Historically, the summer months typically bring our highest inventory levels of the year in the Puget Sound market, but the story being written this year is not one that repeats history. As mortgage rates began a speedy climb last year, we saw an expected move to the sidelines for many buyers and a sharp decline in pending sales. At the same time, inventory levels were contracting as they typically do during the winter months. But 2023 is playing out differently than previous years as we welcome the summer sunshine.
Typically, we would see inventory climb throughout the spring and reach peak levels in July or August, yet that's not happening. At the same time, and to the surprise of many, pending sales began to take off again even though mortgage rates haven’t pushed downward.
You'll notice the orange line in the graph below (pending sales) quickly rebounded early in the year and has continued to trend upward, for the most part. At the same time, listing inventory (in blue) is lagging behind. Even with rates nearly twice what they were early last year, the buyers are still out in force, yet the supply of available homes has not increased as it typically would during this time of year.
What's going on? As much as the higher interest rate environment influenced buyers and their purchasing power, it's becoming quite clear that inventory is remaining low because many would-be sellers are deciding to stay in their house with a 3 or 3.5% mortgage vs. selling and buying a new one at 6.5-7% rates.
What does this mean for you as a seller? Although buyers are taking a bit more time and being more selective, they still don't have a ton of choices and that bodes well for you. Prices are strengthening and multiple offers aren’t uncommon for some properties. With proper preparation, sharp staging and a smart pricing strategy, our sellers are seeing considerable interest and solid results!
What does this mean for you as a buyer? Competition among buyers still exists, but not the insane dynamics we saw in 2021 and 2022. It's easier to get under contract, but you'll also be paying a higher interest rate. However, if you're waiting for rates to fall, there’s no guarantee they will. If they do, expect to see more buyers return to the market and prices trend upward as demand outpaces new listings. If you can make the equation work now at current rates, it still may be a good time to purchase. If they go up, you didn't miss out on locking in current rates. If they go down, you can refinance and improve your monthly payment.
We'll continue to keep an eye on the market and report back, but please don't hesitate to reach and discuss your particular situation and how you might navigate our exciting and ever-changing Puget Sound real estate market.