As we approach the end of 2023, we thought it would be helpful to look back at how the Seattle-area real estate market has changed over the past year.
No one can predict future real estate trends with complete accuracy. But hindsight has a way of helping us prepare for the future and make more informed decisions. With that in mind, here is our year in review for the Seattle housing market in 2023.
Seattle Housing Market Trends of 2023
Overall, the real estate market in and around Seattle remains highly competitive at the end of 2023. While home prices have flatlined over the past year or so, the number of homes on the market declined during that time. These inventory declines have increased competition among home buyers, a trend likely to continue in 2024.
Here are some noteworthy Seattle housing market trends that occurred during 2023:
Home Prices Stagnated Over the Past Year
Home prices across the Seattle metro area have remained mostly flat over the past year. In fact, buying a home in Seattle, WA, is a little more affordable now than it was at the same time last year, without factoring in higher mortgage rates.
According to the latest data from Zillow, the median home value in Seattle is currently $824,264, which is 1.8% lower than December 2022. And for the Seattle-Tacoma-Bellevue metropolitan area, the median home price was around $699,000 in December 2023. Their estimate was only 0.1% higher than a year earlier.
While home values in the Seattle real estate market fluctuated over the past year, they are ending 2023 just about where they were at the start of the year.
There’s a reason for this price stagnation. Over the past 18 months, higher home prices and mortgage rates decreased demand among home buyers. That same trend occurred in nearly every city across the United States in 2023.
This “pause” in home-price appreciation was actually a positive trend from a buyer’s perspective. During 2021 and 2022, house values in Seattle and nationwide rose much faster than wages and incomes. That trend drove housing affordability to an all-time low.
But during 2023, house prices leveled off and even declined in many U.S. cities.
Looking forward, Zillow predicts that the median price point for the Seattle area will rise by 1.6% over the next year or so. Specifically, that forecast covers the 12-month period from November 2023 to November 2024.
Inventory Has Dropped Since the Start of 2023
Like many cities and metro areas nationwide, the Seattle-area housing market lost inventory during 2023. As a result, fewer homes are on the market than at the start of the year.
According to a recent housing market report from Realtor.com, the total number of active real estate listings across the Seattle-Tacoma-Bellevue metro area declined by -28.3% over the past year.
As of November 2023, the Seattle, Washington, area had about a 1.5-month supply of homes for sale. That was a clear improvement from the pandemic years when practically no homes were available for buyers to purchase. But it’s still very low from a historical standpoint.
Homeowners who are already locked in at a mortgage rate that’s much lower than today’s rate have also been hesitant to sell. They may be concerned about losing their lower rate in exchange for a much higher rate. This hesitancy to list their homes has also contributed to tight inventory, with free listings on the market as a result.
Home buyers planning to purchase in 2024 should do everything possible to increase their chances of success. We covered some of those best practices in a previous article. The two most important strategies are expanding your search zone as much as possible and making a strong offer the first time.
More Homes Selling Above the Asking Price
At the start of 2023, very few homes in the Seattle area were selling above the asking price. That’s because rising mortgage rates cooled the market during the second half of 2022.
But those same higher mortgage rates made a lot of homeowners reluctant to give up their lower rates by selling their homes, as already mentioned. So, we also saw a drop in Seattle home inventory during that timeframe.
The result? Increased buyer competition has led to more and more offers above the list price. Toward the end of 2023, about 32% of homes for sale in the Seattle area were selling above the asking price—up from 18% at the start of the year.
The overall pace of home sales also increased during 2023 and for the same reasons stated above. Tighter inventory conditions have caused buyers to make stronger offers while decreasing the time it takes to sell a home. It’s basically a more moderate version of what we saw in 2021.
Major Drop in the Number of ‘Days on Market’
One of the most notable changes within the Seattle real estate market during 2023 was the number of “days on market (DOM).” This metric shows how quickly homes sell, based on the typical time between the initial listing and the purchase contract.
A high average DOM points to a weak housing market in favor of buyers. Listings become stale, and home prices may dip as sellers try to sell their homes. Conversely, a low average DOM indicates a strong real estate market favoring sellers. In this scenario, homes sell much faster, giving sellers more negotiating power and the ability to sell at a higher price.
In January 2023, homes listed for sale across the Seattle area real estate market spent a median of 45 days on the market before going under contract. But when this article was published in mid-December 2023, the median “DOM” was back down to around 12 days.
This shows the acceleration of the Seattle housing market in 2023, with a faster pace of home sales.
The tighter inventory conditions mentioned earlier have a lot to do with this. Homes tend to sell faster when supply levels decline. That’s because more buyers are competing for fewer properties, creating a higher level of competition.
Mortgage Rates Dropped During the Latter Part of 2023
Here’s some encouraging news for Seattle-area home buyers. While Seattle mortgage rates rose considerably over the past couple of years, they’ve been trending downward through the last two months of 2023.
During the first week of 2023, the average rate for a 30-year fixed mortgage loan was around 6.48%. That average rose to 7.79% by late October, but it’s been declining ever since.
According to a December 7, 2023 report from mortgage buyer Freddie Mac:
“The 30-year fixed-rate mortgage now sits below 7%, down from nearly 7.80% less than two months ago. When rates began to drop rapidly, purchase applications rebounded initially…”
We could wrap up 2023 with slightly higher mortgage rates than at the start of this year. As for next year, several analysts have predicted a continued but gradual decline in mortgage rates. That would help spur the Seattle real estate market in 2024 by bringing more buyers into the market and overcoming some of the hesitancy among sellers.
Seattle Housing Market in Review: Final Thoughts
As you can see, the Seattle housing market in 2023 underwent many changes. And these developments will affect home buyers and sellers next year as well. It will be interesting to see what will happen with the Seattle housing market in 2024. As always, we will continue to monitor housing market trends in the area and report them right here on our blog!