We weren’t sure if it was because prices shot up like crazy during the winter, the local news was having an impact, etc.
But as geopolitical factors become a bigger deal and as interest rates rise, it’s no wonder that buying in Seattle has slowed down. (Buying in California and New York has also slowed, and CA especially is a good market focus—they’re always the first market to experience the start of a trend.)
However, it’s important to keep things in perspective.
A significant portion of Seattle’s buyers are millennials (people in their 20s and 30s), and this particular demographic of people don’t remember how high interest rates can get. (Federal interest rates averaged 17% in the 1980s!) Even the people who remember this time don’t want interest rates to be higher than they already are, but it will also take some time for people to adjust to this new reality.
We also want to make clear that this market slowdown bears NO resemblance to 2008.
Not even one factor is similar (other than the fact that things have slowed). The key difference here is that prices haven’t even gone down, and in fact, they are at a healthy 10% year over year increase now. Another big difference is that buyers in our current market put down considerable down payments, which is much different than the subprime lending practices we saw in 2006/2007.
In our view, the market is just correcting.
Seattle’s prices were too low for awhile (if you consider how much income was increasing), partially as a result of the dot-com bust in the 90s and then 9/11 in 2001. Normal market growth is 3-5%, and Seattle has been outpacing this for ~6 years now.
Long story short:
Don’t worry! The market is healthy. This is a standard slow-down. *Maybe* we’ll end up losing 1-2%, and it’ll last a year.
What does this mean? People should see this time as an opportunity.
In the last few years, we’ve seen a lot of people in Seattle grow out of their homes but stay in them, because they were nervous about being able to find a new home with inventory as low as it was. And some people who didn’t have 20% down didn’t even feel like they could get in the market. But that’s changing.
Low down-payment offers can win now, and offers with contingencies can win. Homes are staying on the market for 2-3 weeks now (which, again, is normal and faster than most markets!), and buyers have the opportunity to take more time (you don’t have to be in such a rush anymore). And now that there’s more inventory, there’s more competition for sellers. You can’t just throw your house online anymore and expect it to receive multiple offers. If upgrading your home and making sure your marketing was top notch was important before, now it could be the difference between your home vs. the home down the street selling.
Frankly, as real estate agents, we welcome this. It’s a lot of stress making an offer come together in one day sometimes, and we’re glad that buyers won’t be as stressed.