Seattle’s housing market is in flux for the first time in almost a decade. The Seattle real estate market has been on fire since pre-pandemic. Fortunately, the signs of a cooling market persist, where metro home area sales were down by 28.5%.
On one side, the marketing is cooling off, making it great news for investors and buyers that had otherwise been priced out of our market. On the other hand, home prices in the Seattle area have remained relatively unchanged since their previous position last year.
According to NWMLS’s latest report, signs of a more traditional market were visible in September, with a natural slowdown of pending sales during the fourth quarter. There was almost the same quantity of new listings as before the global pandemic, albeit with reduced intensity and a reduced percentage of homes going under contract.
According to data compiled by the Northwest Multiple Listing Service, single-family homes in King County have a median price tag of $875,000, which is a 6% increase from the previous year. Kitsap County holds a median price of $539,997, Snohomish County was $735,000, and Pierce County was $538,000.
These prices increased by 6%-9% from the previous year but have seen a reduction of 2%-3% from August of this year, according to a recent Redfin report.
Market Cool-Off Analysis
The housing market in Seattle has cooled off faster in recent months than in any other region countrywide. This highlights the squeeze that increasing interest rates are placing on an already expensive market.
This analysis comes from Redfin, a Seattle-based brokerage firm, which ranked US metro areas based on the cooling-off speed of their housing markets. These fastest-cooling housing markets, according to Redfin, include San Diego and Seattle, as well as cities like Phoenix, which experienced a huge influx of new residents since the global pandemic.
These are regions where property buyers feel the sting of rising home prices, increased inflation, and mortgage rates. Fortunately, median home prices are leveling off or dropping in housing markets countrywide. A Redfin analysis of home prices and factors such as price drops and the number of sales ranks Seattle as the fastest-cooling housing market countrywide.
Signs the Market is Cooling
In February, home prices were up 15% year over year in Seattle. In August, they were up 7% compared to the previous year.
In February, active listings were down 36% and we saw price reductions on only 11% of listings, depicting a competitive market for buyers. In August, active listings increased 78% and we saw 48% of listings reduce price.
What’s Next?
Due to the current supply and demand situation in the region, a classic buyer’s market scenario is unlikely to happen in Seattle. This is due to an ongoing supply shortage.
Despite the signs of a market cool-off, inventory has risen in the region, which is great news for homebuyers. However, supply levels remain low by historic standards.
Furthermore, despite the unlikelihood of a textbook buyer’s market in Seattle, there is a shift in the housing scene happening on both the supply and demand side of the equation.
The inventory gain is providing home buyers with more options and putting pressure on sellers. However, high housing costs and a significant increase in interest rates are limiting the number of qualified buyers.
In 2023 and beyond, buyers could gain some negotiating advantage even despite the housing shortage. The Seattle metro area housing market and prices are moving in a more buyer-friendly direction. Interest rates could still be a significant factor though; with rates quickly increasing, any savings on purchase price will likely be counteracted by increased rates, at least until we get to a position where rates start to drop and refinancing a mortgage becomes an option.
Find Your Perfect Home in Seattle
Whether you’re ready to start house hunting or just need a local expert to chat with about your real estate goals, I’m here to talk! Having someone who is familiar with the local area and trends is crucial in today’s market.
Ready to talk more in-depth? I would love to talk to you about your unique situation and how I can help you achieve your real estate goals, whether now or in the future? Reach out!