Real Estate Market Update - January 2024
Real Estate Market Update
The 2023 residential real estate market in the United States, including Seattle, experienced the lowest sales activity in well over a decade. However, 2024 is appearing to be a year of recovery as interest rates for 30-year fixed rate mortgages decreased from the historic high of 8.6% in October 2023 to about 6.6% as of today. Despite low demand from Buyers, the lower supply of homes for sale in the Puget Sound area supported 6.25% home price appreciation in King County for single-family homes in 2023.
Many analysts expect mortgage interest rates to decline in 2024, albeit with some volatility, to approximately +/-6%, which could improve affordability. However, as mortgage rates decrease home prices rise.
Listing (Seller) activity is well below the long-term average. Almost 85% of homeowners in Washington state have a mortgage interest rate below 5%. If mortgage interest rates continue to decrease more homeowners, who want to move but have feared paying a significantly higher mortgage rate on their next home, may feel more comfortable listing their houses which will increase the supply of homes for sale.
I believe 2024 will be a busier year as more Sellers find it feasible to upgrade and more Buyers feel comfortable with the monthly cost of ownership as we enter the selling season from February to June. This should produce modest increases in home values.
Guidance for Buyers
The Seller’s market continued through 2023 as the pool of ready, willing and able Buyers exceeded the supply of homes for sale, which remained at historic +10-year lows. However, the pent-up Buyer demand that has developed over the last 15-months has the potential to create a highly competitive marketplace. Be prepared for the possibility to pre-inspect properties in a short amount of time and negotiate competitive offers that escalate in value—I would be happy to guide you through the process.
I do not recommend trying to time the market based on interest rate decreases, assuming you intend to own the home five years or more. It’s about time in the markets, not timing the markets.
Guidance for Sellers
The ideal time to sell (list) a property is from late February until mid-May. Keep in mind you will likely require approximately 2 months to schedule contractors to prepare the property, if necessary, and stage it. Stagers will be booked out 6-8 weeks and photographers 3-4 weeks. I understand that any related sales expenses (e.g. brokerage fees, listing preparation costs, staging fees, etc.) can be deducted from your taxable gain. Please consult with your Certified Public Accountant (CPA) to confirm. See this article, Sold Your Home This Year? Consider Writing Off Some Common Expenses.