Seattle homebuyers hit the brakes
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Illustration: Maura Losch/Axios
Buyers are walking away from homes in Seattle faster than in any other big U.S. city, new data shows.
Why it matters: Sellers, some of whom may have had little wiggle room after buying during the pandemic peak, appear unwilling to take less money — for now.
- Meanwhile, buyers are looking at the job market and mortgage rates above 7% and waiting.
By the numbers: Seattle-area pending sales — homes that have gone under contract but haven't closed — fell 24.4% in September compared with a year earlier, according to Redfin.
- That was the biggest drop among major U.S. metros.
- Los Angeles had the next-largest decline at 16%, followed by San Diego at 15.8%.
- Scheduled home showings fell nearly 13% across the Northwest Multiple Listing Service area, even as the number of homes for sale rose 24.5%.
The big picture: Pending sales fell in all 50 of the nation's biggest metros last month for the first time in three years, per Redfin.
Zoom in: Seattle's once-robust job market is showing signs of strain, adding another concern for prospective homebuyers.
- Redfin specifically cited Seattle's bumpy job market, along with high prices, as factors curbing demand.
- Even buyers who can afford a home may be hesitant to commit in light of interest rates and perceived job insecurity, said John Manning of REMAX.
- Some are falling prey to a "sky-is-falling" mentality and are putting off purchasing decisions, sometimes indefinitely, he told Axios.
The other side: Sellers unwilling to lower prices may be "in the denial phase" of the seven stages of grief over how much the market has changed, Manning said.
- They are also just beginning to realize that their homes must compete on price, condition and concessions, and that buyers are no longer willing to overlook costly deferred maintenance.
- For homeowners who bought or refinanced when mortgage rates were much lower, selling may also mean giving up a relatively inexpensive loan.
Reality check: Nationally, roughly 60% of homes sold in September went for less than their original asking price, according to Redfin.
- But with the average 30-year mortgage rate topping 7% in late September, a lower sale price doesn't necessarily translate into an affordable monthly payment.
Between the lines: Economists call this "downward stickiness": Home prices rise quickly in a strong market but fall slowly when conditions weaken because sellers can afford to wait, according to Steven Bourassa, director of the Washington Center for Real Estate Research.
The bottom line: Seattle-area buyers have more homes to choose from, but many aren't ready to make a move — and sellers may have to decide how long they're willing to wait.