King County’s cooling housing market has turned downright chilly as prices have dropped to their lowest point in two years — with the median home now selling for $116,000 less than last spring.
This is the time of year when home prices typically have a seasonal dip, but not like this: The median single-family house countywide sold for $29,000 less in January compared to the previous month, or three times the normal seasonal decline.
Even on a year-over-year basis, prices declined 3% — the first annual drop since the market bottomed out in the housing bust seven years ago, according to data released Thursday by the Northwest Multiple Listing Service.
The median King County house price of $610,000 was the lowest since March 2017, when prices first reached $600,000. Last May, at the peak of the market, homes were selling for $726,000.
The total 16 percent price drop over the last eight months is the second-biggest decline for any eight-month period on record dating back two decades. During the peak of the housing bubble a decade ago, prices sank 18 percent from July 2008 to March 2009.
The turnaround is even more pronounced when zeroing in just on the city of Seattle. The median home in the city sold for $711,000, a decrease of 6% in a year and down $119,000 since last spring’s peak.
On the Eastside, prices dipped 3% over the past year, to $910,000, though prices remained virtually unchanged from a month prior.
Prices still grew slightly, on a year-over-year basis, at the southern and northern edges of the county, where homes are lower-priced.
The number of homes sitting unsold has more than doubled in the past year across the county. And while that’s been the trend for a while, new this month is a partial reason why: More people are putting their homes up for sale, as opposed to homes sitting unsold for longer. Sales were still down slightly but did not plummet in the way they did earlier this winter and last fall.
Buyers are starting to leverage the cooling market to their advantage. Interviews with eight people who are either currently looking for a house or recently bought one show discounts — at least by Seattle standards — can be had for those willing to negotiate and be patient.
Home shoppers reported seeing never-been-lived-in townhomes drop $100,000 off their price. They were able to convince sellers to pay for thousands of dollars in closing costs and potentially tens of thousands more if an inspection turned up significant problems. And they successfully waited until after the traditional “offer review” deadline, typically a week after the home goes on the market, to swoop in with a “lowball” offer if it’s still on the market.
Matt Holt and his fiance began looking for a house a year ago when the market was still sizzling, only to find 15-20 offers on every house they put an offer on. They went as high as $60,000 over asking price on a house in Renton last year and agreed to waive the contingency that would have allowed them to back out of a deal if an inspection showed the house needed work — but they still didn’t get a house at the time.
Then they got back into the market and just closed on another Renton house this week for $10,000 under asking price, with no contingencies waived.
“We went from going $60,000 over to $10,000 under on pretty similar houses in the span of eight months,” Holt said. The “competition disappeared.”
Renter Bill Sablan has noticed lenders getting more flexible, willing to give mortgages for as little as 5% down (the average locally is about 20%) and to count restricted stock units toward assets before they even vest.
“Last year we looked at the selling price as a starting point that we’d have to go up from,” Sablan said. “This year we look at it as a starting point where we can make an offer less than.”
For years the high prices had scared buyers into acting immediately out of fear that they’d have to pay even more if they waited, but that’s no longer the case.
“I’ve got a feeling we won’t see a substantial drop in home prices because the underlying economics in the region are solid, but I also think the hyperinflation is done for now — that waiting one to two years won’t be a terrible idea,” said Anthony Avery, who is preapproved for a home mortgage but is willing to rent for a while to save up more.
He’s seen homes he’s looked at drop their price by $20,000 to $30,000, and that’s often a precursor for another price drop after that. “So there’s no urgency,” he said.
Adding to the good news for homebuyers is that interest rates have been on the decline in the last few months, falling back to the levels reached last spring.
Home prices continue to fall here at the fastest rate in the nation, but it hasn’t made the Seattle area affordable or do much to counteract the soaring prices during much of this decade. From the bottom of the housing bust in 2012 to the peak of the market last spring, prices soared 136%. Since the market started to slow, prices have dropped a total of 16% in the last eight months.
Looking at trends in specific neighborhoods this time of year can be tricky because home sales volumes are low, leading to heightened volatility. But prices over the past year dropped the most in West Bellevue (down 28%), North Seattle (19%), Southeast Seattle (18%), East Bellevue (12%) and Jovita/West Hill Auburn (11%).
The condo market also continues to cool. Countywide in the past year, condo inventory has tripled and prices ticked up less than 1%, to $384,000.
As has been the case for several months, the market in Snohomish County remains slow: The median single-family house sale of $455,000 was up just 1% in the past year, and well below the high of $511,000 reached last spring. Inventory has also doubled in the past year in Snohomish.
But things aren’t changing quite as fast in the rest of the Puget Sound region, where homes are still more affordable. In Pierce County, the median home price of $330,000 was up 5.5% in the past year, while in Kitsap County, prices soared 14.7% in a year to $344,000.
Tribune Content Agency