Market Update — March 2023
We believe timely and relevant data is key to making good decisions. To this end, we are committed to providing our community and clients with actionable data and insights about the local real estate market.
Local real estate market
With the data from February 2023 in, here’s an overview of the key aspects of the local real estate market. The real estate data below is collected from Northwest Multiple Listing Service (NWMLS).
Median price: The chart below shows the latest median sales prices of homes over the past five years. Since our buyers typically buy properties in King, Snohomish, and Pierce Counties, here’s the Year-Over-Year (YOY) median closed price increase in these counties over the past 12 months:
King: +8%
Snohomish: +9.5%
Pierce: +6.2%
To put these numbers in perspective, S&P 500 and Nasdaq have moved by -6.2% and 1.7% YOY, respectively.
And here are the median sold prices of residential properties in the Greater Seattle area over the past three years:
New construction: 737 new construction homes were sold in February 2023. The median sale price of new construction homes was $710,000.
Months of inventory: At the current rate of sales, it’ll take 1.5 months for every listed home to sell. To put this number in context, note that the months of inventory for a balanced market is considered to be 4 to 6 months. So the current value of 1.5 confirms the persistent shortage of supply relative to demand in the area.
Homes sold: 4,258 homes were sold in February 2023. This translates to a dollar value of $2.9B.
New listings: 5,231 new listings were added to the NWMLS database in February 2023. This is a decrease of -34% from February 2022, which exacerbates the low supply. This indicates fewer property owners are interested in selling their homes exacerbating the chronic shortage of supply.
Mortgage rates: The Fed hiked its benchmark Fed Funds Rate by 25 basis points (meaning 0.25%) at its meeting earlier this month, marking the ninth hike since March 2022 and bringing it to a range of 4.75% to 5%. The Fed Funds Rate is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation.
30 Year Fixed Mortgage Rates — March 2022 to March 2023 (Source: Freddie Mac)
Broader economy
Nationally, home sales rose 14.5% from January to February to a 4.58 million unit annualized pace, per the National Association of Realtors (NAR), coming in much stronger than estimates and ending twelve consecutive months of declines. Sales were 22.6% lower than they were in February of last year, though this is less than the nearly 37% annual decline seen in January. This report measures closings on existing homes, which represent around 90% of the market, making it a critical gauge for taking the pulse of the housing sector.
February’s data showed signs of strength in the housing market, despite media headlines to the contrary. For example, while there was a 0.2% decline in the median home price to $363,000 from a year earlier, this is not the same as a decline in home prices as some reports implied. The median home price simply means half the homes sold were above that price and half were below it, and this figure can be skewed by the mix of sales among lower-priced and higher-priced homes. Real appreciation data per the la
