Housing market cools, but million-dollar homes are here to stay

Market drastically cools since start of year, but Valley homes still regularly sell for $1 million

While the housing market in the Snoqualmie Valley has cooled off significantly since a record-breaking start to 2022, homes in the Valley are still regularly selling around $1 million — a trend that’s likely here to stay.

Data released from the Northwest Multiple Listing Service earlier this month shows that while median single-family home sales in the Valley’s subregion — which includes Snoqualmie, North Bend, Fall City, Sammamish and a portion of Issaquah — are the lowest they’ve been all year, they were still selling for over $1.3 million.

That high price comes even as new results show a more than 300% increase in available listings this August and a 100% increase in July, compared to numbers during the same months last year.

Despite the added inventory, the number of pending and final home sales were down around 30% in both July and August compared to this time last year.

“Inventory has been increasing, but buyers have been put back on their heels by a rise in interest rates that has dramatically impacted affordability,” said Jonathan Pearlstein, a real estate advisor and owner of Engel and Volkers Snoqualmie Valley.

Pearlstein said he expects to see a continued increase in inventory, but thinks buyers will continue to face challenges from rising interest rates, alongside high inflation and an uncertain U.S. economy and stock market. However, he said, buyers that do push ahead will see a greater opportunity to find the right property and negotiate better terms and sale contingency requirements.

Pearlstein emphasized that he does not see a 2008-like collapse forthcoming. He said that demand in the Valley is going to continue to remain strong because of the influx of tech jobs coming into the Puget Sound region, alongside a high performing school district and unparalleled access to nature and recreation.

“The Snoqualmie Valley, I believe, is one of the most desirable locations in the Seattle metropolitan area,” he said. “I expect we are for now — and time to come — a million-dollar community.”

The price drop and rise in inventory comes after a hectic first half of 2022 that was marked by record-breaking housing prices and low inventory. During that span, median housing prices in the Valley’s subregion spent five months above $1.4 million, including three months above $1.6 million.

Not only were those prices high during that five-month span, but they were significantly higher than prices just a year prior. On average, homes during that span sold at prices 32% higher than during the same time period in 2021. That includes prices in February that saw almost a 60% increase from 2021.

Since the summer began, prices have stabilized and are approaching similar marks set during this time last year, with prices up less than a percent in July and just 4.5% in August.

Source: Northwest Multiple Listing Service. Graphic by Conor Wilson/Valley Record

Source: Northwest Multiple Listing Service. Graphic by Conor Wilson/Valley Record

Brian Davis, owner of Snoqualmie Valley Real Estate, said the slowdown is in part the natural evolution of the market and in part that the beginning half of 2022 was unsustainable.

“There was such a fervor and so much activity that you just can’t sustain that,” he said. “It’s part of the natural slowdown we see every year, and it was just so intense through the COVID years that it just had to come down.”

Davis said interest rates have climbed higher than they were in 2008, slowing potential buyers’ interest. However, he said, properties that are unique or special are still being sold regularly. He expects a slight rise in activity over the next few months.

“The fourth quarter in the Valley usually sees a slight bump in activity from buyers from the third quarter,” he said. “It’s going to jump up just a touch and settle for the holidays.

“Who’s to know what happens on the first of the year, but I imagine it will be a similar rhythm where that early spring market will be intense again,” he said.

Alicia Messa, owner of the Messa Real Estate Group in Snoqualmie, said the market is in a weird adjustment period, where it is trying to figure out what the new normal looks like in the wake of the pandemic.

“You have this really bizarre market right now, where it’s hard to even know what a home is worth,” she said. “We’re stabilizing from a market that was so incredibly insane. I’ve never seen a market like that, ever.”

Messa said some sellers are still trying to get what homes were worth 4 to 5 months ago while others have dropped prices. Buyers, she said, are waiting to see if the market is going to drop further.

Messa said she would be surprised if things got much better for buyers, and noted that home prices will probably hover around the $1 million mark.

“I’m blown away by some of these homes. They used to be first-time buyer homes and now they’re a million,” she said. “I would be surprised if we go much lower, but we’re probably going to start seeing prices go up at a moderate appreciation.”