Reece Homes July 2024 Market Update!

The first half of the year is in our rearview mirror and we're looking forward to a busy summer. Let's dive into the market's performance in the first half of 2024:

How Does The Market Feel? (Inventory)

The market got only slightly easier for buyers this month with inventory up by just 1/10th of a month in King & Snohomish counties. This is more inventory than last year which means the market is a bit more friendly to buyers, however we’re still well below the 6 month threshold for a ‘Balanced’ market which means Sellers are doing well.

What Does It Feel Like For Sellers? (Days on Market)

Days on market jumped a bit in Snohomish county and stayed the same month to month in King. This is a similar timeline as we’ve experienced at this time of year for the past 5 years.

How Competitive Is The Market For Buyers? (List to Sale Price Ratio)

The market got a bit more competitive in Snohomish county rising by 0.3% to 100.8% and a bit less in King where it dropped by 1% to 101.6%.  The market is still competitive, though not quite what it was 3 years ago when these ratios were around 107-108%.

What’s Cost of Financing? (Mortgage Rates)

Mortgage rates have eased somewhat since earlier this year which is welcome relief, though they remain a bit higher than last year. Unfortunately, there is very little hope of us returning to 3% or 4% rates in the foreseeable future. We’ll be in the 6% range for the near future and may see 5% range in the next couple of years.

How Are Prices Trending? (Median Home Price)

Prices were slightly up in Snohomish County (0.5%) and slightly down in King County (-0.6%) - though this small shift is likely due to more affordable homes selling rather than specific market trends. When looking at appreciation over the past year we’re up 6.7% in King and 7.1% in Snohomish. For those data geeks… 5 years of appreciation in King 39% & Snohomish 59%... wow!

What Does It All Mean?

The downshift, downturn or doom of the housing market you may be hearing or reading about is primarily hype built on a “feeling” of slow down in the market, but not supported by statistics. The reason the market feels slow right now is due to the lowest levels of new listings available on the market in more than 20 years.

The basic truth is higher mortgage rates removed all but the most motivated move up/down/around sellers from the market, as well as many buyers. However, the balance between the volume of these sellers and buyers is still about the same as we’ve seen over the past 5 to 10 years which means we’re still seeing strong appreciation of home values and seller favored conditions.  We don’t expect this to meaningfully change until we start building massively more homes (which isn’t happening) or we see a major downturn in the economy (which has been forecast for years but has yet to happen). 

Cost of Waiting

Meanwhile, even though rates were high in 2023 as well, those who bought last June have already seen their home values grown an average of 7%, and those waiting for rates to decline or the market to get ‘better’ have fallen further behind, and now need rates to decline to near 5.75% in order to make up for today’s (and tomorrow’s) higher prices.

Unfortunately, we don’t expect rates to reach these levels within next 12-18 months and we expect prices to continue to rise… so by the time rates reach these levels prices will have gained another 5-10% which will means rates will need to be even lower (4.75-5.00) %to make waiting payoff. A truly vicious cycle, indeed.