Pandemic-era interest rates for a home purchase in Pierce County not on horizon, agent says

Home buyers might be yearning now for the low interest rates seen during the pandemic, but a local real estate agent says be careful what you wish for.

Jon Bye, a real estate agent serving the Tacoma area including South King County, says it’s better to look at the market pre-2020 for context, before pandemic-era interest rate drops.

“We’re not going to get back to 2 and 3 percent interest rates,” he told The News Tribune in an interview Monday. “This is not going to happen, unless there’s something terribly wrong in our world ... I don’t want the ramifications of what comes with low interest rates from an environment of my health, my safety and my security for not only me, for my family and my friends.”

Lower interest rates also can put more stress on affordability, he noted.

“Because then that’s when you get ... people paying way more money, removing all their contingencies. You get cash buyers back in the game,” he noted.

“When rates get into the low fives, or at some point, hit the high fours, and if we’re around the same inventory levels that we have right now, prices are going to skyrocket,” he added. “So that’s the tough part. If you’re waiting for the low rate, you’re going to get burned.”

The Northwest Multiple Listing Service on Monday also released its report for May home sales in the Washington counties it represents, including the Puget Sound region.

It also made note of the effect interest rates hovering around 7 percent were having on the area market.

“With interest rates moving into the 7 percent range, we are seeing buyers locking in rates, buying down the rate, and negotiating seller-paid closing costs to take some of the sting out of interest-rate volatility,” said John Deely, executive vice president of operations at Coldwell Banker Bain, in Monday’s NWMLS news release.

In short, inventory remains tight, with Snohomish County “at about 3.5 weeks of supply (0.88 months of inventory),” according to the report. “Pierce County was slightly better at 1.09 months, followed by King (1.26 months) and Kitsap (1.3 months).”

Four-to-six month inventory is generally considered to be a balanced market.

Single-family home listings in Pierce County were down nearly 17 percent in May from same period last year, according to NWMLS’ Monday report, and the number of closed sales down more than 37 percent from 2022.

The median closed sale price in Pierce County in May was $544,990, down more than 6 percent from the same period a year ago but up from April’s $525,000 and $517,442 in the first month of 2023.

For condos in Pierce County, the median closed sale price was $399,000, down 2.68 percent from 2022.

King County’s median closed sale price for single-family homes in May was $910,000, down 8.9 percent from a year ago, while Snohomish County was $780,000, down 4.29 percent. Kitsap County’s median closed sale price was $557,450, down .52 percent from a year ago.

Bye advised people to look at shorter time frames to see the gains.

“You have to look at the shorter window data instead of the 12-24 months, because you’re just like, you’d never get back there,” he said. “It’s like investing in the stock market, you know, at the bottom, you’re always going to get back to level playing field. But if you just don’t do anything, there’s nothing gained.”

Other market changes, Bye noted, include people making shifts again with return-to-office edicts from their employers.

“We’re starting to trickle back in with the clients that are getting called back into work that have moved, that now realize that, ‘Well, they’re not going to let me work out of state.’ ... So we’re slowly starting to see some of that type of activity come back.”

“We’re doing more contingent deals now than we ever have,” he added. “Because in the pandemic, you couldn’t even do that. People just weren’t willing to do that,” he said with so many buyers. “So right now, there’s not a lot of listings, but demand is down as well.”

That doesn’t mean the multiple-offer days are done, notably with homes in areas popular with families such as master-planned communities such as Tehaleh in the Bonney Lake area or parts of Gig Harbor.

“Gig Harbor just continues to be super hot,” he added.

Outside of that it’s really anything under like $400,000 and the affordable “pockets” still in the area, some of which he referred to as “Spana-Graham.”

Bye further described that area as “the whole convergence zone of Spanaway and Graham and Puyallup and East Tacoma.”

He added, “We’re seeing multiple offers that still have contingencies in them. So people aren’t just willing to waive everything. They might be willing to go up on price, but they still want their home inspection, they still need to keep their financing in place.”

There’s been no mass exodus from Tacoma, unlike some areas in California, notably San Francisco, which saw more than 30,000 residents leave since last year alone.

“I feel like there’s twice as many people that want to be here,” Bye noted. He did say that Texas is the main state he sees people either leaving or moving to in relation to the King-Pierce County area.

“I would say probably over half of our clients are relocating or going to Texas,” he said.

“Weather and/or politics,” he said, are the main reasons he hears from clients going to or moving away from the Lone Star State.

Where are people not seeking their next residence?

“Nobody’s going to California,” he replied.