Right now, we’re all hearing words like “inflation,” “recession,” and “layoffs” in the news, and it can feel pretty overwhelming. What’s actually happening in our economy? How does it affect Seattle? If you’re hoping to buy or sell soon, how can you best time the market?
Recently, we texted several of our clients and asked them what questions they had about Seattle’s housing market at the moment. We’ve answered their questions in our recent blogs, and we also wanted to address whether or not it’s a good time to buy a new construction pre-sale home in the Seattle area.
Q: What if I want to buy a new construction home? Is now a good time for pre-sales?
A: It depends on the builder’s situation. If the builder has hundreds of homes to sell (like Lennar or DR Horton, for example) and they are SLASHING prices in places like Bothell, Kenmore, Lynnwood, etc., then yes, it is a good time for presale homes.
However, we would not want to be locked in on a purchase price until after spring of next year.
We think that this time period will represent the bottom of the market if declines maintain at the current overall pace and if inflation breaks by February of next year for two months in a row (and by a significant amount). Then you will know that interest rates will not go up again and are about to decline. When rates start to decline, home prices are about to go up.
Interest rates might be nearly 8% by early next year so it would be scary for most buyers to commit. Still, so long as the ratio between cost and affordability looks more like it used to, then you should buy—again, so long as inflation is also down for the last two months in a row. (Can you tell that this part is really, REALLY important?!) If this is not the case, the FED could raise rates again, and all bets are off. 🙂
If you are looking at homes by small builders and they have ceased new permits like so many others, then you might want to buy. At least you are not down as much as you would have been in April 2022. If you can lock the price in at that point you are GOLDEN. If the builder wants you to commit to a price now and they still have hundreds of homes to sell, then we would be cautious of that.