Home prices in Western Washington increased in October despite reduced competition among potential homebuyers, though there has been a rise in “creative financing methods amid rising interest rates,” according to the Northwest Multiple Listing Service (NWMLS).
“Buyers are benefiting from more choices in inventory and less competition, while sellers are more negotiable when it comes to contingencies,” NWMLS Director Meredith Hansen stated in a news release. “We are seeing more 2/1 buydowns and adjustable-rate mortgages with buyers planning to refinance when the rates come back down.”
According to Northwest MLS, the median home price statewide rose 3.48% from October 2021 to October 2022, increasing from $575,000 to $595,000. While home prices rose year-over-year, from September to October home prices statewide declined slightly from $599,000 to $595,000. During that time, the number of active listings in Washington more than doubled, rising 115.76% from 6,588 listings in October 2021 to 14,214 in October 2022.
In Lewis County, the number of active listings for October stood at 332, up 93.02% from 172 listings in October 2021.
That year-to-year increase in active listings surpassed Pacific County, which saw an 87.36% increase in active listings from October 2021 to October 2022, but trailed annual increases in Grays Harbor (96.46%), Cowlitz (108.66%) and Thurston (113.61%) counties. While inventory is up from a year ago, statewide listings are down 5.3% from September while listings in Lewis County are down 4.6%.
From September to October, home prices rose 12.82% in Lewis County, rising from $378,475 in September to $427,000 in October, compared to a monthly increase of 4.16% in Thurston County. Cowlitz (-1.86%), Grays Harbor (-7.46%) and Pacific (-8.82%) counties all saw their median home prices fall from September to October.
Eren Millam, a Lewis County-based realtor, said the decline in listings has caused prices to rise.
“Prices have gone up quite a bit,” Millam said. “One of the reasons (prices went up) is our new listings have fallen off and I expect that to continue.”
According to Millam, the decline in listings has resulted in less competition among buyers, causing listed homes to stay on the market for longer periods of time.
“We’re finally seeing (average days listed homes are on the market) skyrocket,” Millam said. “I’m expecting to see that continue for a while.”
Millam said he expects the average time on the market for new listings to rise to three to five months. He also cautioned not to expect the increase in the average time a home is listed to cause a significant decline in home prices. Millam said experts are currently expecting a 7.5% correction from the peak in high home prices seen in June, which would only bring home prices back to January levels. Experts also expect interest rates to decline slightly before stabilizing around 4% to 5% next year.
“I think the prices may go down as interest rates go up, but for the most part, the prices where we’ve been for most of 2022, that’s our new baseline for where our county is,” Millam said. “I think when the interest rate stabilizes the market will adjust to it and move forward.”
Millam added even a 25% drop in home prices would only bring prices back down to 2021 levels.
“The $400,000 to $450,000 range, I think that’s where we’re at until it stabilizes,” Millam said.
According to Millam, despite rising interest rates putting negative pressure on housing prices, expected declines in inventory could prevent a near-term decline in home prices.
“We did just have a rate increase so we could see buyer demand go down,” Millam said. “But we’re also expecting inventory to go down.”
Compounding the problem of falling inventory, Millam told The Chronicle, is a decrease in construction activity driven by an increase in the price of building materials.
“A lot of homebuilders have stopped building so our inventory problem, which is what’s driving this, is going to be around for a while,” Millam said.
Millam said low housing inventory has created a housing market defined by rising home prices and little positive news on the horizon for potential buyers.
“If you’re waiting for the market to collapse you’re putting yourself in a really bad position because there’s no sign that’s going to happen,” Millam said.
