News Update : Seattle-Area Home Prices Fell In 2023 After Years Of Growth
2023 saw a dip in the housing market in Seattle, something that has not been seen over the last few decades. This was mostly due to the impact of higher mortgage rates, affecting both buyers and sellers alike. The extreme double-digit price spikes of the early pandemic years had given way to a more modest correction. However, there was a cooling trend observed in 2023 but it varies across the state of Washington. However, it declined in the areas near and around Seattle. King County, Snohomish County, and Pierce County experienced year-over-year drops in median home prices, marking the first time since 2011 that all three counties saw declines. Kitsap County was an outlier, maintaining a flat median price from 2022 to 2023.
Even with a small cool-off period, the affordability of house buying remained a challenge as median-income households could not afford the mortgage on average home prices. Only three out of forty-nine Washington counties were deemed possible for house purchase keeping a 20% down payment in the picture along with limiting mortgage payments to 25% of the household income (gross).
However, as per research and analysis carried out by a team at United Seattle, the price dips were not enough to cater to the rapid price increase seen in the pandemic era. For example, King County saw a 30% increase in home prices as compared to 2019. The sudden rise of work from home made the property value of outlying areas of Seattle see a sharp increase as well such as Snohomish County (48%) and Pierce County (45%) as compared to 2019.
A new trend was seen as buyers shifted their focus to affordable condos and renting spaces. While single-family home prices dropped in King County, the median condo price increased by 2% in 2023. Seattle experienced a 4% increase in median condo prices, reaching $558,000, while the Eastside saw a 1% dip to $617,000. Buyers who could have afforded single-family homes in 2020 or 2021 found condos to be a more accessible option.
The reduction of the market was seen through the lesser amount of house-selling deals in Seattle due to higher interest rates. Year-on-year condo sales dropped in King County (24%), Snohomish County (26%), Pierce County (27%), and Kitsap County (22%). Furthermore, rising mortgage rates (around 8% in October 2023) made buyers change their minds. This was reflected in a lesser number of listings which contributed to the shortage of available homes, preventing prices from falling further.
New construction in 2024 could change the market scenario reducing the shortage on the market. However, increased interest rates and construction costs across the state might have yet another say in this. In 2023, homebuyers in King County experienced relief with fewer bidding wars. Single-family homes sold for just half a percent above list prices, a departure from the competitive 2021 and 2022 environment. Listings also took five to six weeks to sell, offering buyers more decision time compared to the rapid sales of less than two weeks in 2021.
The housing market has started showing signs of improvement in the early part of 2024 as buyers and sellers walk into a more stable market. This will also give a little more financial room for buyers to include home inspections and renovations in their buying plans. Even with the current challenges, the Seattle housing market seems to be moving in a positive direction calling out for cold buyers who were waiting for the right time to move from rental to permanent housing situation.
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