The Fear Factor

What drives the real estate market?

What drives the real estate market? Is it buyers? Sellers? Interest rates, or something else? The answer is D: All of the above. But most of all, those factors all draw from fear.

What are we so afraid of?

Jobs

Understandably, many people are currently worried about job security, especially in the big-tech-heavy Pacific NW. In the post-COVID world, whether or not these workers have had to return to the office at all, or at least sometimes, is still TBD.

Many are still working from home, at least most of the time. And many also bought a home during the #WFH boom times in 2020-2022. Those folks are probably thinking, “What if I lose my job?!” It’s hard to think about selling or buying a home when you’re not sure how you’ll pay the mortgage.

Interest Rates

Will they go up? Will they go down? What should I do???

The answer is YES. Rates will rise, and rates will fall. Should you buy? Should you sell? The answer to all is yes…at least to 2 of those 3. The answer to whether one should buy or sell depends on the circumstances, and as always, depends on what is most important to you.

Since no one gets to have their cake and eat it too (at least in real estate), buyers and sellers need to weigh options against their personal circumstances.

When mortgage interest rates are super-low, as in 2020 through most of 2022, buyers were SUPER happy. If they could land a house. Now that rates have risen back to 2007 levels, buyers are balking (or have been knocked out of the market), and sellers are reluctant to move and lose out on that sweet, sweet low rate.

It’s all about fear of losing what you have: a home with a really low interest rate.

Prices

If you read the national news, you have seen articles stating how prices have fallen 8-10%.

News like that makes sellers afraid of how much prices will drop, and buyers fear paying too much while prices are on the way down.

But in the Puget Sound region, particularly King, Kitsap, and Pierce counties, prices have dropped about 4-5% and they appear to be leveling off for now.

Days on Market crept up over the holiday months as they tend to do, but watch what happens this spring now that we’re back to circa-2019 DOM.

And rumor has it, the lack of inventory has begun to bring back the bidding wars in the Seattle area. (Sound familiar?)

Stalemate

For now, it is hard to tell if this is just a normal winter season, or something more. The market is always slow from early November through about late February. And so, we wait.

Buyers wait to see if they still have a job, and if interest rates have stabilized…or if there’s more volatility to come.

Sellers wait to see what the buyer pool will look like, and where prices will be when the time comes to put a home on the market.

Time Will Tell

The real estate market this time of year is a lot like throwing a party. We invite the guests, get the place cleaned up, put on our party clothes, and wait to see who shows up.

The last few years were a rager. We think 2023 will be a more mellow affair, but still well-attended

What do you think?