The spring market is here and the Northwest Multiple Listing Service (NWMLS) reports an increase in new listings, pending sales, closed sales and median prices compared to the market in January. Frank Hawkins, of Hawkins-Poe Real Estate, gives his input on the market in this monthly update.
“Open house traffic has been brisk around Western Washington, signaling the start of the spring market,” suggested brokers at the NWMLS. They noted, “Softening prices are enticing some would-be buyers, while others remain on the sidelines hoping fluctuating mortgage rates will stabilize or decline.” (NWMLS Monthly Market Update, March 6, 2023)
“In all my years of real estate experience, I have never seen both home buyers and sellers handcuffed by interest rates,” commented Frank Hawkins.
Home sellers are hesitant to jeopardize their existing low-interest rate on their current home, by purchasing a new property with current mortgage interest rates now at the highest they’ve been historically in the past 23 years. This hesitancy to make a move is keeping the supply low which is propping up prices again to historic highs.
Many counties, including Pierce and King, experienced an increase in the average sales price in February over January. The days on the market for both Pierce and King also experienced a decrease for February, signaling that properties are moving more quickly than they had in the previous month.
Home buyers have been spoiled with averaging around a 3% mortgage rate for the past 10 years. Currently mortgage rates are doubled from what they were this time last year, adding to the reluctancy to engage in the market. Until interest rates stabilize and inflation fears are reduced, interest rates will remain in this higher-than-customary range, keeping buyers selective and leading to an existing market that is difficult to navigate.
Once rates and inflation have stabilized, the handcuffs will come off, giving buyers a small opportunity to purchase. However, we expect that things will heat up again quickly, so this window to purchase will be small with a limited inventory market, putting home buyers back to where we were this time last year.
“At the end of February, the MLS report shows only 1.7 months of supply across the 26 counties in the report. While that’s an improvement from a year ago when there were only about 0.7 months of supply (about three weeks), it is down from January’s total of about 2.5 months. A supply of four-to-six months is considered a balanced market, according to the National Association of Realtors and other industry watchers.”(NWMLS Monthly Market Update, March 6, 2023)
With all of the projections above, this will make for a very interesting market to navigate. Timing, preparation and being well-represented by an experienced agent will differentiate successful buyers from lookers and successful sellers from extra days on the market.