By: J. Lennox Scott | Chairman and CEO
John L. Scott 2023
10-Year housing cycle
We are entering the second year of a historical pattern for a 10-year Housing Cycle.
2022 First year - intensity adjustment
2023 Second year - market solidifies
Over the next seven to eight years, the housing market will experience price growth.
In 2022, the housing market switched from an extreme frenzy market to a strong level of Sales Activity Intensity™ of homes going under contract within the first 30 days.
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By: J. Lennox Scott | Chairman and CEO
sales activity intensity™
sales activity intensity™ scale - % pending 1st 30 days
Currently, there are fewer buyers due to higher interest rates, which has resulted in fewer new listings coming onto the market, keeping inventory of unsold properties at a low level. Only the ultra-luxury market is currently experiencing selective buyer activity.
The high-point of unsold inventory occurs in September. Then the winter clean-up begins with fewer new listings and with homes taken off the market to reposition in the spring.
SEASONALITY OF UNSOLD PROPERTIES
A backlog of buyers coming into the market after the holidays results in
slightly higher Sales Activity Intensity™ for new listings. The intensity eases back down one level as we approach the peak of new inventory during the
pre-summer months of May and June.
The low point of unsold inventory
When inflation begins to peak, we will see home mortgage rates begin to decrease. Additionally at this time, there is an elevated three-point home mortgage interest rate spread above the 10-year bond, which will be another major factor dropping interest rates in the year 2023. This elevated spread most recently occurred in 2008 and 2020, which then reduced back to the historical two-point spread. Economists are predicting that this will reduce home mortgage interest rates in 2023.
Major factor affecting home mortgage interest rates
• Additional selection and availability
• Homes close to job centers are now at market price
• Fewer multiple offer situations with premium pricing
• Quick action market remains in the more affordable and mid-price ranges where 80% of sales activity takes place
• Get pre-approved for a home loan, or better yet be fully underwritten before contract to purchase
• Economists forecast peak home mortgage interest rates in the months ahead - interest rates are expected to moderate in 2023
• Lock in market price today with the possibility of refinancing when interest rates lower
• Financing option: five-year or seven-year adjustable rate home mortgage - lower the interest rate and your monthly payment
• For homeowners who do not have a mortgage, it’s an extremely opportune time to purchase a home
Buyer Opportunities for year 2023:
• It’s OK to buy and sell within same market timing
• During the frenzy market: buy and sell at premium pricing
• Today: buy and sell at market price
• Often you will end up with the same net seller equity
• Be Market Ready, Day One™
• Five Rights Make a Sale™ to best compete with other properties
1. House Right: Fix up, Spruce up, Showcase your Home™
2. Yard Right: It makes a huge visual impact
3. Price Right: Market price
4. Marketing Right: It is all about the launch
5. The Right Listing Broker: Your personal representative
John L. Scott Seller Listing Launch showcases your home
in the best light to get the best price.
Consult with your John L. Scott broker associate when buying or selling a property.
They will help you navigate the changing housing market.
Their key to success is partnering and communicating with you, as your personal representative.
We will help you purchase: The Right Home, at the Right Price.™
CENTRAL PUGET SOUND
is at the first of the year.
SEATTLE | EASTSIDE
KING | SNOHOMISH | PIERCE | THURSTON | KITSAP