Washington housing market freezes ahead of potential recession

Jan 6, 2023, 2:58 PM | Updated: 3:23 pm
housing market...
A Redfin real estate yard sign is pictured in front of a house for sale in Seattle, Washington. (Photo by Stephen Brashear/Getty Images for Redfin)
(Photo by Stephen Brashear/Getty Images for Redfin)

Pending home sales have dropped more than 30% year-over-year across the nation, the lowest level since 2015, according to a new housing market report from Redfin.

The most significant declines were in Las Vegas, Phoenix, and Austin — each witnessing a drop larger than 50% on average.

“It’s best described that we ended the year with a whimper rather than a roar,” said Matthew Gardner, Chief Economist for Windermere Real Estate, on Seattle’s Morning News. “We know the number of homes for sale is certainly significantly higher than we’ve seen, but the number of sales is down. And, depending on how you look at it, we’re seeing a retraction in pricing.

“So, is the market changing? Well, yeah, I think the market is, and it’s going to be interesting to see how this year plays out.”

The housing market fizzled out at the end of 2022 due to rising mortgage rates, worries over an upcoming recession, and record-low new listings alongside the typical late-year culprits slowing down business — extreme weather and the holidays.

This December in King County, the number of sold homes crashed by 43% year-over-year and 39% in Snohomish County. Pierce County saw the worst decline at 50%.

“What are real estate agents doing?” asked Dave Ross, co-host of Seattle’s Morning News. “Are they doing jigsaw puzzles all day? This sounds catastrophic.”

More from Ross: This speaker election is some of the most spirited debate in years

“The overall numbers are down. However, it depends on how you kind of carve it up,” Gardner said regarding the region’s housing market. “We are certainly in a quieter period right now. I think there are a lot of fence sitters who are waiting for either prices to collapse or mortgage rates to drop. You have to think about the winter lull as well, which is fairly normal.”

The silver lining is the value of homes in King, Snohomish, and Pierce counties have only dropped by a few percent (approximately 2% according to Gardner), meaning, while it remains challenging to sell a property, the actual value is mostly standing pat.

“But again, it’s how you pass the numbers. If you were comparing directly the sale prices in Dec. 2022 and Dec. 2021, yes, you’re right, they’re down very modestly a couple of points,” Gardner said. “But you have to look at the bigger picture. And in aggregate, if you take the median sale price for the whole of 2022 versus the whole of 2021, guess what? In King County, they are almost 9% over. They are over 12% in Snohomish County and about 9% in Pierce County.”

Gardner stated that most economists expect a recession, making the housing market even more vulnerable in 2023. However, a recession opens up less competition and lower prices for potential buyers, leading economists to inconclusive results whether or not purchasing a home during turbulent economic times is a sound strategy.

“The question now is, when is it going to start?” Gardner asks. “One school of thought thinks it will start probably in the second quarter. I think it could be a bit later, maybe the third quarter of this year.”

Gardner compared the economic climate to the U.S. entering a recession in the 1990s, lasting for eight months until March 1991. The Labor Department estimated the economy lost more than 1.6 million jobs as a result of the recession.

“Certainly, [this recession will be] nothing like 2007 and, thankfully for us here in Seattle, nothing like 2000 either,” Gardner said.

On April 14, 2000, the Nasdaq fell 355 points — the worst one-day point loss in history, halting a previous decade’s worth of growth in the tech sector in Seattle. Companies, including AT&T, Broadband, and Nextel, significantly downsized their staff as a result.

Just this week, Amazon is currently laying off more than 18,000 employees, 70% more than initially expected, according to The Washington Post.

Amazon, Salesforce jettison jobs in latest tech worker purge

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

Dave Ross on KIRO Newsradio 97.3 FM
  • listen to dave rossTune in to KIRO Newsradio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave's Commentary

Seattle's Morning News

L.B. Gilbert

Mayor Harrell: Downtown has made ‘incredible progress,’ still further to go

A new year means a renewed effort to revitalize downtown Seattle, and Harrell is optimistic the city can reorient itself.
4 days ago
GA Voter Georgia Senate...
Bill Kaczaraba

NYT reporter on Georgia Senate runoff: ‘It’s a big deal’

After all the hype, Georgia is finally getting to vote on the U.S. Senate race between Senator Raphael Warnock (D) and Herschel Walker (R).
2 months ago
Kirstie Alley...
Travis Mayfield

Mayfield: Remembering Kirstie Alley’s legacy, both good and bad

Kirstie Alley is dead at the age of 71. Her children said on Twitter cancer was the killer, and it had only been recently discovered.
2 months ago
Travis Mayfield

Mayfield: AI might not destroy humanity, but let us love it more

Robots are taking over the world! Not the beep-boop kind but the "open your social media and see AI-created portraits" kind.
2 months ago
Travis Mayfield

Mayfield: How I learned to fall asleep by embracing the worry

I schedule my worries. Literally, there is an entry each day in my phone's calendar that simply commands me to "worry."
2 months ago
Travis Mayfield

Mayfield: What deserves praise in food culture, the baguette or cruelty?

The baguette is worth preserving! So says the UNESCO which recognized the "artisanal know-how and culture of the baguette"
2 months ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Washington housing market freezes ahead of potential recession