Southwest Washington real estate market begins to cool

Across the country, real estate markets are cooling. The same is true in Southwest Washington: pending sales are down, closed sales are down, but don’t expect a substantial price drop.

Rising interest rates have slowed down the local real estate market. Real estate agents are now seeing the number of new listings increase, while sales are down, according to the latest RMLS report.

For those looking to buy a home, there is a month and a half of home inventory, a number not seen since June 2020, when home inventory was just over a month and a half. The number of pending sales fell 22.7% from May, while the number of completed sales fell 1.5% in the same comparison.

The average time to market for homes sold in southwest Washington, however, is 16 days, which is lower than it was in May.

Interest rates have risen 2% since the start of the year.

In his 25 years in real estate, Terry Wollam, broker at Wollam and Associates, has never seen such a swing in interest rates.

“We tend to focus a lot on price,” Wollam said. “But the interest rate has a much bigger impact on what we pay for a house than the actual price of the house.”

For those financing homes, this interest rate directly affects buyers’ monthly payments.

So for this family that wants to move into a bigger house, they would have to give up an interest rate that could have been close to 3% to probably get a house with an interest rate close to 5%. It could very well mean that they end up paying more for the same house.

The current interest rate is still a historically good interest rate, but it will take time for buyers to adjust.

“We are in the midst of a transition period,” Wollam said.

Summer generally sees a drop with people going on vacation. And this year, people may be going out more to do other things after two years of the pandemic. These also likely have an impact on the market.

Wollam expects the slowdown to continue into July and expects sales and pending inventories to begin to balance out in September.

Compared to June 2021, the median sale price increased 16.9%, from $449,000 to $525,000, according to the report. The market is still active in this home price range, Wollman said. But for the other market segments, it’s slowed down.

The region’s median selling price fell slightly from May. But Wollam doesn’t think the downward home price trends seen in other parts of the country will be seen here.

“The Southwest Washington market was more active, with higher demand and less inventory than other markets,” Wollam said.

“We will feel similar trends, but not to the extent that the national trend is because the strength of this market is a bit better than it has been nationally,” he added.

Vancouver has on average the fourth-lowest home inventory of mid-size cities nationwide, according to new research from Inspection Support Network. Only Tacoma, Grand Rapids, Michigan, and Lakewood, Colorado have lower stocks.

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