The Seattle housing market has been one of the most dynamic and competitive markets in the United States in recent years. With a booming tech industry and a growing population, the city has experienced significant growth in its real estate sector, making it a hot spot for both homebuyers and investors.
However, like many other real estate markets across the country, Seattle's housing market has been impacted by the rising mortgage rates leading to a cooling-off trend. In this blog post, we will analyze the current state of the Seattle housing market with a focus on King County, one of the hottest areas for real estate in the region.
The Seattle housing market has been showing interesting trends for the last few months. According to a recent report by the Northwest Multiple Listing Service, published on May 4, 2023, the market dynamics are influencing adjustments in housing prices. However, with a limited inventory of homes for sale, well-priced homes continue to receive multiple offers.
The report states that the current Seattle housing market is excellent, despite limited inventory, with about 1.5 months of supply overall. As summer approaches, Frank Leach, vice chairperson of the MLS board of directors, expects to see increased activity, with inventory being snapped up as it comes onto the market and savvy buyers taking advantage of softening interest rates. However, the report also shows year-over-year drops in new listings, pending sales, and closed sales, an increase in total active listings, and lower prices.
In King County, which accounted for 35% of last month's closed sales, the median price of $790,244 fell 10.2% from the year-earlier price of $880,000. A comparison with January shows prices are up 9.3%. J. Lennox Scott, the company executive officer at John L. Scott Real Estate, noted that fewer resale listings are making it to the market.
The supply of housing remains limited due to a persistent shortage of available homes as fewer homeowners are putting their homes on the market after locking in low home mortgage interest rates during the pandemic. The limited supply results in a return to multiple offers and the restart of premium pricing, especially in the more affordable, mid-price, and upper-end price points.
Northwest MLS brokers added 7,303 new listings to the database during April. That total was down from both March when they added 7,904 new listings and the same month of the year when they added 11,681 new listings. On a percentage basis, the year-over-year drop was 37.5%. With slower sales, total supply improved compared to a year ago. At the end of April, there were 8,114 active listings in the NWMLS database, an increase of 1,600 from the year-ago supply for a gain of nearly 24.6%.
“When looking at the inventory of single-family homes (excluding condos), only one county has more than six months of supply (San Juan),” said John Deely, executive vice president of operations at Coldwell Banker Bain. A typical balanced market is considered between 4-to-6 months, he noted. Continuing, Deely acknowledged that “we're moving at a slower pace than last year. We are maintaining a seller's market given the lack of inventory along with multiple offers, as a healthy number of buyers absorb what is being listed. The key is we can't compare today's market to the record years we had during the pandemic.”
Proper pricing is the important factor for sellers to consider in attracting buyers, emphasized Dean Rebhuhn, owner at Village Homes and Properties in Woodinville. “First-time homebuyers are very price sensitive, and they are hurt by increasing mortgage rates.” Freddie Mac data show the 30-year fixed-rate mortgage rate near the end of April was 6.43%.
That compares to the year-ago rate of 5.1% and a rate of 2.98% on 4/29/2021. Even with the market still experiencing an inventory shortage, Rebhuhn said buyers are looking for homes, with lifestyle decisions continuing to drive the market. “Motivated sellers who recognize today's market realities will have success,” he added.
These stats show that the Seattle housing market continues to show signs of a seller's market with limited inventory, multiple offers, and premium pricing, especially in the mid-price and upper-end price points. However, there are indications of a slight slowdown in the market, with year-over-year drops in new listings, pending sales, closed sales, and an increase in total active listings.
Proper pricing is essential for sellers to attract buyers, especially as interest rates continue to rise. As the summer approaches, the market is expected to pick up, with increased activity and savvy buyers taking advantage of softening interest rates. However, it is crucial to note that the current market cannot be compared to the record years experienced during the pandemic.
ALSO READ: Washington State Housing Market Forecast
ALSO READ: Which Are The Hottest Markets in Seattle?
Key Takeaways of King County Housing Market Trends
Below is the most recent Seattle Housing Market Report released by “Northwest MLS.” The report compares the key housing metrics of the City of Seattle (which is part of King County).
Here are the numbers (RESIDENTIAL+CONDO) for April 2023 compared with April 2022.
ACTIVE LISTINGS FOR SALE
- The total active listings in Seattle were 1,133.
- This represents an increase of 41.10% as compared to April 2022.
- The total active listings in All of King County were 2,561.
- This represents a rise of 21.49% as compared to April 2022.
- 704 closed sales were registered by brokers in Seattle.
- This represents a year-over-year decrease of -34.27%.
- 1,876 closed sales were registered in All of King County.
- This represents a year-over-year decrease of -38.69%.
- 884 pending sales were registered by brokers in Seattle.
- This represents a decrease of -23.99% from the same month a year ago.
- 2,435 pending sales were registered in All of King County.
- This represents a decrease of -27.44% from the same month a year ago.
MEDIAN SALES PRICE
- Seattle's median sales price decreased by 11.04% to $790,000.
- Last year, at this time, the median price in Seattle was $888,000.
- King County's median price decreased by 10.20% to $790,244.
- Last year, at this time, the median price in King County was $880,000.
MONTHS OF INVENTORY (MOI)
- 1.61 months represents the number in Seattle.
- Months of supply in All of King County is 1.37.
- 6 months of supply is when you have a balanced real estate market.
- This shows that this region continues to be a seller’s housing market.
Why is the Seattle Housing Market So Hot?
Seattle's housing market is red hot, and it's due to the influx of high-paid tech employees from companies like Amazon, Microsoft, Google, and Facebook. These employees have been seeking more spacious homes with office areas to work remotely during the pandemic, and they have the financial resources to outcompete other buyers and drive up home prices.
Despite an increase in inventory, the Puget Sound region's housing market remains tight, with less than two months of supply. This means the region continues to be a seller's market, with a limited number of homes available to meet the high demand from buyers. As a result, home prices are likely to remain high for the foreseeable future.
The city's vibrant cultural scene, scenic beauty, and excellent quality of life also make it an attractive place to live. Despite the rising prices, Seattle's housing market continues to attract buyers from all over the country. The city's strong job market, diverse economy, and progressive values make it a desirable destination for people from different backgrounds and professions. This has resulted in a highly competitive real estate market, where homes are selling quickly and above asking prices.
However, the shortage of housing inventory has become a major concern for the city's policymakers, as it has led to affordability issues and exclusionary zoning practices. To address these challenges, Seattle has launched several initiatives, such as increasing the supply of affordable housing, promoting sustainable development, and reforming zoning laws. These efforts aim to ensure that Seattle remains an inclusive and livable city for all its residents, regardless of their income or background.
Is it a Seller's Real Estate Market in 2023?
The following housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only. Based on the information provided, it appears that the Seattle housing market, particularly in King County, is currently a seller's market in April 2023.
This is due to the limited inventory of homes for sale and the high demand from buyers, resulting in homes selling for approximately the asking price and in a relatively short amount of time. Additionally, the sale-to-list price ratio is 100%, indicating that homes are selling for the full asking price on average.
The median listing home price in King County, WA was $850K in April 2023, with a median home sold price of $816K, indicating that prices are trending down slightly year-over-year. However, it is important to note that this is just a snapshot of the market at a specific point in time, and market conditions can change quickly.
Seattle Housing Market Forecast 2023-2024
Seattle housing prices are estimated to go down in 2023. Despite the robust growth in the Seattle housing market, it is predicted that home prices in the Seattle-Tacoma-Bellevue metro area may decrease by 1.7% between March 2023 and March 2024. This forecast is based on the assumption that the local real estate market will continue to cool off as more inventory becomes available amidst higher mortgage rates.
Let us look at the price trends recorded by Zillow over the past few years. For the past 6 to 7 years an extreme drop in inventory led to an astronomical rise in Seattle home prices, as buyers competed over a dwindling number of properties on the market. Seattle has a track record of being one of the best long-term real estate investments in the U.S.
- According to NeighborhoodScout.com, Seattle's real estate appreciated 137.11% over the last ten years.
- It is an average annual home appreciation rate of 9.02%,
- It puts Seattle in the top 10% nationally for real estate appreciation.
Here is the housing forecast for Seattle-Tacoma-Bellevue Metro.
- Seattle-Tacoma-Bellevue Metro home values have gone down by 3.2% from last year to $700,911.
- The Seattle metro housing market forecast ending with March 2024 is somewhat negative.
- Zillow predicts that Seattle metro home values may decline by 1.7% between March 2023 to March 2024.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? People continue to buy and sell their homes, whether they're growing their family and need a bigger place, relocating for a job, or retiring. Opportunities abound for both buyers and sellers if they’re willing to act quickly.
Seattle and the entire metro area market is so hot that it cannot shift to a complete buyer’s real estate market, for the long term. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Seattle can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s unlikely to happen at least over the next twelve months.
The bottom line: This region's current inventory (months of supply for SFH+condos) remains tight — 1.61 months in Seattle and 1.37 months in All of King County. Therefore, in the long term, the Seattle real estate market remains as strong as always. This housing market is skewed to sellers due to a persistent imbalance in supply and demand.
FAQs – Seattle Housing Market
Some of the information in this article was obtained from referenced websites. Norada Real Estate Investments provides no explicit or implied claims, warranties, or guarantees that the material is accurate, trustworthy, or current. All information should be validated using the below references. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.