Q4 2022 Western Washington Economic & Real Estate Update
The following analysis of select counties of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. I hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.
Regional Economic Overview
Although the job market in Western Washington continues to grow, the pace has started to slow. The region added over 91,000 new jobs during the past year, but the 12-month growth rate is now below 100,000, a level we have not seen since the start of the post-COVID job recovery. That said, all but three counties have recovered completely from their pandemic job losses and total regional employment is up more than 52,000 jobs. The regional unemployment rate in November was 3.8%, which was marginally above the 3.7% level of a year ago. Many business owners across the country are pondering whether we are likely to enter a recession this year. As a result, it’s very possible that they will start to slow their expansion in anticipation of an economic contraction.
Western Washington Home Sales
❱ In the final quarter of 2022, 12,711 homes sold, representing a drop of 42% from the same period in 2021. Sales were 34.7% lower than in the third quarter of 2022.
❱ Listing activity rose in every market year over year but fell more than 26% compared to the third quarter, which is expected given the time of year.
❱ Home sales fell across the board relative to the fourth quarter of 2021 and the third quarter of 2022.
❱ Pending sales (demand) outpaced listings (supply) by a factor of 1:2. This was down from 1:6 in the third quarter. That ratio has been trending lower for the past year, which suggests that buyers are being more cautious and may be waiting for mortgage rates to drop.
Western Washington Home Prices
❱ Sale prices fell an average of 2% compared to the same period the year prior and were 6.1% lower than in the third quarter of 2022. The average sale price was $702,653.
❱ The median listing price in the fourth quarter of 2022 was 5% lower than in the third quarter. Only Skagit County experienced higher asking prices. Clearly, sellers are starting to be more realistic about the shift in the market.
❱ Even though the region saw aggregate prices fall, prices rose in six counties year over year.
❱ Much will be said about the drop in prices, but I am not overly concerned. Like most of the country, the Western Washington market went through a period of artificially low borrowing costs, which caused home values to soar. But now prices are trending back to more normalized levels, which I believe is a good thing.
Mortgage Rates
Rates rose dramatically in 2022, but I believe that they have now peaked. Mortgage rates are primarily based on the prices and yields of bonds, and while bonds take cues from several places, they are always impacted by inflation and the economy at large. If inflation continues to fall, as I expect it will, rates will continue to drop.
My current forecast is that mortgage rates will trend lower as we move through the year. While this may be good news for home buyers, rates will still be higher than they have become accustomed to. Even as the cost of borrowing falls, home prices in expensive markets such as Western Washington will probably fall a bit more to compensate for rates that will likely hold above 6% until early summer.
Western Washington Days on Market
❱ It took an average of 41 days for homes to sell in the fourth quarter of 2022. This was 17 more days than in the same quarter of 2021, and 16 days more than in the third quarter of 2022.
❱ King County was again the tightest market in Western Washington, with homes taking an average of 31 days to find a buyer.
❱ All counties contained in this report saw the average time on market rise from the same period a year ago.
❱ Year over year, the greatest increase in market time was Snohomish County, where it took an average of 23 more days to find a buyer. Compared to the third quarter of 2022, San Juan County saw average market time rise the most (from 34 to 74 days).
Conclusions
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
The regional economy is still growing, but it is showing signs of slowing. Although this is not an immediate concern, if employees start to worry about job security, they may decide to wait before making the decision to buy or sell a home. As we move through the spring I believe the market will be fairly soft, but I would caution buyers who think conditions are completely shifting in their direction. Due to the large number of homeowners who have a mortgage at 3% or lower, I simply don’t believe the market will become oversupplied with inventory, which will keep home values from dropping too significantly.
Ultimately, however, the market will benefit buyers more than sellers, at least for the time being. As such, I have moved the needle as close to the balance line as we have seen in a very long time.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
This article originally appeared on the Windermere blog January 26th, 2023. Written by: Matthew Gardner.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Favorite Local Pumpkin Patches
Grab your boots, pack a thermos…it’s time to choose those perfect Halloween pumpkins! This year, why not explore a new town and make your pumpkin patch experience a true adventure? All of these farms are open every weekend in October, and most are open on weekdays too. Some even welcome your furry family members on a leash. Scroll down for the full scoop!
Eastside | North of Seattle | South of Seattle
Eastside
Fletcher Farm
Dog-friendly with a scavenger hunt, farm animal zoo, storybook trail, mini-golf, photo stations, and junior corn maze for the little ones. End of season Halloween Bash, too!
18712 SE May Valley Road | Issaquah
fletcherfarmevents@gmail.com
fletcherfarmissaquah.com
Jubilee Farm
Hay rides, food trucks, music, hay maze, & hot apple cider.
229 W Snoqualmie River Rd NE | Carnation
(425) 222-4558
jubileefarm.org
Novelty Hill Farm
Dog-friendly! Corn maze, farm animals, trike track, & games.
26617 NE 124th Street | Duvall
(425) 788-2416
noveltyhillfarm.com
Oxbow Farm & Conservation Center
Live music, scavenger hunt, hay rides, mini pumpkin decoration, climbing tractor, conservation tours, & apple slingshot.
10819 Carnation-Duvall Rd. NE | Carnation
(425) 788-1134
oxbow.org/oxtober
Remlinger Farms
25 rides & attractions for children (including a train, carousel, & mini roller-coaster!), pony rides, apple cannon, restaurant, & new brewery with 20 choices on tap.
32610 NE 32nd Street | Carnation, WA
(425) 451-8740
remlingerfarms.com
Serres Farm
Mini train rides, corn maze and a dazzling variety of specialty pumpkins.
20306 NE 50th St | Redmond, WA
(425) 868-3017
serresfarm.com/pumpkin-patch
Two Brothers Pumpkins at Game Haven Farm
Baby calves and an eerie number of well-attired scarecrows.
7110 310th Avenue NE | Carnation, WA
(425) 333-4313
facebook.com/twobrotherspumpkins
North of Seattle
Bailey Vegetables
Kettle corn, cider, U-pick apples, baked goods, and kids play area with hay run, farm trikes & sandbox.
12691 Springhetti Rd | Snohomish
(360) 568-8826
baileyveg.com/pumpkin-patch
Bob’s Corn & Pumpkin Farm
12-acre corn maze, 2 kids’ mazes, play barn, hay rides, trike track, & apple cannon. Fire pit rentals for private groups, too!
10917 Elliott Road | Snohomish
(360) 668-2506
bobscorn.com/pumpkins
Carleton Farm
5-acre corn maze, playground, paintball gallery, apple guns, hay rides, & kids’ bucket train.
630 Sunnyside Blvd SE | Lake Stevens, WA
(425) 343-4963
carletonfarm.com/fall-fun
Craven Farm
15-acre corn maze, kids maze, farm animals, mini golf, cow train, foosball, espresso, cider donuts, & scarecrow making. Fire pit rentals and special dog-friendly days, too!
13817 Short School Road | Snohomish
(360) 568-2601
cravenfarm.com/fall-festival
Fairbank Animal & Pumpkin Farm
Lots of baby animals, “corn maize maze,” hay tunnel, toy duck races, photo boards, & veggie garden.
15308 52nd Ave W | Edmonds
(425) 743-3694
fairbankfarm.com
Stocker Farms
30+ attractions including a giant jumping pillow, tire mountain, epic play area, zip line, corn maze, pumpkin cannon, & more. The farm’s evil twin, Stalker Farms, comes out at night.
8705 Marsh Rd | Snohomish
(360) 568-7391
stockerfarms.com
Swans Trail Farms
Washington State corn maze, kids corn maze, petting farm, wagon rides, big slides, zip lines, u-pick apple orchard & live duck races.
7301 Rivershore Rd | Snohomish
(425) 330-3084
swanstrailfarms.com
South of Seattle
Carpinito Brothers Corn Maze & Pumpkin Patch
Rubber duck races, hay slides, corn pit, farm animals, hay maze, & corn maze.
Pumpkin Patch: 27508 W Valley Hwy N | Kent
Farm Fun Yard: 6720 S 277th St | Kent
(253) 854-5692
carpinito.com
Maris Farms
Racing pigs & ducks, mega slide, corn maze, jump pillow, animals, zip lines, rides, plus the creepy “Haunted Woods” complete with zombies and homicidal maniacs.
25001 Sumner-Buckley Highway | Buckley
(253) 862-2848
marisfarms.com
Mosby Farms
Dog-friendly! Corn maze and fresh farm market.
3104 SE Auburn-Black Diamond Rd | Auburn
(253) 405-0711
mosbyfarm.com/pumpkinpatch
Spooner Farms
Corn maze, pumpkin sling shot, speedway, farm animals, caramel apples, & roasted corn.
9710 State Route 162 East | Puyallup
(253) 840-2059
spoonerberries.com
Thomasson Family Farm
Laser tag, corn maze, play barn, farm animals, slides, duck races, trike track, apple slingshot, and giant Jenga & Connect 4.
38223 236th Avenue SE | Enumclaw
(360) 802-0503
thomassonfarm.com
We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
2737 77th Ave SE, Mercer Island, WA 98040 | (206) 232-0446
mercerisland@windermere.com
© Copyright 2022 Windermere Mercer Island
Economic Insights from Matthew Gardner
As we all hunker down through these challenging times, it is comforting to remember that there will be light at the end of the tunnel.
A voice of calm and reason in this time of uncertainty has been our Windermere Chief Economist, Matthew Gardner. While he is expecting an economic slowdown accompanied by a temporary 15-20% reduction in the number of homes sold, he believes the housing market will bounce back once we find our new normal.
Click here to watch his latest videos, or scroll down for some key takeaways…
The US economy will contract sharply but should perk up by Q4.
We’re in for a rough few quarters as the economy enters a recession. Just how rough—and how long—is still under debate. What economists do agree on is that the 4th quarter is looking remarkably positive…assuming we get through the COVID-19 crisis and the economy can resume somewhat normal activity before the fall.
Housing prices will likely remain stable.
Seattle home prices should remain steady—or even rise slowly as we come out of the recession—for a few reasons:
- DIVERSE INDUSTRIES IN OUR AREA which allow us to better weather the economic storm.
- SOLID FINANCIAL FOOTING as one third of local home owners have 50% or greater equity in their homes.
- STRONG DEMAND with more buyers than homes available, as well as rock-bottom interest rates.
This will be different than 2008…
We’re experiencing a health crisis, not a housing crisis.
- WE’LL SEE A PAUSE, NOT A COLLAPSE. Unlike last time, the housing market was strong going into this crisis and should rebound quickly. Why? Because this recession will be due to specific external factors rather than any fundamental problem with the housing market.
- FORECLOSURES WILL BE FEWER with most lenders offering relief to homeowners in distress due to temporary employment issues. Unlike 2008’s mortgage crisis caused by lax lending standards and low down payments, today’s home owners are better qualified and have more equity in their homes.
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We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
2737 77th Ave SE, Mercer Island, WA 98040 | (206) 232-0446
© Copyright 2020, Windermere Real Estate / Mercer Island