The Puget Sound Housing Market for 2022 will go down in history being categorized as “Metamorphic”.
For the first half of 2022, high demand and extremely low inventory, combined with low interest rates created a frenzied demand amidst rapidly inflating housing prices--a path that was unsustainable. For the second half of the year, inflation fighting from the Federal Reserve doused the red-hot housing market with over 100% increases in mortgage rates. These increases moved home mortgage interest rates from the 3% range to, at times, over 7% and caused home buyers to take a pause. This pause has caused: hesitance in home purchases; an increase in inventory; and reductions of home listing prices by motivated home sellers - all while demand/need remains high.
The MLS report for December showed continued growth in the number of active listings compared to the same month a year ago, but sharp drops in the number of pending and closed sales. Last month’s prices for single-family homes and condominiums that sold across the 26 counties in the report dropped one half of one percent (0.51%) from twelve months ago, marking the first year-over-year price decline since March 2012.
Year-over-year prices for last month’s sales of single-family homes and condos (combined) declined in 17 counties but still rose in nine counties.
Pierce County was one of the nine counties that had a year-to-date gain, up 10.2% for the average sales price. Pierce County also saw an increase in the median sales price, up 9.4%.
Kitsap County was another one of the nine counties that experienced a gain. The average sales price in Kitsap County rose 6.9% for a total of $645,404 year-to-date. The median sales price in this area had a gain of 9.1%.
Last year’s median price overall peaked in May 2022, at $660,000. The median price for single-family homes (excluding condos) that sold last month was $587,500, down less than one half of one percent (.42%) from a year ago when it was $590,000.
Considering the holidays, snow and a rare Pacific Northwest ice storm, these numbers are not surprising. Brokers added 2,980 new listings to inventory last month. That total was 1,637 fewer than the number added during December 2021 (4,617). At month-end, buyers could choose from 9,475 active listings, nearly three times as many as a year ago when 3,240 homes and condos were offered for sale area-wide.
With lower rates expected and inflationary pressures easing, Freddie Mac states, “A strong job market and large demographic tailwind of Millennial renters will provide support to the purchase market”. Frank Hawkins, President of Hawkins Poe, Inc. (located in Tacoma, Washington) agrees: “If interest rates continue to decline and sellers remain receptive, I see a buying opportunity for the first time in several years for home buyers”.
Data Provided by Northwest Multiple Listing Service