Western Washington median home prices saw a year-over-year decline for the first time since 2012 as prices fell $5,000 from November to December, according to the Northwest Multiple Listing Service (Northwest MLS). The decline comes amid an increase in inventory following interest rate hikes that began part way through 2022.
“In the first half of the year, we had low interest rates, rising prices and little inventory,” said Dean Rebhuhn, who owns Village Homes and Properties in Woodinville. “The second half of the year brought increasing interest rates, some lowering of prices and increasing inventory.”
According to Northwest MLS, the median home price statewide fell 0.51% from December 2021 to December 2022, decreasing $2,900 from $572,900 to $570,000. During that time, the number of active listings in Washington nearly tripled, rising 192.44% from 3,240 listings in December 2021 to 9,475 listings in December 2022.
In Lewis County, the number of active listings for December stood at 227, up 144.09% from 93 listings in December 2021.
That year-to-year increase in active listings surpassed Grays Harbor and Pacific counties, which saw increases of 72.08% and 124.53% in active listings from December 2021 to December 2022, but trailed annual increases in Cowlitz (162.82%) and Thurston (218.92%) counties.
While inventory is up from a year ago, statewide listings are down 22.62% from November while listings in Lewis County are down 17.15%.
From November to December, home prices fell 1.83% in Lewis County, dropping from $382,000 in November to $375,000 in December, compared to a monthly decrease of 0.62% in Grays Harbor County. Home prices rose 1.26% in Pacific County, 2.58% in Cowlitz County and 6.34% in Thurston County during the same period.
Eren Millam, a Lewis County-based realtor, said recent predictions of significant declines in home prices were unfounded.
“The crash that everyone was saying was going to happen, it was never going to materialize,” Millam said. “I was right.”
According to Millam, there has been a cooling down of the Lewis County housing market as the number of potential buyers has declined, falling to 58% of the normal number of homebuyers. That decrease in buyers resulted in a decline in closed sales, which has been accompanied by a sharp increase in the number of days a home is on the housing market. Since January 2022, the average number of days a home is on the market has about doubled.
As the number of closed sales has fallen and the average number of days on the market has increased, homes have continued to sell below their initial asking price. According to Millam, homes in Lewis County have been selling for about 92% of their original asking price, meaning homes have been selling for less than was asked when they were first placed on the market.
A major reason homes have been selling for less than their original asking price has been an increasing gap between the number of times a home is shown and the average number of times a house has to be shown before it receives an offer. Millam told The Chronicle Lewis County homes that are currently on the market have an average of two showings each, while it takes an average of 10 showings for a house to get an offer.
According to Millam, with the number of potential home buyers at 58% of normal levels, buyers are able to be more “picky” in choosing a home to buy.
But even as homebuyers are able to be more selective in the houses they consider, home prices have seen only a slight decline, something Millam attributes to continued low inventory.
“Even though there’s fewer buyers, (because) there’s fewer homes than there are buyers, demand is still higher than supply. That’s what’s holding the prices up,” Millam said. “A lot of people are saying it’s a buyer’s market, it’s not a buyer’s market. It just feels like a buyer’s market based on how bad it was recently.”
Millam added that while sellers may be in a worse position than they were a year ago, they are still in a better position than they were before the COVID-19 pandemic began.
“For sellers it does look rough compared to the last couple years, but it’s still better than at any time in the history of the world up to May 2021,” Millam said.
In Millam’s view, about half of the reason for the decline in the number of potential homebuyers is normal seasonal variance while the other half is due to the increase in interest rates that began in 2022. He added that if interest rates don’t continue to increase and no major world event occurs then he expects the market to begin heating up again.
“I expect the market to show a slight decline in January and then it's going to start jumping up again starting in February barring any unforeseen interest rate hikes or unforeseen world events,” Millam said. “Because we’re running at about 50% of normal buyer activity, I’m expecting it to about double by the time summer rolls around.”
