in King County, it ’ s seasonality versus elevated rates A flurry of activity in May brought to life what had been a sluggish spring market, propelling prices to record-highs. That said, sales and inventory fell short of their typical levels, reflecting the challenges posed by elevated interest rates.
average (a theme that has dominated the last couple of years).
This brisk transition from a low-rate to a high-rate environment has produced a climate in which both would-be sellers and buyers feel stuck: the former by the “lock-in effect” and the latter by the lack of options (what we can dub the “lock-out effect”). This is without mention of prices creating an additional dilemma for some: single-family home and townhome median prices reached record highs in May (12% and 9%, respectively, above last year) and condos secured their second- highest price point on record (9% above versus last year). These factors have combined to produce a market that’s complex on the surface (including the “lock-in effect”, struggling inventory, below- average sales, swift absorption, and historically high prices) yet simple in its operation (rates are high!). We’re now in a waiting game, observing how much longer those first-time buyers, upsizers, and downsizers can hold out. What we do know is there is pent-up activity that has brewed in King County and while there may have been a flash of it in May (thanks in part to seasonality), there’s a considerable amount that remains unaccounted for.
They say that May acts as the bridge between spring and summer, introducing longer evenings, higher temperatures, and nature’s bloom to our day-to-day. Here in King County, May has also introduced a flurry of market activity that has stimulated what was a sluggish start to spring. This isn’t a result of a change in rates—a 30-year fixed mortgage hovered a sliver above 7.0% for most of May, higher than the levels seen throughout the beginning of the year—but rather a product of two elements: seasonality and necessity. May is the most popular time of year for new listings and the second-most for home sales going back to 2006, meaning seasonality always plays a prominent role at the conclusion of spring. Necessity encompasses the life changes that don’t align with the ebbs and flows of the market and, with sales counts having remained below their past-decade average for the last two years, something had to give eventually (if only slightly). For the first time since August 2022, sales eclipsed the 2,500 mark, reaching 2,644 in May. This was
an increase of 14% month-over-month and 13% versus last year, but again, sales counts remained below their past-decade average (by 19%). Part of the reason sales counts continue to falter in King County (from a historical perspective) is due to buyers having limited purchasing options. The new listings that populated the market in May were absorbed quickly—the average days on market was 18, the lowest value since July 2022—and this contributed to overall inventory remaining constrained. As discussed in previous iterations of the Seattle rennie review, would-be sellers across the country are dealing with a “lock-in effect”—selling now would translate to a substantial increase in their future monthly payments, having previously secured record-low rates during the pandemic. (For context, Freddie Mac estimates that six out of every 10 homeowners in the US have secured rates at 4% or less.) Although inventory levels rose 38% versus April and 30% compared to this time last year, they remained 8% below the 10-year
Information and statistics derived from Northwest Multiple Listing Service. Copyright © June 10, 2024 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of June 10, 2024. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of companies. E.&O.E.
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