Walla Walla Real Estate 2023 Year-End Report
The new year kicks off with some hopeful signs for buyers as interest rates proceeded to drop through the month of December to a current rate of 6.61% from the November level of 7.1% with the Fed is signaling additional cuts on the horizon. Here are some key year-end takeaways for the Walla Walla Valley:
High Mortgage Rates Put a Drag on Home Sales. The U.S. economy was remarkably resilient through the year which led the Federal Reserve to keep interest rates higher and longer than expected. Mortgage rates had a cooling effect on annual home sales. As a result, the number of home sales in the Walla Walla Valley dropped 13% below the previous year to 560 – a level of sales not seen since 2012.
Price Growth Was Stagnant. The slowdown in home sales brought year-over-year price growth to a halt. The years median sales price of $402,000 remained the same as 2023 and the Average sales price experienced just a modest year-over-year gain of 1.2%.
Inventory Remained Low. Mason Virant, associate director of the WA Center for real estate research said “ Inventory levels continued to be low as owners with low-rate mortgages remained reluctant to sell. This has led to year-over-year declines in transaction volume and inventory levels. The year ended with 12% fewer homes listed for sale in Walla Walla than a year ago.
So what will 2024 bring? Economist Matthew Gardner predicts the following:
Mortgage Rates will Drop, but not quickly. Data shows inflation and the broader economy are starting to slow, which should allow mortgage rates to ease in 2024. That said, rates will only fall to around 6% by the end of the year.
Home prices will rise, but not much. While many forecasters said home prices would fall in 2023, that was not the case, as the lack of inventory propped up home values. Given that it’s unlikely that there will be a significant increase in the number of homes for sale, prices will not drop in 2024. However, price growth will be very modest.
Sales will rise but remain low. 2023 will likely be remembered as the year when home sales were the lowest since the housing bubble burst in 2008. Matthew expects the number of homes for sale to improve modestly in 2024 which, combined with mortgage rates trending lower, should result in about 4.4 million homes sales nationally. Ultimately though, demand exceeding supply will mean that sellers will still have the upper hand.
*NWMLS WA Data