Greater Seattle Real Estate, The Year in Review 2022
Northwest MLS Real Estate Report
2022 started out the year with both historically low interest rates and record low inventory. This created a very hot (seller’s) market across the NWMLS and the Greater Seattle real estate market. For example, 2021 ended with the Freddie Mac 30 year fixed rate of 3.05% and NWMLS had 0.40 months of housing inventory. In comparison, at the end of 2022, Freddie Mac 30 year interest rate was 6.42% and inventory was at 2.09 months. Thus the market changed drastically over the course of the year.
Despite these changes, the NWMLS and Greater Seattle real estate market is still technically a seller’s market. For instance, inventory of 4 to 6 months is typically considered a balanced market. Anything below 4 months is considered a seller’s market. In addition, while 6.42% fixed rate seems high when compared to the last decade and especially the last year, the interest rate is well within normal ranges when looking back since the beginning of the 1970’s when Freddie Mac was created.
Historical Interest Rates - Freddie Mac
Despite the inventory numbers indicating a seller’s market, to many buyers and sellers it “feels” like a buyer’s market. Consequently, December saw the first year over year price drop across the NWMLS for homes and condos since March 2012. Nevertheless, the price drop was minimal: 0.51% from December 2021. To clarify, the median sales price was down a mere $2,900 from $572,900 to $570,000.
Real estate inventory remains tight despite less sales. For instance, sellers accepted 4,017 offers in December which was a 31% decrease from the previous December (5,850). At the same time, new listings added last month (2,980) was down 35% from December 2021 (4,617). Thus, even with less sales the inventory remains at a manageable level.
When the Change in the Home Market Began
The single family home market really began to change in March 2022. Inventory in King County at the end of February for active homes was only 649 homes compared to 998 in February 2021. One month later, it was nearly even (973 active homes in 2022 versus 976 in March 2021). In addition, by the end of April there was 1,572 active listings versus 1,380 at the same time in the previous year. During that 2 month period in 2022, Freddie Mac went from 3.76% interest rate on March 3rd to 5.27% on May 5th.
Nevertheless, sales were already lagging behind 2021 as early as February because of the lack of inventory. In February 2022, King County was already behind by nearly 24% (2,379 sales vs 3,119) in closed transactions. There was simply nothing to buy due to inventory being at historical low levels. By the end of 2022, sales were 27.2% less than 2021 (21,745 vs 29,869). Although by the end of the year, the issue was less about the lack of real estate inventory, and more about the interest rates.
The Home Market in Seattle, Bellevue, and Mercer Island
Even with all these changes, prices in 2022 were up over 2021. For example, in Mercer Island the average price of a home listed on the NWMLS was nearly $3 million ($2.985 million) in 2022. This was up $300,000 from 2021 ($2.685 million). In the Bellevue area, the results were similar. Homes west of I-405, which includes Medina, Clyde Hill, Hunts Point & Yarrow Point, sold for an average of $4.354 million compared to 3.886 million in 2021. Homes east of I-405 sold for an increased average of $1.792 million versus $1.556 million. Meanwhile, in Seattle, the average price of a home in 2022 was up nearly $100,000 from 2021. The average Seattle home price was $1.132 million versus $1.033 million the year before.
On the other hand, sales transactions were down across all three areas. On Mercer Island, 209 homes sold in 2022 versus 334 the year before. The Bellevue area was down to 822 home sold from 1,132 homes sold in 2021. Likewise, the number of Seattle homes sold dropped to 7,032 from 10,115 homes in the prior year.
Not All Real Estate Markets Are the Same: Change in Condo Market
After the pandemic hit the U.S. in early 2020, there was a shift in the real estate market where homes became more highly valued than condos. Owners wanted more indoor/outdoor space and were less worried about being closer to work, restaurants, bars, etc. Thus condo inventory increased and peaked in September and October 2020. Both months ended with over 1,500 active condo in King County. This was after January and February 2020 both ended with just above 530 active condo listings. Condo inventory stayed relatively high well within 2021. Condo inventory ranged between 793 and 895 at the end of each month between December 2020 and July 2021. Condo inventory stayed low from December 2021 through May 2022 until condo inventory finally surpassed the prior year in June 2022. This contrasted with the home market which was essentially even in March and then sharply increased from there.
The Condo Inventory did not surpass the prior year until June 2022 while the Single Family Resident Inventory surpassed 2021 in April 2022.
The Condo Market in Seattle, Bellevue, and Mercer Island
Mercer Island condo market is very small. In 2022, on average 3.5 Mercer Island condos sold per month (42 total). This was down from 6.75 condos the previous year (81 total). Nonetheless, a Mercer Island condo sold for an average of $812,000 in 2022 as compared to $612,000 the year before.
The Bellevue condo market is more robust. In 2022, 530 condos sold for an average of just under $900,000 compared to 842 condos that sold for an average of $798,000 in 2021. Condos in the area west of I-405, which includes many of the condo high-rises in Downtown Bellevue, sold for an average of $1.175 million. In the previous year, condos in the same area sold for an average of $1.065 million.
The Seattle condo market is the largest in the state. In 2022, 2,884 Seattle condos sold which was down from 3,401 the previous year. The average price of a Seattle condo sold for $587,000 in 2022 up from $576,000 in 2021. The Seattle condo market is not just Belltown/Downtown Seattle. For example, 557 condos sold in Belltown/Downtown Seattle in 2022. On the other hand, during the same time, 645 condos sold in the NWMLS area that included Capitol Hill and Madison Park. Queen Anne, Magnolia, and Ballard areas also have a lot of condos. Even West Seattle sold more condos (261) than Bellevue area west of I-405 (186) and Mercer Island (42) combined in 2022.
Seattle, Bellevue, and Mercer Island Luxury Real Estate Market
Mercer Island is a Luxury Home Market
The average home on Mercer Island sold for $2.985 million in 2022. Thus, it is no surprise that out of 209 Mercer Island homes that sold, 172 of the homes sold for $2 million or more. Luxury condos on Mercer Island are very rare, although in 2022, one condo sold for $2.75 million. No other condo sold for over $2 million in either 2022 or 2021.
In 2021, 218 Mercer Island properties sold for $2 million or more and as stated above none were condos. The biggest sale was a waterfront Mercer Island home that sold for $13.950 million.
Not to be Outdone: Bellevue's Luxury Real Estate Market
Like Mercer Island, the Bellevue are west of I-405 is dominated by luxury properties. In 2022, the average home sold for $4.354 million. Therefore it is no surprise that out of the 239 homes that sold there, 211 of them sold for $2 million and greater. Furthermore, while the percentage of overall condo sales in the area are not nearly as impressive: 24 out of 198 condos sold for $2 million or more. It is impressive that of the 27 condos that sold in the Bellevue area for $2+ million, 24 were in this area west of I-405. Especially when in 2022 there were 598 Bellevue area condos that sold.
When looking at the Bellevue area as a whole, 411 properties sold for over $2 million in 2022. The most expensive was a waterfront home in Medina that sold for $23 million. Of those 411 properties, 27 were Bellevue condos. The most expensive Bellevue condo sold for $5.9 million in One Lincoln Tower. In 2021, 477 Bellevue area properties sold for $2 million or more. The most expensive was a waterfront property on Hunts Point. Jane Powers and Betsy Terry of Ewing and Clark represented the seller on an off-market sale. The home sold for $32 million. 33 condos sold for $2 million or more. The most expensive luxury Bellevue condo sold for $4.85 million in the Bellevue Towers.
Seattle Luxury Home and Condo Market
The most expensive Seattle luxury home in 2022 was a waterfront Laurelhurst home that sold for $12.5 million. There were 578 sales over $2 million in Seattle in 2022. Of this number, 36 were Seattle luxury condos. The four most expensive Seattle condos were in Downtown Seattle. Three in Fifteen Twenty-One building, but the most expensive was in the Millennium Tower which sold for $7,150,000. In 2021, there were 712 sales over $2 million of which ironically again 36 were condos. The most expensive home was a waterfront home in the Denny Blaine area that sold for $30.750 million while the most expensive luxury condo sold for $7 million in Escala.
The State of Greater Seattle Real Estate in 2022?
As seen throughout blog, inventory increased throughout the year, but prices were up year-over-year. While inventory is up at the end of the year, the demand is such we are still technically in a seller’s market. However, as the interest rates increased, the real estate prices finally dropped below year over year comparison in December for the first time since March 2012. The decrease, although just barely over a half percent, it was still a decrease. Nevertheless, the market still remains strong and with recent news of inflation dropping, it might be a sign of good things to come, especially if interest rates come down.
The future of the Seattle real estate market is hard to predict. Every real estate market brings new challenges. To navigate the current issues, contact one of Ewing and Clark’s real estate brokers. Ewing and Clark has provided exceptional real estate service to Greater Seattle since 1900. Whether you are looking for a waterfront property in Whidbey, a luxury home in Madrona, or your first Seattle home, please contact us