Fewer Price Reductions in Seattle Housing Market: 2024 Update

Published:
October 13, 2023
Last updated:
January 26, 2024
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The Seattle metro area housing market has undergone yet another shift over the past few months. After cooling down during much of last year, the local real estate scene has been warming up again lately.

The latest evidence can be found in a new report published by analysts at Realtor.com. It showed an ongoing decline in real estate listings with a price reduction. This suggests that the Seattle housing market price reductions are less likely to occur than a year ago.

Here’s a breakdown of this latest report and what it means for those planning to buy a home in Seattle in 2024.

Seattle Sellers Less Likely to Reduce Prices

Last week, researchers from Realtor.com published an updated housing market report with data for the nation’s 50 largest metropolitan areas.

This report showed the current percentage of price reductions within each metro and how that number has changed over the past year. The Seattle real estate market experienced a decline in price reductions when measured year over year.

In this context, a “price reduction” occurs when a homeowner initially lists their home at one price but later reduces it. This typically happens due to a lack of offers. Generally speaking, price reductions in the Seattle housing market are more common when the sluggish environment has fewer buyers and is less common in a more active market.

According to the Realtor.com report, 16% of real estate listings within the Seattle-Tacoma Bellevue metro area had a price reduction in September. The share of homes with a price reduction decreased by nearly seven percentage points over the past year.

This means fewer sellers are reducing their prices these days compared to a year ago. But why? What’s causing this latest shift in the Seattle real estate market?

Inventory has a lot to do with it.

Seattle Housing Market Inventory Down by Nearly 30%

The above-mentioned report also revealed a measurable decrease in the overall number of real estate listings. In short, fewer homes are on the market today than a year ago. But there’s still plenty of demand from buyers despite today’s higher mortgage rates.

These trends put upward pressure on home prices and give sellers the confidence to maintain their listing prices instead of slashing them.

Within the Seattle-Tacoma-Bellevue metro area housing market, active listings declined by 28.7% over the past year. That was one of the largest year-over-year inventory declines among the nation’s 50 largest metro areas.

Only Sacramento, Las Vegas, and Phoenix experienced more significant supply reductions.

The Seattle-area real estate market made some supply gains in 2022, with a steady increase in the number of homes for sale. But much of that growth has been reversed by the inventory reductions of the past 12 months.

That same pattern has played out in many cities across the U.S. Jeffrey Meager, CEO of the national home builder KB Home, recently told Fortune:

“…with all the supply-chain issues and everything we went through, we never caught up. So there is a shortage of new homes and resale homes fueling a lack of inventory; at the same time, we have strong demographic demand from the millennials, and Gen Z is now hitting homebuying years.”

How These Trends Could Affect Buyers

This latest report (and others like it) offers several clues about current real estate market conditions in Seattle as of early 2024. It shows that the market is shifting toward sellers again after a bit of lull over the past couple of years.

Granted, we’re not seeing the kinds of “extreme” seller’s market conditions we saw a few years ago. However, the local real estate scene is exiting the nationwide cooling trend of 2022, with a period of increased buyer competition likely.

With less inventory and fewer price reductions, home buyers must enter the market with a solid game plan for success. Here’s what that might look like…

Increased competition: Due to limited availability, buyers could encounter increased competition from other buyers. This could result in multiple-offer scenarios or even the occasional bidding war. Making a solid offer supported by market data can help buyers succeed.

Mindful bargaining: These latest trends suggest that Seattle-area house hunters may have less bargaining power when negotiating with sellers. So it might not be the best time for buyers to make a “lowball” offer or ask for seller concessions.

Quick decisions: A decline in seller price reductions in the Seattle housing market typically coincides with increased buyer competition and faster sales. In this kind of real estate market, buyers might need to make quicker decisions to secure a property before it’s sold to someone else.

Location flexibility: There’s less inventory to go around these days. So buyers should be willing to consider different cities and communities. This can increase the chance of finding a home that matches their needs and budgets.

An Update on Home Prices

To recap, price reductions in the Seattle housing market have become increasingly rare, moving prices north across the board. That’s where we are right now, as of early 2024.

According to Zillow, the median home price for Seattle is currently $815,865. The median for the broader metro area was $695,671 (brought down by the relatively lower home prices in places like Tacoma).

Experts predict that prices within the metro area would rise over the next year or so. That’s an educated guess, not a guarantee. But it does seem realistic based on the trends outlined above.

This represents a shift in price activity, as home prices in Seattle dipped over the past 12 months. From January 2023 to January 2024, the average home price in Seattle decreased by 1.3%.

So, increasing home prices will be a welcome change for current homeowners, as this will help add equity. But it will make home buying a more expensive endeavor for buyers.

An Update on Mortgage Rates

A significant component in Seattle housing market predictions for 2024 is the expected dip in mortgage interest rates over the coming months.

Fortunately for buyers, mortgage interest rates have already started to cool and may continue to do so throughout 2024. This will help offset any gains in home prices in Seattle.

For the week ending January 26, 2024, the mortgage interest rate for a 30-year fixed-rate mortgage dipped down to 6.6%.

Despite these ongoing rate hikes, the MBA predicts that the rate for a 30-year fixed mortgage will decline throughout the year and into 2025. Rates are expected to gradually end off next year at around 5%.

That’s a far cry from where rates are today, which will help make entering the housing market in Seattle more affordable for homebuyers. Even if the average home price in Seattle creeps up next year, lower mortgage rates could make it easier for homebuyers to secure a home loan.

The bottom line is that there will likely be fewer price reductions in the Seattle housing market going forward. While home prices dipped in Seattle year-over-year alongside seller price slashes to get buyers’ attention, such may not be the case as we head further into 2024.

This is good news for sellers looking to put their homes on the market, as they’ll be more likely to fetch a higher price.

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