SEATTLE/BELLEVUE REAL ESTATE MARKET UPDATE - NOVEMBER, 2022
Hey, guys, it's November. So it's time for another market update. And this video, like always, we're going to talk about what is going on in the Pacific Northwest as it pertains to the real estate market. I'm going to keep this video very high level. Just what I'm seeing out there day in and day out, selling real estate. If you want stats or specifics, shoot me a DM, give me a call and I'd be happy to talk about that.
So the weather has changed. It's now cold, gloomy, depressing, right? The seasonal depression in the Pacific Northwest is in full effect. And if you're in the housing market, whether you're buying or selling, you're probably more depressed than it is rough. So the interest rates are continuing to go up. I just had another announcement and now as of today, your average 30 year mortgage is sitting by around seven and a half percent, which is higher than we've seen in a long, long time.
One thing that's important to note is I think most people, when they hear the Fed is raising the rates, they think that it has an immediate effect on the mortgage rate. They do seem to move in the same direction. But what happens is everyone knew that the Fed hike is coming. So the mortgage rates kind of were already accustomed to it or were adjusted to account for it.
Right. So it wasn't a big surprise that the Fed raised the rate and they are saying they plan to raise them again later this year. However, they're hoping at a lower so maybe not point seven, five basis points up less than that. Nonetheless, it is very expensive to buy a house today. So what we're seeing is with the high interest rates, that category that's been hit the most are first time homebuyers.
So there's an article that came out in CNN just yesterday that talked about the first time homebuyers made up only 26% of transactions over the last 12 months. And that number is down for third from 36% because they don't have or they haven't had real estate before or equity. Right. That they could use to kind of roll into the next property.
They are having a hard time paying high rents and saving up in addition to that for a down payment. And to add to that, the rates have gone up significantly in the same report they talked about that actually that annual salaries or that median household income for the first time homebuyers has come down for the first time in a while.
So they're making less money. And even though there's more houses out there to look at, the house prices have not dropped significantly enough to make up for the high rates and the much higher payment. So it is very, very tough and we're seeing that firsthand. In addition to that, just the overall economy and a lot of companies are now in the headlines that they're starting to lay people off are bad signs.
And a lot of people are just uneasy about the future. So they're choosing to sit put. And I think rightfully so. I mean, here in the Pacific Northwest, Amazon has a major presence and they just now announce that they're freezing their hiring for the foreseeable months until they see some stability in the economy. And then I just read they're not the only ones.
And fortunately, Stripe announced on Thursday that they're cutting the workforce by 14%. Lyft is laying off people. Microsoft already announced two rounds of layoffs this year, and they're reporting the slowest growth in five years. Google saw the same thing. Neta is laying people off and we all know that now. Elon Musk owns Twitter and he plans on cutting half of the workforce.
So across the board, the economy is very unstable. It seems like we're heading for some darker days. And so a lot of people are having a difficult time purchasing real estate or thinking, is this the right time to buy? Right. So my recommendation is that none of us really know what's going to happen. So still there's always gonna be people who need to sell and buy.
So if you are in that category and if you can afford today's payment with the new high rate and if you find a home that really checks all the boxes and it's in the neighborhood that you want to be in and you do plan on living it for a long time, rates eventually will come down. And if you're comfortable with that payment today and have a stable job, you should go ahead and buy because there are some opportunities out there that we have not seen in a long time.
If you're kind of wishy washy. A I don't blame you. A lot of people are in that boat and maybe this is not the time to buy, just to buy. However, if you're not overly confident about your current job situation and making today's payment would be a stretch, it's probably wise to wait a little bit and until things stabilize for sellers, I guess it's that same message I've had for the last few months, right?
Homes that are presented well and most importantly priced correctly are still selling and oftentimes selling quickly. My personal example, I have a listing in Maple Valley that we put on the market just a little over a week ago. We priced it correctly even though we were kind of pushing the the higher end of the neighborhood. But the house was dialed in and showed beautifully.
So we went on a week later, we got multiple offers. We're supposed to have three offers. So that's going back to the interest rates. The third offer, the buyer absolutely loved the home. They're preapproved a month ago, they went to get an updated pre-approval to make their offer. But all of a sudden with new rates, they were priced out and they could no longer afford this house.
So we've all we're supposed to have three when it up with two offers. They both improve their terms and the seller is very happy. But then that is the exception because many other homes in that neighborhood have been sitting on the market for longer. If they don't show well and if they weren't priced correctly to begin with. And the other thing that I'm seeing lately are appraisal issues.
For a while it was it didn't seem to be an issue, at least in my business, whether it's because the buyers were so well prepared to be competitive and they waived everything to begin with. So they always had the extra cash to make up the difference if needed. And the home prices were appreciating at such a fast pace to where they always seem to have been comps to support even what we all would think of crazy high value.
Right? But now the prices seem to be trending in the opposite direction. And even though they're not crashing, but they are softening and coming down. So I've personally had a few deals and with talking with the brokers around the office, we're learning that we're seeing more and more appraisals coming low below contract value, in which case it again opens the door for further negotiation or it could possibly kill the deal.
And we see quite a few of those instances where homes come back on the market because the buyer's financing failed. So that's just something to be aware of that making crazy offers. If you're making an offer on a house, make sure it's within the value that you should be. If you're getting financing or otherwise, you might have to have additional funds to make up the difference.
We're all to come together and then at an ultra luxury level, at price points, 10 million up. We also are seeing more and more buyers back out of transactions. And again, just there's a few particular homes that have been under contract that from speaking with brokers, I've learned that buyers are simply walking away from 500,000 or $300,000 of nonrefundable, earnest money just to back out of the deal, because they believe that economy is going to get worse and they'll be able to get the same house for much cheaper.
So they're no longer willing to pay the price that maybe they were willing to pay 30, 60, 90 days ago. There's lots of moving parts, lots of uncertainty overall, lots of fear. The positive is I do think there are some opportunities for those who are prepared. Now, we have had a while. The lenders were also all of a sudden coming out with different 3 to 1 buy downs or we're seeing more and more sellers being willing to pay an offer to pay concessions for buyers to make it a manageable payment.
So I know that overall this video has been pretty dark and gloomy, and I do apologize. On the positive side, there are some good opportunities out there, as I mentioned, for buyers. Also, the sellers seem to slowly start to become more realistic and if they're motivated to sell that, you know, come down on price or they're willing to offer concessions to buyers.
So we are shifting from what was a crazy seller's market to now where we are and there's more of a balanced market and seems like we're continuing to trend towards a buyer's market. So and even though the rates are not favorable, there are deals to be had and the sellers are offering concessions to kind of ease the hurt, at least for the short term.
So if you are in the market, stay positive. Give me a call if you have any other questions. In addition to this market update that 4 to 3 market reports just came out and I'll do a whole separate video on this, so be sure to check that out. And that has been your real estate market update for November and I'll catch you next month.