Just two weeks ago we predicted that January would be a competitive month as buyers rush to find a home before mortgage rates climb—and that's exactly what we're seeing.
Prices surged last week 16% over 2021, kicking off what could be the most competitive month in housing history.
Projections are homes listed by March and closing in April will see the maximum number of bidding wars and escalating prices.
According to NWMLS, despite historically low inventory levels, home sales in the Central Puget Sound region increased to levels not seen since 2006, with Pierce and Kitsap counties seeing the most sales ever. Mortgage rates were historically low, and the ongoing pandemic drew a flood of buyers into a market with a scarcity of available homes. This resulted in double-digit price increases throughout the Puget Sound region.
The Puget Sound region is in desperate need of additional housing units, which would serve to slow the area's existing housing price growth. Costs, on the other hand, continue to constrain construction activity, and this is unlikely to change significantly in 2022. At month's end, there were 3,240 active listings of single-family houses and condominiums in the area (NWMLS's 26 counties), the first time the selection has dipped below 4,000 listings.
According to Realtor.com, King County is a seller's real estate market. Low-interest rates and continued job growth continue to drive the market. If the Median Listing Price is increasing, the market is likely “hot,” and homes will sell more quickly. When prices increase, sellers will benefit.
Stated another way, there were less than two weeks of supply (0.40) at month-end, which is still significantly less than the industry's “balanced market” indicator of four to six months. Inventory was even more sparse in seven counties, with Snohomish having the most acute shortage at 0.20 months. Other counties that fell below 0.40 months were Clark (0.26), King (0.27), Island (0.29), Pierce (0.32), Thurston (0.31), and Kitsap (0.38).
To summarize the last month's statistics, we can say that All King County & Seattle remains a seller's real estate market with only 0.27 months of inventory — still well below what is required to meet the volume of buyers right now. In the current market environment, home buyers are trying to take advantage of low-interest rates, and the local real estate agents are struggling to meet the demand.
According to local realtors, the ongoing combination of low mortgage rates and escalating prices has both buyers and sellers taking advantage of the market. Buyers are finding well-priced homes in good condition, and sellers are seeing many multiple offer situations.
When is the best time to sell in 2022?
While there will always be variables such as quality of upgrades, location, and market conditions such as lack of inventory we are facing a unique situation in 2022.
1) Interest rates are predicted to increase to 3.7 possible by as early as June and be around 4% by year's end.
2) Conforming loans also received a huge increase from the 2021 cap of $776,250 up to $891,250. That’s an increase of $115,000 and adds much more buying power early before the interest rate increases.
3) We are also faced with historically low inventory. In fact, inventory has dropped 90% in the past 10 years, and we currently only have a little over 4,000 homes for sale in all of Western Washington with a population of 5.5 million people. Additionally, we are projected to add upwards of 200,000 more people per year for the next 10 years.
All of this creates a perfect storm for listing early in 2022.
- Frustrated buyers with pent up demand seeing projections of homes increasing another 18 to 20% for 2022.
- Increased buying power of $115,000 for conforming loan limits.
- Pressure to buy NOW while rates remain closer to 3%.
In December 2021, Sammamish home prices were up 60.0% compared to last year, selling for a median price of $1.9M. On average, homes in Sammamish sell after 5 days on the market compared to 7 days last year. There were 48 homes sold in December this year, down from 102 last year.
- Most homes get multiple offers, often with waived contingencies.
- The average homes sell for about 9% above list price and go pending in around 5 days.