Real Estate Market Update - March 2024
Real Estate Market Update
The Seattle-Bellevue residential real estate market continues to be a strong seller's market in Q1-2024 while overall market activity remains at historic +10-year lows as it did in 2023. This trend also coincides with historically high mortgage interest rates that have reverted closer to the long-term 30-year fixed mortgage rate average of 7.74% for over 50 years (see January’s report for graph). Currently, subject to Buyer’s credit score and down payment, a 30-year fixed rate mortgage is approximately 6.75%. An increasing number of Buyers are adjusting to the reality of higher rates and moving forward to pursue lifestyle goals rather than defer them. I’m anticipating market activity/sales volumes will be higher at the end of 2024 compared to 2023.
Currently, it appears that 2024 is a stronger year in terms of Buyer competition and price appreciation than 2023, which is likely because the current quantity of homes for sale is about 15% lower than last year. The quantity of single-family properties in King County for sale (supply/inventory), sold (demand) and pending (under contract) in 2024 have increased month over month, which follows seasonal trends, as the median home value in January, $852,500, increased 10.2% to $939,939 in February. It’s interesting to note that median home values in 2023 only increased 0.6% from January, at $799,900, to February, at $805,000.
The Mortgage Banker’s Association (MBA) revised their November Mortgage Finance Forecast for 30-year fixed rate mortgages as of February 20, 2024 to the following:
Q1-2024: 6.9% (previously Q1-2024, 7.1%)
Q2-2024: 6.6% (previously Q2-2024, 6.6%)
Q3-2024: 6.3% (previously Q3-2024, 6.3%)
Q4-2024: 6.1% (previously Q4-2024, 6.1%)
As reported in February, many economists and market analysts have reduced their forecasts for federal fund rate decreases due to economic data indicating the macroeconomic environment is too strong. Many experts are now forecasting 2 to 3 rate cuts in 2024 instead of the 3 to 7 as previously forecasted. I’m not expecting any rate decreases and believe the 30-year fixed mortgage interest rates will range from approximately 6.3% to 7% in 2024. The bottom line is I believe rates will remain higher for longer.
Guidance for Buyers
The pool of ready, willing and able Buyers exceeds the supply of homes for sale, which is at historic +10-year lows. Be prepared for the need 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 anticipated 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 several weeks to schedule trusted contractors to prepare the property, if necessary, and stage it. Stagers may be booked-out 4 to 6 weeks and photographers 3 to 4 weeks. I understand that any related sales expenses (e.g. brokerage fees, listing preparation costs, staging fees, etc.) may 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.