Unless you’ve been residing under a rock as Eastside median home values have hovered near $1 million, it has been hard to ignore the region’s sky rocketing real estate market.
A strong local economy, a steady population growth, and a dwindling housing inventory have gotten us to this point. But when will this white-hot market cool off?
The answer may continue to trouble buyers: Median home values likely will remain high.
In September (the most recent month for which data was available at time of publication), the median purchase price for a home on the Eastside was $800,000, up $60,000 from $740,000 during the same month last year.
However, the Puget Sound region is seeing a leveling off of frenzied buying because homes are staying on the market longer. The result? Fewer bidding wars among prospective home buyers. In September, for example, the average King County home remained on the market longer than two months for the first time since January 2015.
By the end of September, there were 2,161 total active listings on the Eastside; that is up more than 1,000 listings, or 87.1 percent, over the previous year.
“(Buyers) are at long last now seeing properties stay on the market longer,” said Mike Grady, president and COO of Coldwell Banker Bain. “(Listings are priced appropriately) and not based on the feverish market we saw just a few months ago.”
While this increase in inventory is positive, the region has a long way to go to reach a balanced market, according to the National Association of Realtors, which considers six to seven months of inventory to be an ideal position.
Will the region continue to inch toward that goal? J. Lennox Scott, CEO of John L. Scott Real Estate, said it is likely that new inventory will slow to a crawl until around March 2019. “Over the winter, new monthly resale listings will lower by approximately 50 percent compared to summer months,” Scott noted.
This could be a sign that we are returning to a more normalized, cyclical market, rather than what we’ve seen the last few years. Coldwell Banker Bain’s Grady said the region’s sustained job growth will continue to be a catalyst.
This recent re-balancing of the market also has “led to fewer listings with offer review dates and pre-inspections,” according to Robert Wasser, Northwest Multiple Listing Service director. This is an encouraging step because many buyers waived contingencies to close a deal faster and therefore appeared to be more appealing to a seller when the market was at its peak.
A projected rise in interest rates will be another factor affecting the residential real estate market in 2019. At the time of this writing, 30-year fixed mortgage rates are hovering in the upper 4 percent; these rates are expected to rise in the coming months.
This alone is not enough to turn would-be buyers off from purchasing a home. But when compounded with the low inventory, it could mean the difference between renting and buying.