In the greater Seattle area, we are 7 years into our strong real estate market. Nationwide, including the Northwest, we have seen real estate prices peak in the last few months. In Seattle we have seen prices actually drop by about 1.5% for the first time since 2012. Most of the rest of the county is still showing a small price increase but those numbers could go negative quickly if the world economy stays weak or if a national recession occurs in the next year.
Interest rates are still the bright spot in the market as mortgage rates fell last week, following the reduction in the Federal Reserve’s benchmark interest rate. We took the position that mortgage rates had fallen in anticipation of the Fed rate reduction, but we were wrong, and rates quickly dropped after the Fed reacted. The weak world economy and the maturing of the US recovery have put downward pressure on rates that could continue for some time.
Lower interest rates might mean a rebound in prices in Seattle & the Eastside, however, for the short term we predict that prices will continue to soften slowly. Median sales prices for Seattle and the Eastside are both down slightly and inventory is higher than last. With good selection and low interest rates, buyers are enjoying having a bit more time to shop while still finding homes to buy. Seller’s need to think about cashing out the great increases in equity that they have seen over the last 7 years.