A Market in Evolution - Thanksgiving 2022

Change. I am not a woman of routine. I like to be challenged, to see things evolve and I am not afraid of radical change either. There is always room for a fresh approach, new ideas and a belief that even when change brings about negative circumstances, more often than not it is necessary for a greater good and a better outcome. Over the last three years as a civilization we have witnessed a series of unexpected about turns that rocked our society to the core, where the outcomes were both worse than we ever predicted and better in ways we could not have anticipated. As we emerge from the aftermath of a pandemic that we are learning to live with, the extended ramifications are ricocheting through humanity like the aftershocks of an earthquake, shaking us to the core and testing us daily. From ongoing health fears, to financial anxiety over falling stock prices, job losses and the instability caused by global warfare, we have been in a state of flux for quite some time. I would like to take a moment to acknowledge this and to underline the fact that the insights I am about to share about our housing economy do not in any way undermine the conscious reality of the devastation that many families are feeling right now. In fact, in a bid to share some of my own vulnerability, this has been a difficult year for me as a self employed business owner. It’s been tough but it’s also presented a growth opportunity for me in resilience and practicing gratitude in the face of adversity. So it is with the utmost respect that I am going to share my views on our current real estate market and the opportunities it actually presents. You’re not getting the “realtor salesperson view”, neither the "click-bait media perspective”, but rather a state of affairs summary based on fact.

Invest Investors have proverbially “come out to play” thanks to an opportunity to buy without competition. A softer market makes for better bargain-hunting and this is a good time to jump on opportunities in high performing up and coming neighborhoods, especially if you have cash to spare.

Diversify Financial markets have suffered but we know that share value is relative and what comes down will eventually rise back up. Nonetheless conservative shareholders are more reluctant to sell stock that is “devalued” and so are holding off buying a home until stock value increases again. My viewpoint is that if you have a copious amount of shares to cash in, do diversify that portfolio and do invest some of that into property assets. Especially in this area, the proven year over year appreciation over time is testimony to the fact that real estate in this part of the world is a solid investment proposition with lucrative dividends.

A Seller's Market Interest rates are the highest they have been in twenty years and yet our real estate market has not ground to a halt. In fact, after the initial shock that caused a major real estate inventory standstill in the months of June and July, our market has stabilized since August and while homes are sitting longer overall, they are selling. So much so that we are still technically in a seller’s market, though just by a hair.

Buyer Power Buyers exhaled as they exited an extremely competitive environment and entered one that allowed them to negotiate and add contingencies as a layer of protection (say what?!). This offset the shock of paying up to 7% in mortgage interest rates because savvy buyers know that this is likely temporary (again, based on historic data trends over the last 30 years). This was further softened by preferential ARM deals and buy-down schemes allowing for lower mortgage rates in the short term, while betting on diminishing interest rates over the next 18 months.

Pent-up Demand Homes are still up year on year by an average of 9%. This is despite an average 15% decrease in home values from March of this year. Why did Seattle get hit so hard? Because low interest rates coupled with pent up housing demand and pandemic-induced lifestyle re-evaluations resulted in a huge amount of competition. Ladies and gentlemen I hope this is not news to you; this pent up demand still exists and will continue to persist because we simply cannot build homes fast enough to accommodate our growing population. Despite hiring freezes and job losses we remain a huge recruitment hub with new workers moving to the area in their droves year after year.

Don't Wait for a "Crash". Pent up home demand means that once we have got a handle over inflation and interest rates reduce, we will see our cyclical frenzied real estate cycle re-ignite once again. This means that, despite high interest rates, now is a fantastic time to buy Why? Thanks to reduced competition, more bargaining power, lower prices and heightened contractual protection. For those buyers who acknowledge this cycle, this will present optimal opportunities to purchase a home. For sellers, now is the time to leverage your real estate agent’s expertise and invest in preparing your house for a market that favors those who have an immaculately presented move-in ready home. You won’t sell for nearly as much as you would have in March 2022, but you will in turn benefit with your next purchase. Note that you are still listing at an undeniable real estate high, knowing you’re gaining on average 9% more than you would have in 2021.

Marilisa Vergottini Broker M: 206.599.9908 E: marilisa.vergottini@compass.com W: www.luxuryseattleliving.com IG: @luxuryseattleliving

Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

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