Waterfront Market Update - December 13, 2021

The Washington State Waterfront Real Estate Market has been very active over the last two months. In this blog post, we look at the data through the end of November and look forward with our prediction for what the waterfront market will do in 2022.

The first thing we will look at is the number of actively listed single family waterfront homes in the Northwest MLS area. Remember, the NWMLS is one of the largest MLS's by geographic area in the United States and effectively spans from Lake Chelan all the way West to the Pacific Ocean and from the Northern border of Washington almost all the way down to Vancouver. 

Actively Listed Single Family Waterfront Homes

Actively listed single family waterfront homes is one of our favorite stats because we think it clearly illustrates just how intense the competition is for waterfront property. In the chart above, which only looks at the last two years, it's very clear that we have an almost historic low for the number of actively listed single family waterfront homes. Our prediction is that we'll see this data point hit its historic low in either January or February of 2022, which may be the last time for a while inventory is this lean. For historical context, in the last 20 years, excluding last year, the lowest number of actively listed single family waterfront homes occurred in January 2006 at which time buyers has 1,250 waterfront homes from which they could choose. Then, last year, in February, this number reach the all time low of 248! We've creeping down to that number again right now and it is highly possible that we'll set a new record in Jan/Feb of 2022.   

Number of New and Pending Waterfront Listings

This chart above illustrates exactly why we are in a decreasing inventory market. The number of pending transactions exceeds the number of new listings in October and November -- and we expect it to exceed the number of new listings in December, too. With the holidays consuming a lot of potential seller's bandwidth and the general belief that listing your home during the holidays produces lesser interest, we are seeing very few new listings hit the market. Concurrently, the news media is decribing several interest rate increases projected for 2022, so the pent up buying demand is experiencing an increased sense of urgency so they can lock in a very low interest rate on their mortgage. 

Finally, these two charts above -- which are dynamic so you can scroll your mouse over them to see the specific data points -- illustrate what we've been reading about all year as the trend for real estate across the United States. Supply is very limited and prices are going up steadily. Until supply and demand shift back to a more balanced position, the price of real estate will continue escalating rapidly. 

Looking forward to 2022

We expect waterfront real estate values to continue trending upward through 2022 and into 2023, primarily because of how few waterfront properties are currently listed and the significant pent up demand for vacation homes as the Covid-19 pandemic continues to hamper international and domestic travel. Having said this, it is anticipated that mortgage interest rates will increase next year, potentially into the mid-4% range. This means that some prospective buyers will be priced out of the market, which will slow demand. BUT, waterfront property has always been a luxury and, in general, about 50% of waterfront properties are purchased with cash. This means that the primary residence market will be more greatly impacted by the increase in mortgage rates, but we expect the demand for waterfront properties to be only marginally impacted by increased rates. 

We hope you've had a wonderfuly 2021 and thank you again for reading our blog posts and using our website as a resource for your waterfront property search! As always, if there is anything we can do to help, please don't hesitate to contact us!

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