Snohomish County home prices as of November 2023 are in somewhat of a rut. The average prices for Snohomish County have essentially been flat since June (2023), hovering right around $750,000.
This price stability is unique. I would've expected to see higher prices in the June through August time frame, and then a steady decline in home values through November (and continue through December). However, this is not what we're seeing. This can likely be attributed to low housing supply that continued decreasing for November. This is not abnormal by any means - most people prefer to wait and list their homes (and buy) after the holidays.
As of November 2023, there were approximately 350 homes for sale (this does not include new construction) - which is pretty low (when compared to pre-covid data), and thus is a major factor in the stagnant and stable prices.
The other factor, interest rates, has been at or above 7% (and went over 8% briefly in October) since June 2023. Higher interest rates tend to remove buyers from the market, especially when home prices remain elevated. This coupled with low housing supply has kept prices stagnant, and unable to rise (due to the affordability issue).
So How is 2024 Looking?
It will be interesting to watch 2024 play out. There are expectations that mortgage rates will stabilize to the low 7%'s, and possibly trend downward into the 6% range. Will this create more buyer demand and drive home prices back up and beyond that sticky point of $750K we've witnessed since June? Well, it depends.
I assume there are many buyers on the sidelines waiting for rates to drop and stabilize (rates have been quite erratic, which scares potential buyers). If this happens, we should see a corresponding increase of homes listed for sale, which should help to neutralize any potential drastic price increases (and bidding wars, etc). This is also known as the mortgage lock-in effect which I wrote an article about back in June 2022 - you can access it here.
New Construction - A Saving Grace?
Another important factor that I normally don't track, is new construction. There has been a steady flow of new homes coming onto the market which is feeding buyer demand, and helping create price stability. If new homes continue to come online, it should also help to keep pace with buyer demand, and continue to stabilize home prices.
Builders are normally savvy about building (and learned a lot from the great recession in 2008), and do not want to overbuild, as it can wreak havoc on a housing market. Many large builders are publicly traded, thus have to be extremely diligent about the housing market - current and future - or answer difficult questions from their stockholders / owners.
DR Horton (ticker: DHI) is a new home builder that's prevalent in Snohomish County. Their stock has been doing well, which indicates that investors feel that the housing market and buyer demand appear positive into the future. Further, investors (the market) feel DR Horton has an effective business model that drives the optimal amount of new construction and properly forecasts future buyer demand in consideration of local market dynamics.
New homes aren't for everybody, and on average in Snohomish County, new home prices are quite a bit more expensive than existing homes.
For Snohomish County, The average NEW home price in June 2023 was $903,000 versus EXISTING home's average price of $748,000. However, the gap has closed as of this writing - November NEW home average price: $870,000 and EXISTING average price: $750,000.
It's important to understand that builders have been offering buyer incentives such as buying down mortgage rates for the first year or two, as well as other incentives (upgrades, etc). So the effective monthly payment between new and existing homes may be much closer than it seems (at least the first year or two) than by just looking soley at a home's sale price.
You can view Snohomish County housing trends, mortgage rates, and more at: https://www.joefrankrealtor.com/data
Thank you for taking the time to read this article!
If you have any questions or comments, please feel free to comment below, email, text, or find me on social.
Cheers!
-Joe
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