Sunday, June 23, 2024

Adjusting to higher rates: Wenatchee Valley's real estate resilience

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In the face of climbing interest rates, the single-family home market in Chelan and Douglas counties, with a spotlight on the Wenatchee Valley, has showcased remarkable adaptability. A comparison of sales data from the early months of 2022 to the same timeframe in 2024 reveals a market that's navigated these financial shifts with a steady hand.

During January and February of 2022, as interest rates began their ascent from 3% to 4%, the market saw 114 homes change hands through financing, amounting to a total of $66.8 million. Fast forward to 2024, and we find a nearly parallel scenario: 113 homes sold, totaling $61 million in financed transactions. This near-constant in units sold, alongside an 8% dip in financed sales volume, signals a market that's not just surviving but stabilizing—even as the average 30-year mortgage rate hits 6.75%.

The deviation, particularly a $5 million slack in sales, primarily stems from a downtick in homes selling for over $1 million. A closer look at sales by price range unveils a nuanced landscape: financed sales of homes under $250,000 have slightly retracted, while cash purchases in the $250,000 to $500,000 segment surged. The luxury sector, homes priced at $750,000 and above, witnessed a significant retreat in financed buys, illustrating the pronounced effect on higher-end properties.

Nationally, the scenario is mixed. The National Association of Realtors noted a 9.5% month-over-month rise in existing home sales in February, counterbalanced by a 3.3% year-over-year decrease. Locally, however, the Chelan-Douglas single-family residential (SFR) market has outpaced national trends, marking a notable increase of 33% month-over-month and 43% in year-over-year sales, an emblem of robust market resilience.

Recent announcements by the Federal Reserve regarding interest rate cuts and adjustments to its balance sheet suggest potential for further stimulation of the real estate market. However, these measures also pose inflationary risks, especially with increased government spending anticipated during an election year.

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The Wenatchee market's dynamism isn't confined to single-family homes. Sales in land, commercial real estate, and condos have also seen an uptick, propelled by an increase in financed transactions across various price brackets. This broad-based market activity underlines a sustained demand across different sectors, buoyed by a noticeable rise in financed transactions across diverse price ranges.

In sum, despite the hurdles of higher interest rates, the Wenatchee Valley's real estate market continues to forge ahead, its strength in financed transactions a testament to enduring buyer confidence and overarching market stability.

Brian Fair owns and operates Pioneer Title Company in Wenatchee

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