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Many people may be concerned that Seattle may be in the midst of a housing bubble. Is it? And will it burst any time soon in 2026?
The evidence suggests that no bubble exists, especially as prices have been retreating.
Recently, we examined a common question on the minds of some residents across the state of Washington. Is the state experiencing a real estate bubble?
While home prices have clearly risen at a pace that’s above average over the past few years — though they’ve been stagnant over the past year — several economists have said it’s not a bubble scenario.
But what about the Seattle metro area, in particular? Is Seattle currently in a housing market bubble? Or will it move toward one further in the year and beyond? Again, the answer is no.
Several experts have weighed in on this subject, and the general consensus is the same. They say the Seattle-area real estate market is not in a bubble.
That’s largely due to strong economics fundamentals that were lacking during the last housing boom (fundamentals like high employment and sound lending practices.)
The national Case-Shiller housing price index recently showed that the Greater Seattle Area experienced a warm housing market over the past few months compared to other markets across the country.
The index shows that home prices in Seattle peaked in June 2018, but steadily retreated until late 2019. According to real estate database company Zillow, prices in Seattle had plummeted from a whopping $752,000 in June 2018 to $728,000 by October 2019.
That said, prices have been on the rise since then, despite the slight dip over the past year. According to Zillow, home prices in Seattle have gone down 2.1% year-over-year as of January 2026.
While many may have assumed that a bubble was building and was doomed to burst over the past few years, such is not the case.
The negative factors that contributed to the previous housing crisis are no longer present today. Mortgage rates are have declined throughout the past year. And they are expected to continue to dip over the course of 2026. And demand may still be strong, but not as much as it was a few years back.
“A bubble is usually when prices get ahead of the fundamentals that influence the marketplace. For the Seattle area, we still have very high inward migration, extraordinary levels of job growth within high paying economic sectors, and record low interest rates.”
So it seems there is general agreement that Seattle is not in a real estate bubble in 2026, and that one does not appear likely. Sure, we’ve seen rapidly rising home prices in the area over the past decade.
Prices did not rise because of speculation. They rose because a lot of people want to live in the Seattle area, due to its strong economy and job market, its outdoor beauty, and other attractive features. And those who are using mortgages in Seattle to buy a home are better qualified than in the past.
According to Zillow, home prices decreased 2.1% over the past 12 months, as mentioned, and now sits at $837,800. This reason alone may signify that no housing bubble is taking place in Seattle at this time.
The supply-and-demand situation is a story of extremes, particularly on the supply side. Strong demand and chronically low inventory have put tremendous upward pressure on home prices in recent years. That’s why the metro area has experienced double-digit increase in house values — per year – over the past few years (excluding June 2018 to July 2019).
Right now, there’s only a 2.2-month supply of available homes for sale. That’s far from a “balanced” market of anywhere from 5- to 6-months’ supply.
Other challenges remain for home buyers in the Seattle area. Home prices are still pretty expensive for the average homebuyer, especially when compared to the national average price of a home.
But at least it’s not a bubble!
If you’re in need of a home loan to finance a home purchase in Seattle, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington. We have been serving the entire Seattle metro area since 1992, along with the rest of the state and the broader Pacific Northwest, including Washington, Idaho, Colorado, Oregon, and California. We also provide a variety of mortgage programs, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans, among many others. Please contact us if you have mortgage-related questions, or if you’d like to receive a rate quote in Seattle.
Whether you’re buying a home or ready to refinance, our professionals can help.
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