October 2023 Market Report

Despite interest rates continuing to rise, the local real estate market is remaining resilient. Let's unpack the details from September and transition from the Summer to Autumn market.

Overall market feeling is best measured by Inventory, the balance of supply (sellers) and demand (buyers) which rose modestly by just 0.2 of a month in the region to a total of 2.0 months in King and 1.6 months in Snohomish County. These are very low levels which typically strongly favor sellers since 4 to 6 months of inventory are commonly the 'balanced' market indicators.

Sellers are often most concerned with how long it takes to find a great buyer, and we measure this with Days on Market which rose in King County 3 days to 10 days and dropped significantly in Snohomish County to just 5 days from 15 days the month prior.

Buyers often want to know how competitive the market will be, which we measure through List to Sell Price Ratio. Here we are seeing the easing of the market, where we are now averaging less than 100% in the region for the first time since March, dropping 0.6% to 99.9% in King and holding steady at 99.5% in Snohomish County.

While Median Home Value isn't a great measure of your home's value, it does help create a general feeling of whether home prices are rising or falling. Median price in King County dropped 5.0% to $778,170 from August to September, however, is only down 1.4% from this time last year. In Snohomish County prices rose 3.6% month to month and 1.7% over the last year and presently stand at $699,000. This is remarkable resilience for our market. The price change in King County is likely due to a down shift for buyers into more affordable homes combined with the increase in building of affordable homes such as townhomes.

At the close of September mortgage interest rates were at 7.31% and they continued to rise to 7.5%-7.75% through early October driven by inflation which is much lower than last year though not declining as quickly as policy makers would like. Ironically, many other economic indicators are strong... unemployment is low, job growth is great and wage growth is steady, which indicates a healthy underlying economy. This is likely why we continue to see steady demand despite higher rates.

What's Next? From what we can tell the market will continue to feel volatile with everyone adjusting to the higher interest rate environment (who would've thought back in 2020 when rates were 2.67%, people in today would be celebrating locking in a 6% mortgage rate at the start of 2023?). Despite the volatility we expect home prices to remain resilient as the supply of homes continues to be lower and demand continues to stay strong due to a healthy economy with low unemployment and solid wage growth.

In the end, with refinance always available as a tool to hedge against future declines in interest rates, we are continuing to see those who are waiting to make a move are experiencing higher costs as home prices and interest rates continue to rise. For many there are great potential long-term savings in acting now in this volatile market to lock in a home at a lower price and then lower their long-term costs by refinancing when rates come down in the next 12-24 months.