The Washington State housing market has been experiencing a period of change over the past year. With the COVID-19 pandemic causing major disruptions in the economy, it is no surprise that the real estate industry is also feeling the impact. In this blog post, we will discuss the current state of the Washington state housing market, what it means for buyers and sellers, and what the forecast for the future holds based on current trends and rising mortgage interest rates.
Washington Home Values
According to data released by Zillow, the average home value in Washington state is $562,936, which is down 1.5% over the past year. Despite this decrease in value, homes are still selling quickly, with an average of just 19 days to pending. The median sale-to-list ratio was 0.992 in February 2023, indicating that homes were selling at almost the asking price.
Forecast
The MSA-level forecast data by Zillow provides an overview of the expected changes in housing prices in various cities in Washington State. As per the forecast, the Seattle MSA is expected to experience a decline in home prices by 1% by March 2024, with a 0.3% decline by April 2023 and a 0.7% decline by June 2023.
On the other hand, Spokane is expected to see an increase in home prices by 3.4% by March 2024, with a 0.3% increase by April 2023 and a 0.5% increase by June 2023. Similarly, Yakima is also expected to see a rise in home prices by 3.1% by June 2023. Meanwhile, other cities like Olympia, Bremerton, and Bellingham may experience a slight decline in home prices, while others like Kennewick and Wenatchee may experience modest increases.
Based on the MSA level forecast data provided by Zillow, the following are the top 10 MSAs in Washington state where prices are expected to rise and fall by March 2024:
Top 10 MSAs where prices are expected to rise by March 2024:
Moses Lake, WA: The Moses Lake MSA is expected to see the largest increase in home prices by March 2024, with a forecasted rise of 4.5%.
Spokane, WA: The Spokane MSA is also expected to see a significant increase in home prices, with a forecasted rise of 3.4%.
Yakima, WA: The Yakima MSA is forecasted to see a rise of 3.1% in home prices by March 2024.
Pullman, WA: Pullman is expected to see a rise of 4.2% in home prices by March 2024, making it the fourth highest on this list.
Kennewick, WA: The Kennewick MSA is forecasted to see a rise of 2.2% in home prices by March 2024.
Walla Walla, WA: Walla Walla is forecasted to see a rise of 2.4% in home prices by March 2024.
Olympia, WA: The Olympia MSA is forecasted to see a rise of 1.6% in home prices by March 2024.
Bremerton, WA: The Bremerton MSA is forecasted to see a rise of 1.1% in home prices by March 2024.
Mount Vernon, WA: The Mount Vernon MSA is expected to see a rise of 1.2% in home prices by March 2024.
Longview, WA: The Longview MSA is forecasted to see a rise of 1.7% in home prices by March 2024.
It is important to note that the forecasts are based on a range of factors, including supply and demand, economic growth, and interest rates, among others. However, the actual changes in home prices may vary depending on various unforeseen circumstances. Therefore, it is essential for both buyers and sellers to monitor the market trends closely and work with a real estate agent who has experience and knowledge of the local market.
Impact on Buyers and Sellers
With home values decreasing, it may be an ideal time for buyers to purchase a home in Washington state. However, with the high demand and quick sale times, buyers must act fast to secure a home. For sellers, the decreasing home values may mean a need to adjust the asking price to remain competitive in the market. It may also be necessary to take steps to make the property more appealing to potential buyers, such as making repairs or improving the property’s curb appeal.
Mortgage interest rates in the United States have been steadily rising, which could impact the Washington state housing market. The cost of obtaining a mortgage decreases as soon as the interest rate does, which increases demand for real estate and raises home prices. However, the reverse is also true. If interest rates continue to rise, it could lead to a decrease in demand for real estate and lower home prices.
In conclusion, the Washington state housing market is experiencing a period of change due to the COVID-19 pandemic and rising mortgage interest rates. Home values are decreasing, and while some cities may see an increase, it is essential for both buyers and sellers to remain aware of the market trends and adjust accordingly. It is uncertain how the market will evolve, but the key is to remain informed and make decisions based on accurate and timely information.
Will the Housing Market Crash in Washington?
There is undoubtedly a slowdown in the pace of home sales in the Washington housing market, but it is more of a return to normalcy. This is neither a crash nor a bubble; housing demand is still present. The slowdown is ideal for buyers who are weary of being outbid in a hot Washington real estate market or who are experiencing buyer fatigue.
The current trends suggest that a sudden and significant crash is unlikely in the near future. Although rising mortgage interest rates may slow down the rapid price increases seen in recent years, the market is still expected to remain relatively strong.
There are several reasons why the housing market outlook in Washington appears positive. For one, the state’s real GDP experienced growth, and the tech industry and international trade continue to drive the economy. Additionally, population growth is driving demand for housing, and the state is adding new housing units to keep up with the growing population.
While rising interest rates may slow down the rate of price appreciation, real estate experts predict that prices will either level off or slightly rise in the near future. It’s important to note that unexpected events can always impact the housing market, but for now, the Washington housing market appears to be on a positive trend.
All-Transactions FHFA House Price Index for Washington (Quarterly)
Q4 2022: 940.88
Q3 2022: 967.16
Q2 2022: 975.48
Q1 2022: 911.22
Q4 2021: 872.62
The FHFA HPI in Washington State as of Q4 2022 is 940.88. It is a broad measure of the movement of single-family house prices and calculates average price changes in sales or refinancings on the same properties. Looking at the data provided, we can see that there has been a steady increase in the FHFA HPI in Washington State over the past year. From Q4 2021 to Q4 2022, the HPI increased from 872.62 to 940.88, indicating an overall positive trend in the housing market.
However, it’s important to note that the rate of increase has slowed down in recent quarters. From Q3 2022 to Q4 2022, there was only a slight increase of 26.28 points, compared to the larger increases seen in the previous quarters.
Based on these trends, we can predict that the Washington housing market will likely continue to see moderate growth in the near future. It’s possible that the rate of increase may continue to slow down, as seen in the most recent quarter, but overall, the market is expected to remain relatively strong.
Factors such as population growth, job growth, and interest rates may all play a role in the future trends of the housing market. As always, it’s important for buyers and sellers to stay informed and be prepared for any changes that may arise.
Source: FRED
Sources:
https://fred.stlouisfed.org/series/WASTHPI#
https://www.zillow.com/wa/home-values/
https://www.neighborhoodscout.com/wa/real-estate
https://fred.stlouisfed.org/series/ACTLISCOUWA#
https://www.redfin.com/city/13296/NE/Washington/housing-market
https://www.statista.com/statistics/306793/washington-gdp-growth/
https://en.wikipedia.org/wiki/Economy_of_Washington_(state)
https://ofm.wa.gov/about/news/2022/06/washington-tops-78-million-residents-2022
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