Sales Activity Intensity

Current Effect in Snohomish County:

With approximately 67.9% of homes selling within the first 30 days on the market, Snohomish County is experiencing a high level of sales activity. This strong demand signals a market where buyers need to act with urgency and decisiveness. Homes are selling quickly, often receiving multiple offers, many of which surpass the asking prices. This trend is pushing home prices higher and reducing the duration homes remain on the market, creating a seller's market where bidding wars are common.

Monthly Inventory Levels

Current Effect in Snohomish County:

Inventory levels in Snohomish County are low, with only about 1.3 months of supply. This shortage of homes available for sale heavily favors sellers, maintaining the market's competitive nature. The scarcity of available homes means heightened competition among buyers, leading to rapid sales and further amplifying the upward pressure on home prices.

Interest Rates

Current Effect in Snohomish County:

Interest rates in Snohomish County currently sit at an uncomfortable 7.14%, presenting a mixed impact on the market. On one side, these higher rates diminish the overall buying power, which could potentially slow buyer activity. On the other side, despite these higher rates, the market continues to experience robust activity due to strong demand and limited inventory. Although the high rates have not significantly dampened market enthusiasm yet, they are making affordability a pressing concern, especially for first-time and lower-income homebuyers.

Combined Impact on the Market

The confluence of these factors results in a highly active and seller-favorable market environment in Snohomish County. The intense sales activity and low inventory levels forge a market where sellers have significant leverage, commanding higher prices and expecting quick sales. However, the rising interest rates are beginning to inject caution into the market, as buyers need to consider the increased monthly costs of mortgage payments.

Looking forward, the Snohomish County housing market may continue to see high levels of activity, but the sustainability of this trend could be tested if interest rates keep climbing or if economic conditions shift. Potential buyers might find themselves increasingly priced out of the market, which could eventually lead to a cooling period if demand wanes.

For both buyers and sellers, grasping these market dynamics is essential. Buyers should be prepared to make swift and informed decisions, potentially exploring various financial options to counteract the impact of high interest rates. Sellers, currently in a favorable position, should remain vigilant about potential changes that could affect buyer interest and overall market activity.

This detailed understanding of the Snohomish County housing market underscores the importance of strategic planning and market awareness for anyone looking to buy or sell in this vibrant yet challenging market environment.

Residential Resale, Condos & New Construction in Snohomish County

As of July 2024, the Snohomish County housing market displays distinct characteristics across different property types—resale residential homes, condominiums, and new construction. Each category influences the real estate market in unique ways due to varying buyer demands and economic conditions.

Resale Residential Homes

Current Status: The resale market in Snohomish County remains highly active, driven by limited inventory and continuous demand. Homes frequently receive multiple offers and are selling swiftly, often above the asking price. This dynamic is fueled by the overall shortage of available properties, which pushes prices upward and shortens the time homes stay on the market.

Impact on the Market: Resale homes are crucial in defining market dynamics because they constitute a significant portion of the available inventory. Their rapid turnover and escalating prices help sustain the momentum in Snohomish County's housing market, reinforcing its status as a seller's market.

Condominiums

Current Status: Condos in Snohomish County are seeing increased demand, particularly among first-time homebuyers and those seeking lower-maintenance living. While the market is hot overall, condos offer a more accessible entry point into homeownership. However, they come with HOA fees, which can impact overall affordability.

Impact on the Market: Condos typically attract a different buyer segment than single-family homes. They absorb some of the demand from buyers priced out of standalone homes or those preferring an urban lifestyle with amenities. This segment helps diversify the real estate market and stabilizes growth by providing alternative housing options.

New Construction

Current Status: New construction homes in Snohomish County are in high demand for their modern amenities and customization options. However, these properties also carry higher price tags. The rate of new construction can be influenced by factors like land availability, building costs, and regulatory issues. New developments are crucial to meeting growing demand but often fall short of significantly altering the inventory shortage.

Impact on the Market: New constructions are vital for long-term market health as they increase the overall housing supply. They stabilize property values by offering high-quality alternatives at premium prices, which can help moderate the price increases seen in the resale market.

Market Trends and Implications

The narrowing price gap between resale homes and new constructions in Snohomish County marks a significant shift from historical norms. Traditionally, new construction homes have commanded a premium due to modern features, fewer immediate repairs, and builder warranties. However, as of July 2024, the difference in cost between new constructions and resale homes has decreased due to rising costs and decreased availability of resale homes, which have driven up prices significantly. Additionally, market saturation and competition among builders might be influencing pricing strategies to attract buyers who have more options among resale properties.

Implications for Market Participants:

• Buyers: New constructions are now more accessible without the traditional premium, offering customization options and fewer immediate repairs.
• Sellers of Resale Homes: These sellers might face challenges competing with new constructions if they cannot offer comparable value, leading to a need for strategic pricing and potentially updates or enhancements to make their properties more appealing.

The Fed's Influence

In July 2024, the Federal Reserve decided to maintain the current interest rate levels, keeping them steady at 5.25% to 5.50%. This decision reflects the Fed's delicate balance of fostering economic growth while controlling inflation. Recent statements from the Fed indicate that they are taking a cautious approach, waiting to see sustained improvements in inflation before making further adjustments​ (Investopedia)​​ (Federal Reserve)​.

The choice to hold interest rates steady suggests a cautious stance by the Fed amidst current economic indicators. This approach often indicates an attempt to monitor ongoing economic trends without introducing additional stimulus or constraints. For the Snohomish County real estate market, this implies that mortgage rates might remain relatively higher than the historic lows previously experienced, at least in the short term. Higher borrowing costs can impact buyer affordability and could decelerate some housing market activities​​.

However, the Fed has projected that these rates might decrease slightly later in the year if economic conditions like inflation stabilize towards their target of around 2%. This anticipation of potential rate cuts could signal a shift in the economic landscape. If the Fed begins to reduce rates, it could lead to a revival in buyer activity as financing becomes more affordable, potentially stimulating home demand and supporting the market​​.

In the immediate future, while steady rates might slightly cool the housing market by keeping borrowing costs elevated, the projected reductions in interest rates over the next couple of years could energize it. This scenario presents a complex landscape for both buyers and sellers to navigate, highlighting the necessity of staying well-informed about upcoming economic and policy changes as they make their real estate decisions.

Bonus Tip: With the market's current dynamics, some listings, especially those on the market for more than 7-10 days, may offer negotiation opportunities for seller's concessions. These concessions could potentially be applied toward your closing costs. Now might be a particularly advantageous time to negotiate seller concessions for buying down your interest rate, whether through a permanent or a temporary 2/1 buydown. This strategy can provide financial relief and improve the affordability of a mortgage amidst higher interest rates.

Seasonality

Seasonality significantly influences the real estate market in Snohomish County, impacting everything from inventory levels to buyer behavior. Typically, the market reaches its peak activity from March through May, widely regarded as the optimal time to list homes due to several factors:

Increased Demand: The desire to relocate and settle before the new school year boosts buyer activity in the spring. This urgency often results in quicker sales and heightened competition, especially in markets like Snohomish County where inventory is notably low​ (Realtor)​.

Favorable Weather: Spring's mild weather conditions are ideal for showcasing properties. Homes tend to appear more inviting with blooming gardens and clear skies, enhancing curb appeal. Additionally, buyers are more likely to visit open houses when the weather is agreeable​.

Longer Days: The extended daylight hours in spring afford more opportunities for showings and open houses, benefiting both buyers and sellers by aligning with busier schedules​​.

Given that we are currently in July, which follows the peak spring market, sellers in Snohomish County can still expect robust buyer interest, though the intensity might slightly taper off compared to the spring months. Sellers can anticipate high foot traffic from potential buyers and possibly higher offers due to the increased competition. The seasonal surge typically leads to both an increase in sales activity and a rise in property prices, offering a prime opportunity for sellers to maximize their returns.

Conversely, buyers face a highly competitive market characterized by multiple offer scenarios and limited negotiating power due to the strong demand. It's crucial for buyers to have their financing arranged and be prepared to act swiftly to secure a property in this fast-paced market environment​​.

Being Prepared as a Buyer and Seller in Snohomish County

For Sellers: Getting Market Ready

In the current Snohomish County market, where approximately 67.9% of new listings go pending within the first 30 days—often in multiple-bid scenarios—it’s crucial for sellers to be thoroughly prepared​.

Listings that are turnkey—those that are new constructions, fully updated, or in exceptionally good condition—tend to sell quickly and often above the asking price. Conversely, properties that require significant updates, are poorly located, or are overpriced tend to linger on the market, sometimes resulting in price reductions.

Key Seller Strategies:

• Quality and Condition: Ensure your property is in excellent condition. Addressing necessary repairs or making updates before listing can prevent delays and make your home more appealing.
• Pricing: Set a realistic price that reflects the current market conditions and the quality of your home. Overpricing can lead to extended market times and eventual price cuts.
• Staging and Presentation: Well-staged homes tend to sell faster. Professional staging can help highlight your home’s best features.
• Marketing: Utilize professional photos and consider virtual tours to reach a broader audience, crucial in a market where buyers are ready to move quickly.

For Buyers: Adapting to New Norms

For buyers, the market conditions in Snohomish County require readiness to act swiftly, with many homes receiving multiple offers shortly after listing. However, not every property will be involved in a bidding war, especially those that are less than ideal.

Key Buyer Strategies:

• Pre-approval: Have your financing in order before you start looking. A pre-approval letter from your lender will make your offer more attractive to sellers.
• Flexibility and Patience: Be ready to move quickly when a suitable property comes up, but also maintain patience to wait for the right opportunity.
• Negotiation Readiness: For homes that are on the market longer, be prepared to negotiate. These homes may offer the chance to secure a better deal, possibly including seller concessions or credits.
• Market Research: Stay informed about current market trends and potential shifts in interest rates or inventory levels which can affect your buying power and strategy.

Market Context

With only 1.3 months of inventory currently available, Snohomish County remains a seller’s market. This shortage means competition is still fierce for well-positioned listings, and buyers need to be exceptionally prepared to act. However, the market can favor buyers when it comes to properties that are not in prime condition or optimally priced​

The Rent vs. Buy Conversation in Snohomish County

If you're considering buying a home in Snohomish County and are concerned about rising interest rates, it's crucial to weigh that against the benefits of homeownership.

Buying a Home Means Avoiding Rising Rents

• When you rent: Your monthly payment typically increases each time you renew your lease.
• When you buy: Your fixed-rate mortgage payment remains constant for the duration of your loan.

Homeowners Own a Valuable and Tangible Asset

• According to CoreLogic, the average U.S. homeowner now has about $290,000 in equity.
• When you rent: The money you pay each month offers no return on investment.
• When you buy: As home prices increase, and as you pay down your mortgage, you accumulate equity.

Owning Your Home Grows Your Wealth Over Time

• Dr. Lawrence Yun notes, “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
• When you rent: Rising rental costs can make it challenging to save for a down payment on a home.
• When you buy: Building equity over the years significantly enhances your net worth.

In Snohomish County, just like in many parts of the country, rent remains high. Additionally, the Bureau of Labor Statistics reports that rent is the second highest category affected by inflation, with an 8.3% increase from the previous year​ (Orchard)​. This stark rise underscores the long-term financial benefits of buying a home in the current market, despite higher interest rates. The stability of mortgage payments and the growth in equity make buying a compelling option for those looking to improve their financial future.

Overall, while higher interest rates may seem daunting, the advantages of owning a home, such as stable payments and equity growth, can provide significant financial benefits in the long run.

According to Zillow the average rent for a Seattle 3-bedroom home is $3,400 per month. This equates to approximately a $600,000 home (view 3 Bedroom Seattle homes for sale in the $500K - 700K price range) with 20% down on a 30-year fixed 7% bought down to as low as 5% with a temporary 2-1 buydown interest rate loan.