Rates remain high in the eyes of many buyers, which is the primary catalyst for the market cooling off over the last two months. Compared to August 2021, months supply of inventory is up 77.8%, active listings are up 31.9%, closed transactions are down 29.2% and the average list price vs. sales is 3.7% worse than a year ago. Crucially however, the average median sold price in Seattle is up 5.8% YoY despite the recent, very apparent softening of the market. 

Buyers seem content to ride out the higher interest rates and will consider purchasing homes when rates start to decrease in the future. I mentioned this in my last newsletter in June. Buyers that pursued purchasing a home at that time were rewarded with average pricing down 1.2% compared to last month. The great unknown is how low pricing will go before it starts to creep up again. 

For buyers, the important balance that need to be discussed is what is the better long term play? Should they buy now at slightly decreased prices and higher rates, or wait for rates to come down and tackle the market at future pricing levels? There is no golden answer but I would argue it’s important to analyze the implications of waiting the market out. 

First of all it is unclear when or if interest rates will decrease again. While it is likely that they will, there is no set time frame so it must be assumed it won’t happen until 2023. That means housing has several months to regain its footing on pricing and will likely be at least in the spring market before buyers find rates attractive. In 2022, between January and April, the median sold price in Seattle appreciated from $762,000 to $865,000 an increase of roughly 14% in 3 months. It is not obvious that a similar increase will happen in 2023, but if it did, the increase in housing pricing will likely eradicate any savings incurred from waiting for rates to drop. It is also quite likely that there will be a tremendous wave of buyers all looking to buy at the same time given the lower rates, likely leading to an extremely competitive market. 

My thoughts should not be construed as financial advice but simply as additional information for buyers to consider as they assess whether it is a good time for them to buy or not.