Tue. Aug 9th, 2022
q2-2022-central-washington-real-estate-market-update

The following analysis of select counties of the Central Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

Central Washington has added 5,558 jobs over the past 12 months, which represents an annual growth rate of 2.5%. With the addition of these jobs, the area has now returned to its pre-pandemic employment levels. Although the Central Washington region has seen a full recovery, Kittitas County is still lagging with a shortfall of 2,600 jobs. Adjusted for seasonality, unemployment levels in Central Washington were 5.4%, down from 6.2% a year ago. The lowest unemployment rate was in Chelan County, where it was 3.9%. The area’s highest jobless rate was in Yakima County, where 6% of the labor force was still without work.

Central Washington Home Sales

Sales in Central Washington fell 2.2% from the second quarter of 2021. A total of 1,359 homes sold, which was lower than a year ago but 33% higher than the first quarter of 2022. The spring housing market was clearly a busy one.

Pending sales, which are an indicator of future closings, rose more than 70% compared to first quarter. This suggests that closings in the third quarter will likely be strong.

Year-over-year, sales rose in Douglas, Yakima, and Okanogan counties, but fell in Chelan and Kittitas counties. However, compared to the first quarter of 2022, sales rose significantly across the board.

Inventory levels rose more than 36% year over year and were up 82% from the first quarter. There are considerably more choices in the market, which is good news for buyers.

A bar graph showing the annual change in home sales for various counties in Central Washington from Q2 2021 to Q2 2022. Okanogan County came out on top with a 12.5% change, followed by Douglas at 5.1%, Yakima at 1.1%, Chelan at -6.3%, and Kittitas at -15.1%.

Central Washington Home Prices

The average home price in Central Washington rose 12.2% year over year to $521,894. Prices were 3.9% higher than in the first quarter of this year.

I have been watching list prices as they are a leading indicator regarding the direction the market may take. Median list prices were an average of 10.7% higher than in the first quarter. Only Kittitas County saw asking prices pull back, but I do not see this as a concern at the present time.

Only Douglas County saw year-over-year prices rise by less than 10%. Compared to the first quarter, prices rose in three counties, but fell modestly in Kittitas and Douglas counties.

Although interest rates rose to an average of more than 5.5% by the end of second quarter, sellers still appear to be confident in the market. This was demonstrated by rising list prices even in the face of more competition with the increase in inventory.

A map showing the real estate home prices percentage changes for various counties in Central Washington. Different colors correspond to different tiers of percentage change. Douglas County is the only county with a percentage change in the 5% to 7.9% range, while Chelan and Yakima are in the 11% to 13.9% change range. Okanogan and Kittitas Counties are in the 17% + change range.

A bar graph showing the annual change in home sale prices for various counties in Central Washington from Q2 2021 to Q2 2022. Kittitas County tops the list at 18.5%, followed by Okanogan at 18.2%, Yakima at 13.3%, Chelan at 13.1%, and Douglas County at 5.7%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Central Washington Days on Market

The average time it took to sell a home in Central Washington in the second quarter was 31 days.

During the quarter, it took six fewer days to sell a home in Central Washington than it did a year ago.

Two counties saw the length of time it took to sell a home drop compared to a year ago. Kittitas and Douglas counties saw no change and market time in Chelan County was up five days. Compared to the first quarter of 2022, market time fell across the region.

On average, it took 24 fewer days to sell a home in the second quarter than it did in the first.

A bar graph showing the average days on market for homes in various counties in Central Washington for Q2 2022. Douglas County has the lowest DOM at 14, followed by Kittitas at 17, Chelan at 25, Okanogan at 37, and Yakima at 64.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Jobs continue to be added to the local economy and the labor force is expanding, which are both positive for the housing market. Inventory levels have risen significantly, but data on pending sales and market time suggests that the market is still buoyant. List-price growth suggests that sellers are still confident even with rising interest rates and considerably more homes for sale. However, the pace of home-price appreciation is starting to cool, which may be of some solace to home buyers.

A speedometer graph indicating a medium seller's market in Central Washington for Q2 2022.

All things considered, I have decided to move the needle a little more in the direction of home sellers. The market is going to start moving, albeit slowly, toward some sort of balance, but for the time being, sellers remain in control.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q2 2022 Central Washington Real Estate Market Update appeared first on Windermere Real Estate.

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