Seattle homebuyers hit the brakes
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.
SOURCE: Axios.com
