Transactions across the Northwest Multiple Listing Service, the largest in Washington State, that includes Seattle real estate has seen the number of transactions drop significantly. Real estate deals are down 18% from a year ago and 47% from two years ago. Sales were unusually strong in the month of October in 2020 (10,806 sales) and 2021 (9,983 sales), but sales in 2018 (8,005) and 2019 (8,335) were both over 8,000 transactions. The last two Octobers, sales have dropped significantly. October 2022 there were 6,464 sales and this October there were 5,291.
Interest rates are causing supply and demand to both decrease. 30 year mortgage rates at the end of October neared 8%. 86% of current Washington homeowners have mortgages with interest rates with 5% or less and more than a quarter have rates of 3% or lower. Thus, the would-be sellers are thinking long and hard before moving which reduces supply On the other side of the coin, homebuyers are being discouraged to enter the market since high interest rates give them less buying power. Thus, demand is not what it normally would be.
End Result, Prices Rise
Inventory has been low for several years now. With this new set of circumstances, inventory remains low. The market is deemed to be an even market when there is between 3-4 months, a seller's market when less and a buyers market when more. Across the NWMLS there is 2.2 months of inventory; therefore, prices increased over last year ever so slightly. Median price was $602,000 this October compared to $595,000 in October 2022.
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