It’s a new year, which provides an opportunity to observe the year behind us as well as the year ahead. It wasn’t that long ago that Seattle was considered one of the hottest housing markets in the country. Today, Seattle is one of the fastest-cooling housing markets, with Seattle-area prices declining about 3% from August to September 2022. According to the latest S&P CoreLogic Case-Shiller Index, that’s one of the biggest dips in the country – tied with San Francisco.
Of course, we can’t discuss the housing market without acknowledging the current high inflation, elevated mortgage rates, and slowing sales activity. According to the National Association of Realtors Chief Economist Lawrence Yun, “severely limited housing inventory will prevent large home price drops for most of the country [in 2023].”
So what does all this mean for the Seattle-area housing market?
Let’s dive deeper into some of the housing market trends from 2022 and what that might mean for the year ahead.
Is There a Housing Bubble?
It’s true that mortgage rates saw a significant increase in 2022 – from 3.2% near the beginning of the year to over 7% by the end – and when paired with the increase in home prices, there were some concerns about another housing bubble. According to Freddie Mac, mortgage rates are declining, which is good news for the housing market, as those rate declines have led to a stabilization in purchase demand. While home prices have gotten ahead of themselves over the past couple of years as a result of pandemic-induced demand and historically low mortgage rates, overall, we don’t expect year-over-year declines in housing prices.
One of the biggest questions people ask is: “will mortgage rates continue to rise?” As the Federal Reserve continues to raise interest rates in its effort to address inflation, this will continue to affect mortgage rates.
In order to allow rates to start to stabilize, the Fed will likely start to pull back in mid-2023. Rates will likely remain above 6% until fall 2023 when they should dip into the high 5% range (see the above chart from NAR). Although that rate might still seem high, it’s important to note that it’s more than 2% lower than the historical average.
While mortgage rates and interest rates continue to increase, rental rates are right there with them. One of the best ways to protect yourself from skyrocketing rent is to become a homeowner.
Although inventory levels increased in 2022, they’re still well below their long-term average. According to Redfin, the number of listed homes was 11,067 – a decrease of 20.7% year-over-year. Of course, homes will still be listed for all the usual reasons – career changes, death, and divorce – however, the housing market will not see a normal rate of homes listed. The decreased available inventory is partly due to the fact that many homeowners are holding strong in their current homes. This means that heading into 2023, there will be a limited inventory of resale homes for sale.
To help combat a lack of inventory, Soundbuilt has several incredible communities with new homes available in Western Washington. We’ve been building homes in the area for more than 40 years, and we’re committed to craftsmanship and intrinsic design! We have an amazing selection of homes – some of which are move in ready! – so you can protect yourself from rising mortgage rates and rental costs!
Washington State Housing Market Forecast
According to Zillow, Washington home prices have increased by 15.1% over the past year and 44.5% over the last two years. And experts say we’re unlikely to see a home price decline in 2023. This trend will likely continue unless available inventory increases more quickly than demand or rising interest rates dampen demand. Home values in the Seattle area are also expected to rise by about 5.7% between July 2022 and July 2023.
Ready to Buy a Home in 2023?
If you’re ready to buy a new home in Washington, we’re here to help! Take advantage of our special Hot Homes Hot Deals to ensure you maximize your savings as you move into your new home this year!
Another great way to be the first to know about our incredible new homes and communities is to join our VIP Priority List! And, of course, if you have any questions, our online concierge is available 7 days a week by calling 253-363-2450 or emailing firstname.lastname@example.org.