: 788 new construction homes were sold in September 2022. The median sale price of new construction homes was $749,950, which is up by 12% since September 2021.

• Months of inventory: At the current rate of sales, it’ll take 2 months for every listed home to sell. This number was 0.75 in September 2021. To put these numbers in context, note that the months of inventory for a balanced market is considered to be 4 to 6 months. This underscores the persistent shortage of supply relative to demand. It seems the market is inching toward stability although homes are still under-supplied.

• Homes sold: 7,504 homes were sold in September 2022. This translates to a dollar value of $5.45B.

• New listings: 9,422 new listings were added to the NWMLS database in September 2022. This is a decrease of -17.2% from September 2021.

Takeaway: What we see in the market is that despite the slowing demand due to higher interest rates, property prices continue to rise, albeit at a slower rate. But why is that? The main reason is the tight supply: In addition to the chronic shortage of homes in the local market, the slower rate of home price increase has driven a portion of potential sellers to hold off, which has in turn driven the supply even lower than usual.

Buyers insights: While interest rates are going up, two factors help counter higher rates

• More lenders are now offering temporary rate buy-down options. This helps buyers to tide over the next couple of years before a potential refinance.

• Home prices are growing at a slower pace, which gives a typical buyer more power than they had over the last few years.