The Reality of Two Housing Markets (And Why Right Now Might Be the One That Builds Real Wealth)

By Dan Keller | Mortgage Advisor | New American Funding | Everett, WA

Since 1970, there have really only been two housing markets. Not fifty variations. Not a complicated spectrum. Two.

Understanding which one you are in right now, and what it actually means for your wealth, changes the entire conversation about when to buy

Market One: Low Rates, High Competition

When mortgage rates are low, buyers flood the market. Everyone who was waiting on the sidelines comes back in at the same time. Demand surges. Inventory gets absorbed quickly. And sellers, knowing they have multiple buyers competing for the same home, stop negotiating.

In this market:

• Mortgage rates are low

• Home prices rise

• Competition is high

• Sellers hold all the leverage

This is the market most buyers remember from 2020 through early 2022. Waived inspections. Offers $50,000 to $100,000 over asking price. Buyers losing out on five, six, seven homes before getting one accepted. And the homes they eventually bought were often priced well above where they would have been in a calmer market.

Market Two: Higher Rates, Lower Competition

When mortgage rates rise, buyer demand cools. Fewer people qualify, fewer people are actively shopping, and sellers who need to move their homes start making concessions they would never have considered in a low-rate environment.

In this market:

• Mortgage rates are higher

• Home prices plateau or soften

• Competition is lower

• Buyers have negotiating power

This is the market buyers in King, Snohomish, and Skagit Counties are in right now.

What the Current Data Actually Shows

This is not abstract theory. Here is what is happening on the ground across the markets Dan serves, based on the most current NWMLS data available.

In Snohomish County, the median sold price is $705,500 with a sale-to-list ratio of 98.9%, meaning homes are regularly selling below asking price. Active listings have climbed to 2,935, inventory sits at 3.4 months, and the median days on market is 25 days. Snohomish County prices are down 5.6% year over year from their May 2025 peak of $799,950.

In King County, the median sold price is $841,000, down 3.9% from a year ago and nearly 9% below the June 2025 peak of $920,000. Active listings stand at 8,419 with 4.3 months of inventory. Inspections, seller-paid repairs, closing cost negotiations, and price reductions are all back on the table in a way they have not been in years.

Put simply: buyers in this market are negotiating at or below list price on $700,000 and $800,000 homes with 3% to 5% in seller concessions. That is real money. On a $750,000 purchase, 4% in seller credits is $30,000 in reduced out-of-pocket costs.

The Math That Changes the Conversation

Here is the question worth sitting with.

How long would it take you to pay down an extra $30,000 to $50,000 on your mortgage balance? For most homeowners, the honest answer is ten years or more, because most of the early payments on a 30-year mortgage go toward interest rather than principal.

Now consider this: buyers in this market are negotiating $20,000 to $40,000 below peak-year pricing on comparable homes, plus negotiating seller credits on top of that. That gap between what a home costs today and what it cost at peak represents equity you are not paying for. You are simply buying at a point in the cycle where prices have softened and sellers have incentive to work with you.

According to the National Association of Realtors, when interest rates drop by a full percentage point, home values historically surge 5% to 10% as demand increases. Snohomish County prices are currently sitting roughly 9% below their 2025 peak. If that pattern holds when rates eventually fall, the buyers who purchased during this window could see significant equity appreciation, in addition to being able to refinance into a lower rate when the market presents that opportunity.

The rate you buy at today is not permanent. The price you pay is.

The Refinance Path

A common objection to buying in a higher-rate environment is the monthly payment. It is higher than it would be if rates were lower, and that is a real and legitimate concern.

But the rate is the one thing that can change after closing. If rates drop meaningfully, a refinance brings the payment down. The purchase price, the equity negotiated, and the seller concessions secured at closing are already locked in. Those do not get renegotiated.

The buyer who waited for rates to drop and then purchased in a surging market paid more for the home, had less negotiating room, and is now refinancing from the same rate environment as the buyer who purchased during the higher-rate window. The difference is the price paid and the equity built in between.

Why This Window Has a Shelf Life

The conditions that make this market favorable for buyers are directly connected to the number of buyers who are currently sitting out.

When rates fall, those buyers come back. Every one of them. The inventory that has been building for the past 18 months gets absorbed. Sellers who are currently offering 3% to 5% in concessions will stop doing that the moment they have multiple offers again. And the prices that have softened from their 2025 peaks will begin climbing again as demand catches up with supply.

This cycle has repeated consistently since 1970. The pattern is not guaranteed to repeat identically, but the underlying logic is sound: lower rates attract more buyers, more buyers drive up prices, and higher prices eliminate the negotiating room that exists today.

The buyers who look back on 2026 as a generational buying opportunity will be the ones who understood this cycle and acted on it while the window was open.

What This Looks Like Across the Region

The math plays out differently across the cities and counties Dan serves, but the underlying opportunity is consistent.

In Snohomish County cities like Everett, Marysville, Lake Stevens, Monroe, Stanwood, and Arlington, homes are selling at or slightly below list price with meaningful time on market and seller flexibility. New construction in communities like Sather Farms in Smokey Point is also presenting negotiating opportunities that did not exist during peak competition years.

In King County markets including Bothell, Kenmore, Kirkland, Lynnwood, and Shoreline, the price softening from peak is more pronounced in the condo and mid-tier single-family segments. The 4.3 months of inventory in King County is the highest it has been in years and translates directly into buyer leverage on the right properties.

In Skagit County, including Burlington, Mount Vernon, and Anacortes, prices remain more accessible relative to the broader Seattle metro and buyers shopping north of Snohomish County are finding solid value in communities with strong long-term fundamentals.

Frequently Asked Questions

Q: Should I buy a home now or wait for mortgage rates to drop?

This depends on your personal financial readiness, but the market argument for buying now is straightforward. Home prices in King and Snohomish Counties are currently 4% to 9% below their 2025 peaks. Sellers are negotiating concessions of 3% to 5% that were not available at peak. When rates fall and demand surges, both of those advantages typically disappear. The rate you buy at today can be refinanced. The price and concessions cannot be renegotiated after closing.

Q: How much are sellers actually negotiating in Snohomish County right now?

Based on current NWMLS data, Snohomish County homes are selling at a 98.9% sale-to-list ratio, meaning buyers are regularly negotiating below asking price. Seller concessions of 3% to 5% toward closing costs or rate buydowns are being negotiated regularly on homes that have been on the market for more than a few weeks.

Q: What is a seller concession and how does it help me?

A seller concession is a contribution from the seller toward your closing costs or a mortgage rate buydown. It reduces the cash you need to bring to closing or lowers your interest rate without changing the purchase price. On a $750,000 home, a 4% seller concession is $30,000. That is money you do not have to bring to the table or money applied to buying down your rate.

Q: What happens to home prices when mortgage rates drop?

According to the National Association of Realtors, a one percentage point drop in mortgage rates historically causes home values to increase 5% to 10% as buyer demand surges. Snohomish County prices are currently roughly 9% below their May 2025 peak. If rates drop and that historical pattern holds, buyers who purchased during this window could see significant equity gains.

Q: Is it possible to buy now and refinance later?

Yes, and this is one of the most practical strategies available to buyers in this market. Purchase at a negotiated price with seller concessions today. If rates drop meaningfully in the future, refinance into a lower rate. You keep the purchase price advantage and the equity you built in between. This is sometimes called "date the rate, marry the home."

Q: How do I know if I am financially ready to buy in this market?

Financial readiness comes down to four things: a credit score that qualifies you for competitive financing, enough savings for your down payment and closing costs, an income that supports the monthly payment comfortably, and a plan built around your budget rather than just the maximum approval. The starting point is a conversation to run those numbers together.

The Bottom Line

There are two housing markets. There have always been two housing markets.

Right now, across King, Snohomish, and Skagit Counties, buyers have more negotiating power than they have had in close to a decade. Prices are off peak. Seller concessions are on the table. Competition is manageable. And the rate, when it eventually improves, can be refinanced.

The question is not whether this is the perfect time to buy. The question is whether the opportunity available today is worth more than the uncertainty of waiting for conditions that may never be as favorable again.

For a lot of buyers in this market, the math says yes.

Ready to Run the Numbers?

Understanding which market you are in is step one. Understanding what you can specifically negotiate in this market on your budget and timeline is the conversation worth having next.

Come to the free monthly First-Time Homebuyer Class in downtown Everett to learn the full picture in a no-pressure setting. Register at happyhomebuyerclass.com.

Or reach out directly.

Call or text (425) 350-7136. Email dan.keller@naf.com. Or book a time at calendly.com/meetdankeller.

Let's connect. Cheers!

— DK

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Dan Keller | NMLS #115349 | New American Funding | 2733 Colby Ave, Everett, WA 98201