Despite superficial similarities between the current housing market and the crises of years past, Windermere economist Matthew Gardner assured Island County residents that they have little to worry about.
Current downward trends in pricing and upward trends in supply are not indicative of a crashing market, Gardner said at his annual economic forecast Feb. 23; the housing market is simply reverting back to its usual state.
Housing prices in Island County and across the country skyrocketed in 2021, with the average sale price peaking at over $700,000 in 2022. During the latter half of last year, the market began to cool off. Gardner predicted that things will continue to slow down throughout the year.
The average sale price in Island County was down to $545,000, according to data from Northwest Multiple Listing Services Gardner presented at the event. Mortgage interest rates are declining nationally, too, down to 6.5% from over 7% in November of last year.
At the same time, listing activity is up in Island County, surpassing 200 listings at the beginning of the year after spending around two years below 100.
Gardner said he’s heard many people express concerns that these conditions are reminiscent of the housing market crash that led to the great recession, but he said there is nothing to fear.
“It’s not 2007 again,” he said.
Gardner pointed out that while listing activity is up compared to 2021 and 2022, it is still well below the long-term average for the area. Likewise, though average sale prices may seem to be dipping drastically compared to recent soaring prices, they are actually approaching the long-term trend that housing prices were following prior to the recent spike.
“We’ve forgotten what normal looks like,” he said.
Gardner predicted that sale prices will likely contract a bit more before stabilizing at the long-term trend.
“We are reverting back to a more sustainable pace of price growth,” he said.
He added that while this current downward trend might feel bad to homeowners, decreasing home prices does not equate to money lost to homeowners. In fact, over 60% of Island County homeowners with a mortgage have more than 50% equity in their homes, up from just over 30% of county homeowners near the end of 2020.
He also predicted that national mortgage rates will continue to drop off, ending around 5.5% in the fourth quarter of this year.