The Housing Market here in the Woodinville and Bothell area has definitely been hot over the past couple of years, with a substantial shortage of properties coming to market, resulting in a supply and demand issue. This phenomenon saw frustration for buyers who were pipped to the post repeatedly when making offers on homes, with major contingencies removed, cash offers and presenting offers well above asking price. Properties were being snapped up in a matter of days, some listings never even making it to a review period.
We saw 2022 start out with a bang and seller being in an enviable position of receiving multiple offers and those were higher than anticipated, however as the year progresses this may not remain the case.
With escalating inflation sitting at a 40 year high the mortgage market has drastically increased interest rates by as much as 2 full percentage points so far this year, from their all-time lows. While the rise has caused some people to pause when it comes to home buying, it’s worth noting that even at 5.5% interest rates are still traditionally low. The cause and effect means we are bound to see a shift in the housing market and a slow role to more balance.
What do we anticipate happening for the Summer of 2022 and the rest of the year in our market? We are seeing indicators that the housing market is beginning to assimilate to more probable patterns. Higher mortgage rates will likely take homes longer to sell and should apply the brakes on home price appreciation. Home inventory levels are gently accumulating, but we are yet to see it have an effect on the general price of homes. Our area did have three hundred more new property listings than pending last month, which gave inventory levels a much-needed bump, and resulting in homes for sale in numbers not seen for some time.
So, what does this all mean? Well, we are on a similar path in the housing market as in 2018 where after a long period with remarkably low inventory and interest rates, the rate increased, and sales declined. This shift in 2018 really started to gain traction in June of that year and through the winter.
Premium pricing should start to wane as summer takes hold and can result in the illusion that prices have dropped, and we anticipate that the market will see homes selling within the first 30 days, if priced favorably. The market should regulate itself and prices should stay level, but with less engagement on new listings, less multiply offer scenarios and offer price escalations.