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Springtime typically sees increased buyer and seller activity when it comes to houses.
But in Washington state, “Sellers are on strike,” according to Jeff Smart, president of Washington Realtors.
“Stuff is moving,” he told The Center Square. “I mean, everyday homes go on the market and go off the market, so the real estate transaction continues, but there just aren’t as many. We need more houses to sell.”
Nevertheless, he’s still optimistic about the market.
“I’m a second-generation realtor, and I grew up with a dad running the brokerage in the 80s when interest rates were at 17-18%, and houses were still selling then,” he explained.
Smart said the flood of refinancing during the COVID-19 pandemic is now the reason many homeowners are stuck even if they want to move.
A Realtor.com survey from last summer found that 82% of potential sellers expressed feeling "locked in" by their current low mortgage rates.
“You got a lot of people who got into their homes with that super low rate, the COVID rate we call it,” Smart said.
That translates into people not being able to afford a comparable house elsewhere with rates higher than what they have today.
“The chief economist for the National Realtors Association recently said there seems to be a decline in the divorce rate, and he’s attributing that to people deciding they’d rather stay than give up that good rate," Smart explained. “People are sitting still because they got this great rate, and they won’t get it again."
Mike Wilkerson teaches a real estate class at Portland State University and is the director of analytics at ECOnorthwest, a Portland-based economic consulting firm.
“Housing has traditionally been more affordable – that is, boiled down to the price of a home relative to someone’s income,” he said. “And then today, we have more extenuating circumstances ... like the inability to save for a down payment because rent is much higher than incomes and interest rates are so high.”
He says that even making a lateral move is problematic unless you have no debt.
“It’s really challenging,” Wilkerson noted.
“Some recent studies have shown for every interest point that you have as a differential in buying a new home, you are 18-20% less likely to buy a new home,” he continued. “If you’re looking at the market today, you’re saying I’m at maybe 3% and going to 7%, that’s like an 80% chance that you’re not going to sell your house.”
According to Wilkerson, research shows that the fastest-growing sector of listings year over year is those without a mortgage – those with a paid-for home.
“Of the top 50 markets, Seattle has the lowest share of people with no mortgages, so that’s kind of adding to the constraints on the market,” he said.
He says the share of people here without mortgages is lower, which is decreasing the number of listings.
“Today we are in the three-month range for homes to sell,” Wilkerson said. “Historically, unless you have six months or more of supply, that’s where you tip into being a buyers-market with price drops, but when you’re in this three-month range, we are squarely in a sellers-market.”
Both experts suggest there are other factors to consider, like whether you are a first-time home buyer or are in the market to sell your home.