Is This the Bottom of the Real Estate Market in Seattle?

July 25, 2023
Last updated:
July 25, 2023
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From a buyer’s perspective, the best-case scenario is to buy a home at the so-called “bottom” of the real estate market. This occurs when house values fall to their lowest point during a downturn, after which they rise for a long period of time.

Some people refer to this as “timing the market.” It’s generally better to focus on your own financial situation, long-term plans, and personal needs, rather than trying to time the market.

Still, it’s helpful to enter the real estate market at a favorable time, from a price standpoint. And that time could be close at hand.

As of summer 2023, it appears that the Seattle-area real estate market might be approaching its lowest point of the nationwide post-COVID downturn. After falling for the past few months, home prices across the Seattle metro area are showing signs that they could start rising again.

What Is the ‘Bottom’ of the Market?

Buying a home at the bottom of the market is when a person purchases a property when prices are at their most affordable level. Real estate markets tend to follow cycles. They go through periods of growth (mostly) and occasional decline, due to a variety of economic and market factors.

By purchasing at the bottom of such a cycle, Seattle-area home buyers can get more house for the money while avoiding depreciation. This in turn allows buyers to potentially secure a larger or more desirable property than they could afford during a market upswing.

This kind of timing can also help homeowners build equity more quickly, as the market eventually recovers and property values increase.

But “market timing” comes with its share of risks as well. By attempting to time the market, a home buyer could miss out on a great property. As many real estate experts will tell you, it’s usually best to buy when the time is right for you personally.

Seattle Home Price Rebound Seems Imminent

Home prices in the Seattle area have declined over the past few months. That’s no big secret. The same trend has occurred in most cities across the U.S., and for the same reason.

After overheating during the COVID years, real estate markets across the country are now settling into a new normal. And in most cases, that means a temporary downturn in prices.

(Emphasis on the word “temporary.”)

If you look back over the past 40 years or so, you’ll notice that Seattle-area home prices have only experienced two significant downturns. Both were extreme cases that affected the nation as a whole.

The first period of decline happened during the Great Recession of 2008, at a time when prices were falling in most U.S. cities. The second downturn happened over the past six months or so. Now, however, it seems that the Seattle real estate market is exiting a downturn and about to enter another (possibly long) period of sustained growth.

Several recent forecasts have predicted continued price appreciation through the remainder of 2023 and into 2024. For instance, Zillow predicts that U.S. home values will rise by around 6% from June 2023 to June 2024. Similarly, CoreLogic’s forecast indicates a year-over-year increase of 4.5% from May 2023 to May 2024.

We’re already witnessing a slight uptick in prices within the Seattle real estate market, reinforcing the notion that the bottom is near.

According to a July 2023 report from The Seattle Times, citing data from the Northwest Multiple Listing Service: “King County home prices ticked up for the fifth straight month in June.” Zillow also shows a slight increase in prices over the past couple of weeks, for nearly every city in the Seattle-Tacoma-Bellevue metropolitan area.

Local home buyers should pay close attention to this trend, since they directly affect housing affordability. If home prices continue to climb going forward, it could create a renewed sense of urgency among Seattle home buyers.

For the past few months, there has been a sense that the housing market was “on pause,” with prices either dipping or remaining flat. But that period might be coming to an end, with a new era of rising prices on the horizon.

Mortgage Rate Trends and Outlook

In addition to home prices, mortgage rates also play a significant role in the decision-making process for buyers. The surge in rates during 2022 contributed to a market cooldown, but rates have since eased and are currently hovering in the upper-6% range.

According to the weekly survey conducted by Freddie Mac, the average rate for a 30-year fixed mortgage loan dropped to 6.78% during the week of July 20, 2023. That marked a decline of 18 basis points from the previous week’s average of 6.96%.

The Mortgage Bankers Association recently predicted that 30-year mortgage rates would gradually decline over the coming months and average in the mid-5% range for much of 2024. Freddie Mac’s analysts predicted rates would “move mostly sideways, most likely remaining above 6% through year-end [2023].”

The general consensus among forecasters is that another spike in mortgage rates appears unlikely, at least for the foreseeable future.

Bottom Line: The Market Is Changing

No one can predict future housing market trends with complete accuracy. Our goal here is to shine a light on recent trends within the Seattle real estate scene, to help home buyers stay up to speed. And a potential rebound is definitely something buyers should be aware of.

We will continue to monitor these and other developments within the Seattle metro area housing market, providing additional reports to keep you informed.

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