We expect the UP/Fircrest housing market to remain sluggish through much of this year, but home prices are unlikely to drop further.
Fourth Quarter Market Update
for University Place and Fircrest
Increased mortgage interest rates have definitely had a cooling effect on the UP/Fircrest housing market in the past 6-9 months. Sales activity is down, and home prices have retracted. With inventory levels still quite low, a further erosion in home values seems unlikely. Like many in the industry, we predict a flat market for 2023.
The median home price in University Place and Fircrest is 2% lower now than it was a year ago. We expect prices will be down year over year through much of 2023, but it’s important to recognize that year over year sales numbers are “trailing indicators” that aren’t necessarily a good reflection of the current trajectory of the market. We’ve definitely lost value, there’s no question about that, but the housing market has probably corrected itself as much as it’s going to from a price perspective.
Year over year sales activity is down. Only 81 single family homes were sold in zip codes 98466 and 98467 in the fourth quarter of 2022 – a significant 37% decrease in sales activity compared to the fourth quarter of 2021. This sluggishness in the market is likely to continue until mortgage interest rates improve.
Homes in University Place and Fircrest haven’t been selling as quickly as they once did, but they’re still selling pretty quickly – moving from active to pending within a month on average.
Housing inventory levels remain low in UP and Fircrest. A lot of home owners are reluctant to let go of their super low interest rates in order to make a move, which means they’re not putting their houses on the market. Low inventory levels will likely prevent a further loss in home values going forward.
Current Market Conditions
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- Realtor.com chief economist Danielle Hale predicts that sales activity in 2023 will be 14% lower than it was in 2022.
- National Association of Realtors chief economist Lawrence Yun predicts that mortgage interest rates will improve in 2023, settling around 5.7% by the end of the year, but that home values will remain flat until 2024.
- New construction permit applications are down 17% year over year. State legislatures will likely consider bills in 2023 that change land use guidelines and ease regulatory obstacles in an effort to stimulate development.
- With housing inventory levels unlikely to rise in the near term, a traditional buyer’s market is unlikely in 2023. That said, sellers will have to be realistic about what the market will bear when setting list prices, given increasing affordability issues for buyers.
In the current real estate marketplace, it remains critical for buyers and sellers to seek expert advice. If you’re thinking about buying or selling a home in the area, please contact us to discuss how we can put our knowledge and experience to work for you.
Mark Pinto is a top-producing Realtor with Windermere Chambers Bay, specializing in residential real estate in Tacoma, Gig Harbor, University Place and Lakewood.
Mark Pinto: (253) 318-0923
MarkPinto@windermere.com
