Hi, I’m Doron Weisbarth with Weisbarth & Associates. Welcome to my July 2023 Market Update report.
I usually try to avoid being publicly critical of media reports. Lots of people do it, and it’s easy and can be fun, but it’s not what I want to be known for.
At the same time, when reporters don’t do their job, or when media outlets, who we depend on to deliver accurate news, put their financial and other self-interests before those of the public that they serve, I think it’s the right thing to call them on it.
Last month the Seattle Times came out with two headlines that I felt had to be addressed. One I already did in my vlog from last month. But in some ways, the other headline that came out on June 23rd, is even more misleading. That headline reads:
“Homeowners in Washington lose more equity than any other state as market cools.”
This headline was then picked up by other media outlets in and out of state.
Now, this headline conjures images of hordes of distressed homeowners, whose home values have fallen so far that they are now underwater, yet trapped in mortgages they can’t escape. It might remind you of the Great Recession, when – as the article itself even dares to point out and compare to – about a third of Washington homeowners were, in fact, underwater on their mortgages.
But if you read the rest of the article, you quickly realize this headline is just fearmongering and totally misleading.
How many homeowners in our state are underwater right now, you might ask? During the Great Recession it was about 33%. So now is perhaps 15%? 20%? 25% or more?
No! It is a mere 2%. You heard that right: Two percent.
And consider that at any given time, a small fraction of homeowners are underwater, even when the market is booming. Meaning, that the price drops last year may not even be the cause of these homeowners to be in distress.
Now that’s statewide. How about in Seattle?
Well, in Seattle, just 0.7% of homeowners are underwater on their mortgages. That’s right – less than 1 percent.
As Yoda might say, “Time to panic, this is not.”
Now, of course, if you’re one of the people who is underwater, that probably doesn’t feel very good, I get that.
But this headline is stoking an awful lot of anxiety considering it only applies to a small fraction of homeowners, and many of them might have been in distress no matter what.
Now, the media is in the business of selling news, and headlines like this sell news. I get that. But I really think that it’s fair for us, the consumers, to demand better from our media outlets, really!
So let’s look at the facts, again, most of this you’ve heard me say multiple times in the past.
Last year, the market peaked in the spring, after an uncharacteristic acceleration of home prices. The market was red hot and out of control. Then, a combination of bad news and market uncertainties – inflation, war in Ukraine, gas prices, and interest rates, to name a few – caused the market to hit the brakes. Then, starting in January of this year, the market reset, returning to its original trajectory of a steady, if somewhat slower, upward climb.
Consider these statistics:
Last year in June of 2022, the median sales price of residential homes in King County was $925,000. In June of this year - after the price drops - it was already back up to $938,000 – so we are up 1.4% from last June, and still climbing.
Likewise, in Seattle, the median price of single-family homes in June of 2022 was $965,000. This year, it’s moving upward after its earlier decline, and last month it reached $920,000. So we’re only 4.7%, below the last June’s prices. However, the current trajectory will bring it back to its peak within a couple of months or so.
In this chart I drew a straight, horizontal line from the datapoints for June of last year in both datasets – Seattle is the DOTTED ORANGE LINE, and King County is in DOTTED BLUE LINE.
You can easily see how the median sale prices for single-family homes in King County and in Seattle have been steadily increasing since January of this year. In fact, as I noted earlier, at the current rate of appreciation, median prices are likely to reach the peak prices from last year, and perhaps even surpass them, in the near future.
And, just to be clear, these trends hold true in other counties and cities in our area.
By the way, if you want to look at all this information and read my report at your pace and leisure, you’ll find all this information in my July newsletter, available online and for download, for free, at Weisbarth.com/Newsletter, that’s Weisbarth.com/Newsletter.
So, who, you might wonder, is affected by this supposed “loss of equity”? The only people who are really affected are those who bought at the very height of the peak sales prices last year and need to sell their home now. As you might imagine, that is a very, very small slice of the population.
For all the rest of the homeowners in Seattle, King County, and elsewhere, your equity is fine. If you need to, you can sell whenever you want and make a very nice profit, truly!
So, now that you have the facts, please help spread the word to others, so that we don’t let this kind of fearmongering scare people. And please reach out to your local media outlet and ask them to do better. We deserve it, don’t you think?
If you know anyone who is considering buying or selling their home this year, please send them this video or refer them to us by phone, text, email, or fill out the ‘referral’ form on our website at weisbarth.com/refer. My team and I have developed systems, plans and strategies to make sure that our clients maximize their results from their home purchase, or home sale, and we have the numbers to prove it!
The best way to reach me is by phone at 206-779-9808, that’s 206-779-9808.
Please remember to like, subscribe and follow for more great insights, charts and tips on my monthly vlog, and read our monthly newsletter at Weisbarth.com
I’m Doron Weisbarth with Weisbarth & Associates. See you next month!