Seattle’s Real Estate Market Is Simmering Down, But For How Long?

March 9, 2022
Last updated:
April 4, 2022
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The fall months of 2021 saw a slight easing of housing prices in Seattle, but things are picking up again. The last few months of last year showed that the real estate market in Seattle doesn’t seem to be letting up any time soon.

The year 2021 was a strong one for the Seattle real estate market, but it may not be as hot in the coming months. What will 2022 bring for the housing market in Seattle?

Real Estate Market – Seattle: 2021 Recap

Seattle’s real estate market was a sizzling one in 2021 marked by tight inventory, soaring prices, and healthy sales. Let’s go over some key points that characterized the market last year.

Record-Breaking Sales

Despite the ongoing tight inventory situation in Seattle, the city still managed to see record-breaking sales in 2021. The Northwest Multiple Listing Service (NMLS), which covers 22 counties in Washington State, reported 107,354 closed sales in 2021.

This marked the first year that annual sales topped 100,000. Further, closed sales increased over 33% from the year before.

Record High Prices

Seattle has long been one of the more expensive real estate markets in Washington State and the country as a whole. As of February 2022, the average home price in Seattle sits at $915,340, marking a healthy 13.4% increase from the same time last year.

Seattle’s home prices help keep the average price on the surrounding King County high. Right now, King County’s average home price is $857,498. That’s 20.2% higher than where prices were the same month in 2021.

Demand for housing in Seattle continues to be driven by an increase in millennial buyers entering the market, as well as the tech jobs in the city that draw in interested buyers.

Having said that, the rate of price appreciation may not be as strong in 2022 compared to last year, partly due to rising mortgage interest rates. However, the pace of price growth will still be relatively healthy.

Record Low Inventory

Tight inventory continues to be a trend in Seattle and the surrounding markets throughout the Evergreen State. Right now, Seattle has just a 0.64-month supply of housing available, and in King County, that number is even lower at a mere 0.49-month supply. A balanced market is characterized by a 5- or 6-month supply, which means Seattle has nowhere near enough housing to meet the demands of prospective buyers.

In fact, at no point throughout the year did Seattle have more than a 1-month supply of available housing, which means there weren’t enough homes to satisfy the pool of buyers on the market.

The spike in home prices throughout 2021 was largely driven by this tight inventory situation. As supply fails to meet demand, the price of homes will continue to soar.

What Happens Next For the Seattle Housing Market For 2022?

Home prices in Seattle spiked last year, and they’re expected to continue increasing at a relatively healthy pace throughout 2022, though not necessarily at the same rate of appreciation.

Seattle Expected to See High Prices and Tight Inventory Throughout 2022

Inventory will remain very tight. Combined with continued buyer demand, this will likely fuel home price increases over the next few months. Despite the continued scarcity of inventory, however, closed sales are expected to remain relatively strong this year.

The Seattle real estate market is very hot right now, including in the higher-price ranges. Multiple-offer situations will likely continue to be a regular occurrence given the high demand and housing scarcity.

Condos May Be a More Budget-Friendly Option For First-Time Buyers

First-time homebuyers looking to get into the market this year may need to set their sights on condos to keep the home purchases within a reasonable price range. Luckily, condominium inventory is up in various Washington State markets, including Seattle.

Suburban Living Continues to Be a Hot Trend

The recent health crisis prompted urban dwellers to rethink their living arrangements, given the lack of space, both indoors and outdoors. In an effort to gain more space, many Seattle homeowners chose to migrate out of the city center and seek out suburban options.

The rapid growth in work-from-home arrangements has also given residents plenty more flexibility in terms of where to live relative to work locations. This trend will likely continue throughout 2022, as more people look to move into homes that can accommodate home offices.

Such an exodus out of the downtown core is putting upward pressure on home prices in areas that have traditionally been much more affordable centers outside of Seattle. The increased competition among buyers in once-affordable locations will therefore continue to put more pressure on homebuyer hopefuls with tighter budgets.

Is Now a Good Time to Buy a Home in Seattle?

Even though home prices are high in Seattle, 2022 is still a good time to buy, for a few important reasons.

Mortgage Interest Rates Are Still Low (But Rising)

Securing a low interest rate on a mortgage is a great way to keep housing costs low, and rates have been very low over the past few years. As of this writing, the rate for a 30-year fixed-rate mortgage is 3.69%.

Over the past year, however, mortgage interest rates have been on the rise, and experts agree that rates will continue to inch up over the course of 2022. According to the Mortgage Bankers Association (MBA), mortgage rates will reach 4% by the end of the year.

Buyers may want to get into the market sooner rather than later to take advantage of low rates before they continue to rise. That said, rates are still expected to remain relatively low this year, despite their upward trend.

Rising Home Prices Give Buyers the Chance to Build Equity

Given the continued rate of price appreciation that is expected this year, buyers who purchase a home earlier on in the year will be able to ride the wave of price increases. Along with appreciation in property values comes a growth in home equity. The sooner buyers get in the market, the sooner they can take advantage of such equity growth.

Why Choose a Sammamish Mortgage?

At Sammamish Mortgage, we can help you get fully preapproved for a mortgage, even in the face of massive home appreciation rates.

Sammamish Mortgage has been in business since 1992, and has assisted many homebuyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help you get pre approved. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon, and Washington.

Contact a loan officer if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.

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