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Dawg Days of Fall | WMU 9.3.21

Dawg Days of Fall Washing University Arena
Sep 8, 2021 02:53 PM

By: Kyle Bergquist

Puget Sound Real Estate:  Dog Days of Summer turn to Dawg Days of Fall

Every once in a while I’m just looking for an opportunity to pump up my 20th ranked alma mater, but it is true that the Dog Days of Summer are over and it’s worth taking a look at where the housing market ended up this summer.  Early next week the NWMLS will release its August report on the Puget Sound Housing Market.  Outside of November through January, August can easily be argued to be the fourth softest month in the housing market on an annual basis.  So don’t be surprised if some of the headlines preach that the market softened in August…it USUALLY softens in August relative to June and July…but then picks right back up for a Fall Surge in September and October before the holidays temper things back down in November – Historically speaking anyway.

Based on NWMLS data for single family residences, August 15th had 981 Pendings and 727 Active listings within the Seattle City limits.  On one hand the 981 Pendings is down from 1,236 Pendings on June 1, 2021 (down 20.63%); but on the other, August 15th 2021 Pendings are up 49.32% compared to August 15th, 2019 (Before COVID). 

According to Altos Research, the median list price of a single family residence in Seattle was down 5.67% on August 15th, 2021 compared to the record high set just a few weeks earlier at $875,000.  On the other hand, the median list price of a single family residence in Seattle was up 10.07% compared to August 15, 2019 (Before COVID).  And lastly, according to the latest Case Shiller Index released last week, Greater Puget Sound Prices for June 2021 are up 25% compared to June 2020. 

Going the Distance

The Dog Days of Summer are slower due to Buyer Fatigue from the Spring Market and Buyer vacations before school starts.  Don’t be surprised if some of the content released next week discusses a “softer” market…it’s not.  It’s only softer when you compare it to the Spring Mayhem Market.  Compare it to previous August markets, and we’re still rocking it.  Historically speaking the Puget Sound Housing market will heat up again through the end of October as rejuvenated buyers look to land a deal before the Holidays. 

Overall, the Northwest Housing Market is as strong as any real estate market out there.  Amazon has postings for 14,000 corporate (not warehouse) jobs across Seattle and Bellevue; Facebook has 815 job openings paying more than $95k; and Microsoft has 2,232 job openings paying more than $100k.  Add on a plethora of smaller firms opening offices and hiring STEM jobs in the region, and Puget Sound’s Housing Market is supported by a straight up titanium backbone of an economy. 

The biggest future headwinds for our housing market could be higher mortgage interest rates (but now that we’re onto the possibly scarier Mu Variant coming to the US in the next month or so, I don’t suspect mortgage interest rates will climb much as investor dollars stay parked in the relative safety of Mortgage Backed Securities); or a supply glut.  The supply glut headwind seems most applicable with the Downtown Seattle Association reporting a record 11,979 new housing units opening up in 2021 and 2022, but so long as people opt to stay in their homes forever, it seems to me that even though we might have a lot of apartments and condos on the way, we’ll be short on single family residences for quite some time. 

Extra Credit

For everyone thinking our market is priced too high, remember that’s simply a perspective rooted in context.  According to Altos Research, Median House Prices in San Francisco are $1.495m, and San Jose is at $1.299m.  So relative to where a lot of this STEM talent is being imported from, Seattle prices are a bargain. 

Knowledge is Power, and The Greatest Investment on Earth is Earth. 

Go Dawgs!

30 plus year homeowners in King County map

Interest Rates

Per Bankrate’s survey of large lenders, the 30 year mortgage interest rate fell this past week to 3.03%, with .35 in discount and origination points.

According to Bankrate, 30 Year Fixed Rates have fallen .31% since their 52 week high of 3.34%
(That’s a savings of $84.69 per month on a $500,000 loan!)

Mortgage Interest Rates April 2020 - Sept 2021 graph

Kyle’s Quick Take – Mortgage Market Week in Review

Interest rates have moved largely sideways the past couple weeks as the markets digest all that’s happening – rebound in the economy paired with fears of Delta and now the Mu Variants.  Rates will break out one way or another in the next week or so as they get squeezed by technicals (moving averages closing in from both sides).  I’m not a Betting Man (or a very good one anyway), but I would guess that as the weather starts to turn, COVID cases will rise as people congregate indoors more.  This could open the window for a slightly depressed economy which should push mortgage rates slightly lower. 

WHAT YOU NEED TO KNOW FOR WHERE RATES WILL GO:

  • Good Economic News or Inflation = Bad for Mortgage Interest Rates. 
  • Bad Economic News or Deflation = Good for Mortgage Interest Rates. 

Puget Sound Real Estate:  Charts and Data

Absorption Rates per NWMLS Real Time Data

 

Absorption Rate is calculated as:  (Pending Sales) / (Active + Pending Sales)

SFR in Seattle

  • SFR Pending Sales in Seattle:  881 homes
  • SFR Active Listings in Seattle:  640 homes  
  • Absorption Rate for SFR in Seattle:  57.92%
    • Competition is driving prices higher.  So long as the absorption rate can stay high, escalation clauses will likely keep pushing prices even higher than where we’re at today in the weeks to come.  

Absorption Rate - Median Price for SFR graph

Condos in Seattle

  • Condo Pending Sales in Seattle:  350 condos
  • Condo Active Listings in Seattle:  499 condos
  • Absorption Rate for Condos in Seattle:  41.22%  
    • A relatively high absorption rate gave us a strong floor for median condo prices to jump higher earlier this year.  So long as the absorption rate can stay strong, escalation clauses will likely keep pushing median condo prices higher than where we’re at today in the weeks to come.  

Absorption Rate - Median Price for Condo graph

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