Hi, I’m Doron Weisbarth with Weisbarth & Associates. Welcome to my April 2023 Market Update report.
You’ve probably seen some recent headlines warning of the pending doom from the sharp drop in the real estate prices in our area, and how fewer homes are selling, and other signs of worry with Seattle’s real estate market that are supposed to keep you up at night.
Well, if you’ve been reading my newsletters and watching my vlogs for a while, hopefully you understand that some of these dire predictions are based on narrow analysis and are out of context.
For instance, a couple of months back I showed you some data revealing that while it’s true that prices have come down from their historic highs last year, prices are still higher than before that surge began. And remember that that surge happened when the market was red-hot and out of control, while interest rates were still at rock bottom, and before many of the market uncertainties, such as high inflation, high fuel prices, the war in Ukraine, and more, affected our collective psyches.
I also showed you that the days-on-market, meaning the time between when a home is listed and when it sells, has dropped significantly since the beginning of the year, as have the inventory levels.
By the way, if you want to look at these charts and read my report at your pace and leisure, you’ll find all this information in my April newsletter, available online and for download, for free, at Weisbarth.com/Newsletter, that’s Weisbarth.com/Newsletter.
The point of all of this is that if you’re going to compare the recent data with that of last year’s, when the market was in a super surge, then of course things are going to look dire and depressing. For some odd reason, news outlets seem to only be able to do this simple, year-over-year analysis and won’t even consider doing a bit more of a deeper review. Maybe it sells more papers or something, I don’t know.
Here’s what you need to know: the market is actually doing quite well, thank you very much! The buyers are out there, eagerly looking for a good home, and we’re seeing more inventory come on the market as we move deeper into the spring sale season. With recent drops in interest rates, and potentially better news on inflation and maybe employment and the economy in general, the market seems to be poised for continued growth.
Here are two more interesting facts to consider.
First, because of a shift in zoning laws that are pushing for higher density, builders have been getting creative with their lots. In Seattle, Kirkland, and other cities in our area, we’re seeing smaller homes, multiple homes, attached ADUs, and detached ADUs, become the norm. Lots that used to have only one large home built on it, are now hosting two or three smaller ones instead.
What does this mean?
It means that there are more new construction homes on the market, but these homes tend to be smaller. Of course, that means that they sell for less money than one larger home would have, which helps with the affordability issue. And it also means that the average and median sales prices are coming down, or at least not increasing quite as fast.
But it does not indicate a depressed market. Take a loot at this graph.
What I’m comparing in this graph are the median sale price for single family homes in King County, that’s the blue line, and the median price per square foot for those same homes, that’s the orange line.
By the way, I use this data for King County, but the same things would emerge in other counties in our area.
What you can see is that the average price per square foot has gone up decisively faster! In fact, you can see that it started rising even before the median sale price did.
Why? Because the combined sales price of two homes that are 1,500 square feet each, will generally be more than the sale price of a single home that is 3,000 square feet. In other words, half the size doesn’t NOT mean half the price. Which means that the price per square foot is increasing faster right now.
The second fact to remember is that interest rates are about double what they were a year ago. People who bought or refinanced when rates were historically low are now looking at these higher rates they’d have to pay, if they sold and bought a new home.
That makes some people hesitant to sell, even when it might still be in their best interests to do so, for example to accommodate for a growing family, or, on the flip side, to downsize. This hesitancy is understandable and is contributing to our lower inventory levels.
It’s not unlikely that, at some point, the family needs are going to prevail, which will make more homes available. When will that happen? That’s anyone’s guess. In the meantime, this is one of the factors that are contributing to our price increases.
So if you, or someone you know, needs to make some big decisions like this, and is feeling stuck because of the lack of clarity, then the first thing to do is to get real information and get properly educated about the market and about one’s options, in order to create clarity.
My team and I offer a free, no-obligation consultation. Which means that we’ll be happy to sit down with anyone who needs such help, look at all the available information, bring in our wealth of knowledge and experience, and then analyze and rate all the different options, including the options of staying put. The idea is to try and help create the clarity needed for one to make a good, solid, confident decision that is rooted in knowledge and real information.
If this is something that you’re interested in, then please call me directly at 206-779-9808, or send me a message through this site or send me a safe, secure, and confidential message through my website, at Weisbarth.com, that’s Weisbarth.com.
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I’m Doron Weisbarth with Weisbarth & Associates. See you next month!