Summarizing One Year in One Minute

Where have we been?

Following several years of real estate insanity due to the covid era market, it appears that the traditional seasonal real estate market is back on track in the Northwest. After taking off the 2nd half of 2022, potential homebuyers are once again actively searching for homes and placing offers - sometimes even multiple offers, depending on the price point and location.

As the end of 2022 approached, numerous buyers adopted a "wait and see" approach. They were confident that the inventory in 2023 would offer them a plethora of top-quality options without having to compete against other buyers....and maybe another discount to boot!

If I am being honest, from October through December, I found myself entertaining the thought this was the road we were heading down. However, something unexpected happened along the way. Many homeowners decided to hit the pause button and withdraw their properties from the market. Their rationale was straightforward: "Why sell for 10-20% less than the peak price, abandon my all-time low mortgage rate, only to replace it with a rate nearly double what I have?" What many real estate pundits failed to recognize was that numerous sellers didn't have to sell, they simply wanted to.

Many sellers are holding onto their record-low interest rates and refraining from selling unless they have no other choice. Meanwhile, new listings are hitting the market at the lowest rate seen in over 20 years. As a result, buyers who are waiting for a flood of new inventory may have to wait for some time.

Before sellers start celebrating and declaring that "the good times are back!", there is still considerable economic uncertainty. It is impossible to know if another shoe is going to drop. Housing costs are at an all-time high, and it's hard to imagine buyers being squeezed too much further than they already are due to a lack of affordability.

So, where does that leave us today?

Buyers have emerged from the woodwork at the start of this year, snapping up reasonably priced homes in the market. If a property is well-presented and priced appropriately, it shouldn't stay on the market for long. While buyers have less competition than in 2021 and early 2022, they've lost the leverage they had in Q3 and Q4 of 2022.

I believe that the low inventory will keep property values propped up at their current rates through the summer. However, our Keller Williams leader, Gary Keller, is predicting a subdued Q3 and Q4 of 2023. 

If you're thinking of selling, there's a market available right now.  It is uncertain how long this window of opportunity will last.

What should we be looking out for?

I believe the housing market will follow along with interest rates.  If they push down, we can see another housing run.  If they increase, housing will likely slow down accordingly.

What could throw a wrench in this prediction?

Other factors to consider include inflation, employment, and any other unforeseen events such as the Silicon Valley Bank crisis.