October was a scary month full of ghosts and goblins. But all the horrors of Halloween don’t mean the local housing market is full of doom and gloom. Scott Sheridan of Primary Residential Mortgage explains why this could be a fantastic time to capitalize on a slower housing market and reap the benefits in a potential HOT spring market.
The Puget Sound Real Estate Market
The October NWMLS Data is in. Comparing the numbers for King County in October 2018 versus October 2017 show:
- Supply Side
- 8.65% more new inventory released to the market compared to October 2017
- Which raised the total inventory count on the market 102.16%, to 6,283 homes for sale (versus 2017’s 3,108 homes for sale in October)
- Demand Side
- Number of homes getting into contract for sale fell 18.57%
- Number of purchases that closed in October 2018 was 17.52% less than the number of purchases that closed in October 2017
- All these numbers result in 2.4 total months of inventory (as calculated by 6,283 total number of homes for sale divided by the number of closings in the month of 2,618). This is 144.9% MORE months of inventory than we had last year at this time.
Sifting Through the Data
This all may sound bleak, but it could be a GREAT opportunity to adapt! What’s important to note is despite all this not-so-good data, housing prices are still 8.59% HIGHER in October 2018 than October 2017 in King County! The reason for this is because inventory usually drops in the winter. This usually causes housing prices to rise. Housing prices rose about 21.3% last winter within Seattle city limits. So though the Puget Sound housing market took two steps back these past few months, it has taken 3 steps forward prior to the 2 steps back. This explains the higher housing prices now than the same time last year, despite the data.
There’s no arguing that housing prices in Seattle are about to appreciate this winter like they did last winter. But with falling inventory levels on the near horizon, it is easy to be confident that housing prices now are likely to be as low as they’re going to be in the foreseeable future. Traditionally housing prices start to rise in the winter due to falling inventory. Looking at the data, inventory did start its annual decline in Seattle (3.62% decline in inventory week over week).
Another thing to consider when entering the housing market is interest rates. Per Bankrate.com, the 30 Year Mortgage interest rates rose 4 basis points this past week, and are now at 5.10%. Rates are 1.06% higher than the 52-week low-interest rate and are now at their highest levels since February 2011.
Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc. He has been in the mortgage industry for three years and brings a fresh millennial flair to the mortgage industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. He combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer. You can follow Scott’s weekly market updates on his PRMI Facebook Page.