SEATTLE HOUSING MARKET FORECAST

Home Prices, Interest Rates, Real Estate Statistics, Video and Charts

The Seattle Housing Market At a Glance

Seattle housing market update infographic

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3 KEY INDICATORS
Seattle Housing Market

  1. SALES ACTIVITY INTENSITY:
    • 61.9% (FRENZY)
  2. INTEREST RATE:
    • 7.38% (UNCOMFORTABLE)
  3. INVENTORY LEVEL:
    • 1.3 Months (SHORTAGE)

THE BIG DEAL
The normal spring market intensity has kept the inventory low and the sales activity moving swiftly despite the interest rates creeping up on us again. We patiently wait for the fed to lower rates.

Enjoy Our Seattle Housing Market Report Video


Seattle Housing Market MAY 2024: In-Depth Analysis Amidst Frenzy, Shortage, and Rising Rates


Welcome to the fast-paced world of Seattle's housing market as of May 2024!  Here, we explore a market that continues to challenge norms with its robust demand and constrained supply. Fueled by Seattle's strong economic fundamentals, including a booming tech sector and a vibrant cultural scene, the housing market remains a critical area of interest for both potential homebuyers and investors.

This report delves into three key indicators that shape our understanding and forecasts of this dynamic market: Sales Activity Intensity, Monthly Inventory Levels, and Interest Rates. By examining these metrics, we aim to provide a comprehensive snapshot of the current market conditions and future trends that can help stakeholders make informed decisions.


Detailed Explanation of the 3 Key Indicators
  1. Sales Activity Intensity:

    • Definition: This metric reflects the percentage of homes that go under contract within the first 30 days of listing. It's a direct indicator of the market's temperature, showing how quickly homes are moving from listing to pending status.
    • Scale:
          • <25%: Buyer's market – low demand, homes take longer to sell.
          • 25%: Healthy market – balanced demand and supply.
          • 35%: Strong market – increasing demand, sellers have a slight advantage.
          • 45%: Very strong market – high demand, multiple offers are common.
          • 55%: Surge – very high demand, significantly more buyers than available homes.
          • 65%: Frenzy – extreme demand, homes sell extremely quickly, often well above asking price.
          • 75%+: Extreme frenzy – unprecedented demand, highly competitive conditions.
    1. Monthly Inventory Levels:

      • Definition: This measures the number of months it would take to sell all current listings at the current sales pace without any new listings being added. It's a critical indicator of market balance.
      • Scale:
        • 0-1 month: Severe shortage – extremely low inventory, seller's market.
        • 1-2 months: Shortage – low inventory, strong seller's advantage.
        • 2-3 months: Low – less inventory, leaning towards sellers.
        • 3-4 months: Healthy – balanced between buyers and sellers.
        • 4-5 months: Selectability – more options for buyers, slight buyer's advantage.
        • 5+ months: Buyer's market – high inventory, buyers have leverage.
    2. Interest Rates:

      • Definition: This refers to the average mortgage rate available to homebuyers. Interest rates are a significant factor affecting affordability and buyer demand.
      • Scale (not a fixed scale but commonly accepted ranges):
        • 3-4%: Excellent – very favorable for buyers.
        • 5-6%: Good – relatively affordable for most buyers.
        • 7-8%: Uncomfortable – can slow down buyer activity as financing becomes more expensive.
        • 9-10%: Challenging – high rates can lead to decreased demand and slower market activity.

    Each of these indicators plays a crucial role in interpreting the dynamics of the Seattle housing market. By analyzing trends within these metrics, we can better understand the forces at play, predict future movements, and strategize accordingly. Whether you're looking to buy a home, sell one, or simply keep an eye on market developments, these indicators provide the insights needed to navigate the complexities of Seattle's real estate landscape.


    The Seattle housing market continues to operate under highly dynamic and competitive conditions. The interplay of sales activity intensity, monthly inventory levels, and interest rates paints a complex picture that influences both buyers' and sellers' strategies. Let's break down how each of these indicators is currently shaping the market:

    1. Sales Activity Intensity
      • Current Effect:
        • With approximately 66.9% of homes selling within the first 30 days on the market, Seattle is experiencing what can be characterized as a "frenzy" level of sales activity​​.
        • This high demand indicates a competitive market where buyers need to move quickly and decisively. Homes are not only selling rapidly but often receiving multiple offers, which frequently exceed asking prices.
        • This trend is pushing prices upward and shortening the time homes stay on the market, creating a sellers' market where bidding wars are the norm.
    1. Monthly Inventory Level
      • Current Effect:
        • The inventory levels in Seattle are notably low, with only about 1.3 months of supply. This indicates a significant shortage of homes available for sale, which continues to tilt the market in favor of sellers​.
        • The low inventory contributes to the competitive nature of the market, as fewer available homes mean more competition among buyers, leading to quick sales and further exacerbating the upward pressure on home prices.
    1. Interest Rates
      • Current Effect:
        • Interest rates in the Seattle area are currently in the "uncomfortable" range at approximately 7.38%, which has a dual effect on the market​
        • On one hand, higher rates reduce the overall buying power of consumers, which could slow down buyer activity.
        • On the other hand, the market continues to see robust activity due to strong demand and limited supply. The high rates have not yet dampened the market enthusiasm significantly, but they are making affordability a critical issue, particularly for first-time homebuyers and lower-income buyers.

    Combined Impact on the Market

    The combination of these factors leads to a highly active and seller-favorable market environment in Seattle. The intense sales activity and low inventory levels create a market where sellers have the upper hand, able to command higher prices and expect quick sales. However, the high interest rates are beginning to introduce more caution into the market, as buyers must consider the higher monthly costs associated with mortgage payments.

    Looking forward, the Seattle housing market may continue to experience high activity levels, but the sustainability of this trend could be challenged if interest rates continue to rise or if economic conditions shift. Potential buyers may find themselves priced out of the market, which could eventually lead to a cooling off period if demand decreases as a result.

    For both buyers and sellers, understanding these market dynamics is crucial. Buyers need to be prepared to act quickly and efficiently, possibly exploring financial options to mitigate the impact of high interest rates. Sellers, while currently enjoying a favorable market, should stay informed about potential shifts that could affect buyer interest and market activity.

    This nuanced understanding of the Seattle housing market highlights the importance of strategic planning and market awareness, whether one is looking to buy or sell in this vibrant and challenging market environment.

    Residential Resale, Condos & New Construction

    As of May 2024, the Seattle housing market continues to show distinctive characteristics across different types of properties—resale residential homes, condominiums, and new construction. Each category impacts the real estate market differently due to varying buyer demands and economic conditions.

    1. Resale Residential Homes:

      • Current Status:
        • The resale market remains robust with high activity, primarily due to the limited inventory and ongoing demand. Homes are often receiving multiple offers and selling quickly, frequently above the asking price. This is driven by the overall shortage of available properties, which places upward pressure on prices and shortens the time homes are on the market​.
      • Impact on the Market:
        • Resale homes are pivotal in defining market dynamics because they make up a significant portion of available inventory. Their quick turnover rate and rising prices help sustain the momentum in the Seattle housing market, reinforcing its status as a seller's market.
    2. Condominiums:

      • Current Status:
        • Condominiums in Seattle are seeing a growth in demand, especially among first-time homebuyers and those looking for lower-maintenance living. Despite the overall hot market, condos provide a more accessible entry point into homeownership. However, they also come with HOA fees, which can impact affordability​.
      • Impact on the Market:
        • Condos typically attract a different buyer segment than single-family homes. They help absorb some of the demands from buyers who might be priced out of the market for standalone homes or prefer a more urban lifestyle with amenities. This segment helps diversify the real estate market and stabilizes growth by providing alternative housing options.
    3. New Construction:

      • Current Status:
        • New construction homes are highly sought after for their modern amenities and potential for buyer customization. However, they also tend to come with higher price tags. The rate of new constructions can be influenced by land availability, building costs, and regulatory factors. In Seattle, new developments are crucial to meet the growing demand but are often insufficient to significantly alter the inventory shortage​.
      • Impact on the Market:
        • New constructions are essential for long-term market health as they increase overall housing supply. They also tend to stabilize property values by offering high-quality alternatives at premium prices, which can help moderate the price increases seen in the resale market.

    The narrowing price gap between resale homes and new construction in the Seattle housing market marks a significant shift from historical norms. Traditionally, new construction homes have commanded a premium, typically being around 40% more expensive than resale homes. This premium is generally attributed to several factors:

    1. Modern Features and Customizations: New construction homes come with the latest designs, energy-efficient materials, and modern amenities. Buyers often have the option to customize these homes during the building process.

    2. Fewer Immediate Repairs: New homes come with new appliances, roofing, HVAC systems, and more, which means less immediate maintenance cost and no need for upgrades that might be necessary in older homes.

    3. Builder Warranties: New constructions usually come with warranties that cover the home for anything from structural issues to minor imperfections for several years after purchase.

    However, as of May 2024, the difference in cost between new constructions and resale homes in Seattle has dramatically decreased to just 4%. This unusual situation can be attributed to a few key factors:

    • Rising Costs and Decreased Availability of Resale Homes: In Seattle, intense demand coupled with low inventory levels for resale homes has driven up prices significantly. As more buyers compete for fewer available homes, the prices of resale properties have been pushed closer to those of new constructions.

    • Market Saturation and Competition among Builders: At the same time, the market for new constructions may be experiencing competitive pressures that restrain price growth. Increased competition among builders could lead to more aggressive pricing strategies to attract buyers who have more options among resale properties.

    • Economic and Financial Context: The broader economic context, including interest rates and financing options, may also play a role. If borrowing costs are higher, the overall affordability of homes becomes a more pressing issue, potentially compressing the price differential as builders and sellers adjust to meet market demands.

    This shift has important implications for both buyers and sellers:

    • Buyers might find that the benefits of new construction—customization options and fewer immediate repairs—are now available without the traditional premium, making them more attractive and accessible.
    • Sellers of Resale Homes might find it challenging to compete with new constructions if they cannot offer comparable value, leading to a need for strategic pricing and potentially updates or enhancements to make their homes more appealing.

    Understanding these dynamics is crucial for stakeholders in the Seattle real estate market to navigate the changing landscape effectively.

    The Fed

    In May 2024, the Federal Reserve chose to maintain the current interest rate levels, keeping them steady at 5.25% to 5.50%. This decision reflects a careful balance between managing economic growth and controlling inflation. The Fed has forecasted this rate to potentially decrease to around 4.00% to 4.25% by the end of 2024 and further down to 2.25% to 2.50% by the end of 2025, as economic conditions such as inflation are expected to stabilize towards the Fed's target of around 2%​.

    The decision not to alter interest rates right now reflects a cautious approach by the Fed given the current economic signals. Holding the rates steady is often seen as a move to gauge ongoing economic trends without adding further stimulus or restriction. For the real estate market, this means that mortgage rates are likely to remain relatively higher than the historic lows seen in previous years, at least in the short term. This can affect buyer affordability and might slow down some of the housing market activities.

    However, with projections indicating potential rate cuts starting as soon as later this year, there could be a shift on the horizon. These anticipated cuts are based on expectations that inflation will fall back to target levels, which would allow for more aggressive rate reductions to support economic growth​. For the housing market, this could mean a resurgence in buyer activity as financing becomes more affordable, potentially stimulating demand for homes and buoying the market.

    Overall, while the immediate effect of steady rates might cool the housing market slightly by keeping borrowing costs higher, the forecasted reductions in the coming years could invigorate it. This provides a nuanced landscape for both buyers and sellers to navigate, emphasizing the importance of staying informed about future economic and policy shifts as they consider their real estate decisions.

    BONUS TIP:  With some listings, it is possible to negotiate for Seller's concessions.  Look for homes that have been on the market longer than 7-10 days.  Generally, these concessions would go towards your closing costs.  Now might be a good time to negotiate seller concessions towards buying down your interest rate.  Either a permanent or temporary 2/1 buydown.

    Seasonality

    Seasonality plays a significant role in the real estate market, affecting everything from inventory levels to buyer behavior. Typically, the real estate market experiences its peak activity during the spring, starting as early as March and extending through May. This period is often seen as the best time to list homes because:

    1. Increased Demand: Many buyers are eager to move and settle before the new school year begins, driving up demand during the spring months. This urgency can lead to faster sales and more competitive bidding, especially in markets with low inventory.

    2. Favorable Weather: The pleasant weather in spring makes it easier for sellers to showcase their homes in the best light, with natural beauty enhancing curb appeal. Buyers are also more inclined to attend open houses when the weather is comfortable.

    3. Longer Days: Longer daylight hours provide more time for showings and open houses, which is advantageous for both buyers and sellers.

    Reflecting on the current period, being in the peak of the spring market, sellers can expect high foot traffic from potential buyers and possibly higher offers due to increased competition among buyers. This seasonality effect often leads to a spike in both sales activity and prices, making it an optimal time for sellers to maximize their returns.

    However, buyers should be prepared for a competitive market with possibly multiple offer scenarios and less room for negotiation due to the high demand. It's important for buyers to have their financing in order and to be ready to make quick decisions in such a fast-paced market environment.

    Overall, understanding the impact of seasonality can help participants in the real estate market make informed decisions about the best times to buy or sell.

    Being Prepared as a Buyer and Seller

    For Sellers: Getting Market Ready

    In the current market, where 65-75% of new listings go pending within the first 30 days, often in multiple-bid situations, it is crucial for sellers to be thoroughly prepared.

    Listings that are turnkey—meaning those that are new constructions, fully updated, or in exceptionally good condition—tend to sell quickly and often above the asking price. On the other hand, properties that require significant updates, are poorly located, or are overpriced tend to linger on the market, sometimes leading to price reductions.

    Key Seller Strategies:
    • Quality and Condition: Ensure your property is in excellent condition. Addressing any necessary repairs or making updates before listing can prevent delays and make your home more appealing.
    • Pricing: Set a realistic price that reflects the current market conditions and the quality of your home. Overpricing can lead to extended market times and eventual price cuts.
    • Staging and Presentation: Well-staged homes tend to sell faster. Professional staging can help highlight your home’s best features.
    • Marketing: Utilize professional photos and consider virtual tours to reach a broader audience, especially important in a market where buyers are ready to move quickly.

    For Buyers: Adapting to New Norms

    For buyers, the market conditions require readiness to act swiftly, with many homes receiving multiple offers shortly after listing. However, not every property will be involved in a bidding war, especially those that are less than ideal.

    Key Buyer Strategies:
    • Pre-approval: Have your financing in order before you start looking. A pre-approval letter from your lender will make your offer more attractive to sellers.
    • Flexibility and Patience: Be ready to move quickly when a suitable property comes up, but also maintain patience to wait for the right opportunity.
    • Negotiation Readiness: For homes that are on the market longer, be prepared to negotiate. These homes may offer the chance to secure a better deal, possibly including seller concessions or credits.
    • Market Research: Stay informed about current market trends and potential shifts in interest rates or inventory levels which can affect your buying power and strategy.

    Market Context: With only 1.2 months of inventory currently available, Seattle remains a seller's market. This shortage means competition is still fierce for well-positioned listings, and buyers need to be exceptionally prepared to act. However, the market can favor buyers when it comes to properties that are not in prime condition or optimally priced.

    Conclusion: Both buyers and sellers must be well-prepared and informed to successfully navigate the complexities of Seattle's real estate market in 2024. Sellers should focus on presenting their homes in the best possible light to maximize returns, while buyers should be ready to quickly capitalize on opportunities as they arise, maintaining the flexibility to adapt to a market that still presents significant challenges and opportunities.

    The Rent Vs Buy Conversation

    If you are thinking of buying a home in Seattle right now and are worried that the interest rates have increased it is important to contrast that to what you gain.

    Buying a Home Means Avoiding Rising Rents

    When you rent:  Your monthly payment usually goes up every time you sign a new lease

    When you buy:  Your fixed-rate mortgage payment is locked in for the length of your home loan

    Homeowners Own a Valuable and Tangible Asset

    “. . . the average U.S. homeowner now has about $290,000 in equity.” (Corelogic)

    When you rent: You won't get any return on your investment as you pay your rent monthly

    When you buy: As home prices rise, and as you pay down your home loan, you build equity.

    Owning Your Home Grows Your Wealth Over Time

    “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.” Dr Lawrence Yun

    When you rent:  When the cost of renting goes up, it's more difficult to save money for a down payment to buy a home.

    When you buy: As you build equity through the years, you give your net worth a big boost.

    Seattle rent remains high and according to the Bureau of Labor Statistics, it is the second highest victim of inflation at 8.3% rise from last year.

    According to Zillow the average rent for a Seattle 3-bedroom home is $3,500 per month.  This equates to approximately a $600,000 home (view 3 Bedroom Seattle homes for sale in the $500K - 700K price range) with 20% down on a 30-year fixed 7% bought down to as low as 5% with a temporary 2-1 buydown interest rate loan.

    PRE-SUMMER HOUSING MARKET

    As the Spring market continues through May and June, we will begin to see a peak number of new resale listings hitting the market. Currently, we are at an extreme frenzy Sales Activity IntensityTM level up to $1.5M, where 86% of homes go under contract. Additionally, we are seeing a frenzy level of intensity up to $2M with strong sales activity up to $5M.J Lennox Scott


    LENNOX SCOTT

    CEO of John L. Scott Real Estate


    Lennox Scott
    Seattle Real Estate GRAPHS AND Data

    SALES ACTIVITY AND INVENTORY



    sales activity

    With 1.3 months of supply if no other homes were listed in the next 39 days we would run out of houses to buy.

    There were 1,487 new listings in April.

    If you are looking for homes 2 million plus you are seeing more inventory than $500k-$1million.

    As you can see from the table above anything below 5 months of inventory is considered low.  Low inventory means higher demand.  Higher demand drives the price up.

    811 homes were sold in Seattle last month.

    In the Seattle housing market homes in the 500k-1m+ price range typically sell the fastest.

    MARKET INTENSITY

    may 2024 sales activity

    61.9% of homes are selling in less than 30 days in the Seattle housing market. A median market is usually closer to 30%.

    Houses in the $750K - 1m price range are selling 73.6% of the time in the first 30 days.

    Even as there are more homes for sale, there are still many buyers trying to buy… the homes that do list are still selling fairly quickly.

    PRICE

    AVERAGE SALE PRICE: $1,017,870

    SINGLE-FAMILY RESIDENTIAL:  $1,141,050

    CONDOS: $701,107

    AVERAGE SALES PRICE 5 YEARS AGO: $799,269

    % INCREASE OVER 5 YEAR SPAN: 27%

    LISTINGS SELL PRICE COMPARED TO LIST PRICE: 102.2%

    TIMING

    yearly housing cycles

    As you can see from the John L. Scott 6 phases to a yearly house cycle chart we are entering the ultr active pre summer market.


    JOB AND POPULATION GROWTH

    WHILE WE ARE NOT SURE HOW THE EMPLOYMENT NUMBERS WILL END UP HERE IS THE CURRENT UNEMPLOYMENT SITUATION

    CURRENT UNEMPLOYMENT RATES


    employment rate

    WA Employment Security Department

    Where Counties are Growing[Source: U.S. Census Bureau]

    "

    "King County lost population last year for the first time in almost 50 years", according to the Seattle Times.


    Seattle Market Stats

    STATS PROVIDED BY: INFOSPARK

    • $1,017,870 was the average sold price for listings in Seattle.
    • 1,487 new listings went on the market this month.
    • 1,647 homes were for sale during the month.
    • 1,038 homes went pending in Seattle.
    • 811 homes sold this month
    • 1.3 months of inventory available in Seattle
    • 19 was the average days on market for a home to sell in Seattle
    • 102.1% was the average listing price vs. sales price percentage
    • $595was the average price per square foot in Seattle
    • $825,492,584 was the total closed sales volume for Seattle
    • 7.39% was the interest rate
    • 61.9 % of homes sold in the first 30 days in Seattle
    • 16 Showings to Pending
    • 7.4 Showings per Listing

    SEATTLE HOMES FOR SALE


    seattle homes for sale
    SEARCH SEATTLE LISTINGS

    SEATTLE HOUSING MARKET Summary


    As we wrap up our examination of Seattle's housing market for May 2024, the figures reflect a dynamic and challenging environment for buyers and sellers alike. With an average sold price of $1,017,870 and a robust sales activity intensity of 61.9%, Seattle's market is teetering on the brink of a frenzy. Homes are moving quickly, often selling in just 19 days and at 102.1% of the listing price, indicating a market where bidding wars are the norm rather than the exception.

    The inventory levels at 1.3 months point towards a distinct shortage, which continues to tip the scale in favor of sellers, giving them the upper hand in negotiations. This tight inventory is a clear indicator of a market where new listings are absorbed almost as quickly as they appear.

    The current interest rates stand at 7.39%, which, while not in the 'challenging' range, are certainly 'uncomfortable'. This has undoubtedly started to impact buyer affordability, potentially slowing down some of the demand, yet the market heat persists.

    This month's statistics are a testament to Seattle's resilient demand, spurred by its robust tech sector and vibrant cultural scene, even as financing costs climb. The high price per square foot ($595) and substantial total closed sales volume ($825,492,584) underscore a market that, despite financial hurdles, continues to thrive on strong buyer interest.

    As we move forward, those looking to enter or exit the Seattle housing market must prepare for continued competition and fast-paced transactions. Buyers should align their financing options early and be ready to act quickly when opportunities arise. Sellers can benefit from the market's vigor but should remain aware of the shifting dynamics as interest rates influence buyer enthusiasm.

    In conclusion, the Seattle housing market in May 2024 remains a complex landscape shaped by high demand, limited supply, and increasing costs. Stakeholders should stay informed, agile, and ready to navigate the ebbs and flows of this ever-evolving market.

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