Market stagnation amidst interest rate anticipation
Uncertainty around the number and magnitude of future interest rate increases has contributed to the slowdown of the housing market in King County, with fewer sales and listings than is typical for September.
region’s total number of home listings rose by 7% between August and September, to 5,665. Notably, this level of supply is 22% below the long-run average. Part of the reason inventory did not rise appreciably is that only 3,554 new listings came to market last month—17% below September 2021’s count. This new listings low-flow, combined with already below-average levels of supply, points to fewer-than-is-typical sales being reported in October. And with the Federal Reserve’s next interest rate announcement on November 2nd—expect another rate hike, perhaps as high as 75 basis points— the continued uncertainty around inflation and how high interest rates might rise will compel buyers (and perhaps some sellers) to wait on the sidelines for the macroeconomic environment to settle down.
level in recent memory. And while prices have been declining of late—the median price in residential homes in King County is down 12% from its peak in the spring, while condominiums are down 9%—borrowing costs have risen such that purchasing power has been eroded for almost all would-be home buyers. Reflecting these dynamics, the 2,457 MLS sales in King County last month were 17% lower than the past 10-year average; they were also 10% below August 2022’s level, when the typical seasonal pattern is a 3% contraction. As we also noted previously, rising interest rates have not yielded an expansion in housing supply and, for this, we can “thank” a robust labour market. This continued to hold true in September, with Metro Seattle’s unemployment rate sitting at just 3.1% (below the national rate of 3.3%) while the
For many, September is a month of transition: summer holidays have come to end, school is back in session, and as a media executive recently recounted to me, his first wife observed that “the only time of the year people really work hard are the months of September, October, and November”. For our local housing market, September represents a transition from the slower summer market into a more active fall one, with (typically) rising listing counts paving the way for a bump in sales counts in October. As with so many things, though, this year has been different; indeed, market activity in King County was rather muted last month. As we noted previously, this year’s large and frequent rate hikes by the Federal Reserve have dampened housing demand, with buyer confidence not at its, shall we say, highest
Copyright © 2022 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 Oct 12, 2022. All data from Real Estate Board of Greater Vancouver and Fraser Valley & Rennie. 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. 3
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