“With interest rates increasing, I will wait a while for prices to come down.” – A Seattle buyer. 

I’ve been hearing this sentiment a lot recently among buyers who feel as though it would be beneficial for them to wait out the current rate hikes. While it is true that buyers’ purchasing power is reduced, there isn’t too much evidence in the data to indicate that pricing will go down – although the rate of appreciation has slowed. 

The truth is that the rate of housing appreciation from January – May was extremely high, and that a measure of seasonality is behind the fact that the median sales price was relatively flat between April to May (up 0.5%). The big reason I personally don’t think that pricing will be decreasing anytime soon is because Seattle is still facing exceptionally low inventory – currently 0.8 months which is down 11.1% from just a year ago. There are currently 15% less active listings compared to a year ago, and 86% of closed sales sold at list or above compared to 81% a year ago. 69% of these homes sold above list while days on market was down 44.4%. 

The simple equation of the market at the moment is a long continuation of a supply shortage. Closed sales as a percentage of listings on the market (effectively the likelihood of a home selling) was 90%, up from 81% in May 2021 and the highest in any May in the past decade. When looking at data for the trailing 12 months, only 4% of pending sales didn’t close in May, down from 13% a year ago.

All this is to say that all indicators on pricing show that there isn’t an imminent downturn in the market. It is also true that housing typically does well in times of recession (2009 was different as housing was the catalyst for the recession). For buyers in the market, it is a tough pill to swallow to pay higher interest rates on a mortgage if entering into a contract, but it might be beneficial to get into a home at today’s pricing and then refinance when rates go down in the future, as opposed to waiting for rates to come down and paying higher prices. For sellers, in the current climate, it is important to price and present a home correctly to attract buyers and I’m still seeing plenty of homes sell before review dates – a great indicator of buyer activity.