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Seattle's Real Estate Market Quietly Concludes 2023

Updated: Feb 2

A serene picture of North Ballard's residential homes, with the picturesque Shilshole Bay Marina in the backdrop, captures the essence of Seattle's housing scene last month. This image reflects the broader trend in the Puget Sound region where home sales witnessed a consistent downturn in December compared to the previous year.

King County's real estate market observed a noticeable reduction in both property dealings and closures in December, showing a 3% and 10% decrease respectively from December 2022, as per the latest data from the Northwest Multiple Listing Service. More comprehensive data for the entirety of 2023 is expected to be unveiled later in the month.

Despite a month-over-month decrease in median home prices across the region, a year-over-year comparison shows a rise in most counties within the Seattle area. Notable figures include King County's median home price reaching around $850,000 (a 3% increase from December 2022), Pierce County at $536,000 (up 6%), Kitsap County at $545,000 (up 9.5%), and Snohomish County at $685,000 (a decrease of 2%).

The past eighteen months have seen a significant slowdown in Seattle's housing market, primarily due to soaring interest rates that deterred potential buyers and sellers. The high rates impacted affordability and led to many homeowners clinging to their existing, lower-rate mortgages. This situation created a balance in the market, preventing drastic price drops while also limiting sales activity.

However, there's a glimmer of hope as mortgage rates have started to decline slightly in recent weeks. This change, with rates hitting their lowest since May at 6.6% in late December, might encourage more homeowners to list their properties and attract buyers back into the market.

Despite these shifts, the challenges of affordability remain prominent, and a significant increase in housing inventory is yet to be seen. In King County, the number of homes listed in December was the lowest for any month in 2023, also showing a 17% decline from December 2022. This trend signifies an especially tight supply, although the situation varied in other counties.

David Palmer, a Redfin agent in Seattle, highlights the crucial role of move-up buyers who are currently inactive due to high rates. This absence is stalling the market, particularly impacting first-time buyers who are waiting on the sidelines.

Palmer's recent experience with a two-bedroom townhome in High Point, which sold for its listing price of $625,000, reflects the changing market dynamics. The deal included a $15,000 credit for the buyer, indicative of the new market realities where buyers encounter fewer bidding wars and more balanced negotiations.

Interestingly, condo prices in the region have been rising more rapidly than those of single-family homes and townhouses. In December, the median condo price in King County was $537,000, a 15% increase from the previous year, and in Seattle, it was $585,000, up by 14%. This trend is attributed to factors like first-time buyers seeking affordable alternatives and the popularity of accessory dwelling units marketed as condos.

As we step into the new year, real estate experts anticipate mortgage rates to remain above 6% but possibly decrease slightly. This scenario could entice more sellers, potentially boosting sales, yet affordability will continue to be a significant hurdle in the Seattle housing market.

Source: Seattle Times, MMCG

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