Tight Inventory Could Affect Seattle Home Buyers in 2024

Published:
November 7, 2023
Last updated:
November 7, 2023
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If you’ve been following Seattle real estate market news for any length of time, you probably already know that we are experiencing an ongoing inventory shortage. This is true for Seattle and just about every other major city across the United States.

Home buyers in the Seattle area might be tired of hearing about tight housing supply conditions and other challenges. It can be wearying. But if you’re planning to enter the Seattle real estate market in 2024, you’ll want to have a clear understanding of current market conditions and how inventory could affect Seattle buyers in 2024.

Here’s an update on the housing supply situation and what it might mean for Seattle home buyers in 2024.

Seattle Property Listings Decline in Fall 2023

As of fall 2023, the Seattle housing market continues to experience a housing market shortage. Even though rising mortgage rates have reduced the demand for homes, the inventory reduction has had a more profound effect. It’s also putting upward pressure on home prices.

Earlier today, Realtor.com published its latest housing market update with stats for the nation’s 50 largest metropolitan areas. According to that report, active real estate listings nationwide have declined slightly over the past year or so.

To quote the November 2023 Realtor.com report:

“While home prices remained relatively stable year over year this October, limited inventory continues to hamper homebuyers as the number of homes actively for sale shrank annually (-2.0%) for the fourth month in a row…”

In the Seattle metro area, housing market inventory experienced a much steeper decline over the past year. The total number of active real estate listings for the Seattle-Tacoma-Bellevue metro area declined by -28.3% from October 2022 to October 2023.

Not only could tight inventory affect Seattle buyers for the rest of this year, but it will also play a key role in what buyers do next year.

Why Is Inventory So Tight in 2023?

The current inventory shortage in Seattle and nationwide has been a long time coming. Real estate supply levels have been trending downward for the past 20 years or so.

Here are some of the factors that have contributed to the current housing market inventory shortage across Washington and elsewhere in the U.S.:

  • Reduced construction: New home construction declined sharply after the Great Recession and has not fully recovered. This is due to several factors, including a shortage of skilled labor, rising material costs, and regulatory barriers.
  • Increased demand: The demand for housing in the U.S. has increased in recent years. This trend was driven by population growth, millennials entering their home-buying years, and low mortgage rates from 2013 to 2021.
  • Homeowners staying put: Homeowners are staying in their homes longer than they used to for a variety of reasons. In 2023, many homeowners report feeling “locked in” by their low mortgage rates, which makes them less inclined to sell.
  • Investors buying properties: Another key reason why housing inventory is so tight is the increase in investors, both domestic and foreign, who are buying properties for investment purposes and then renting them out. According to a recent Pew Stateline report, investors purchased nearly one-quarter of all single-family homes in 2021, up from about 15% to 16% each year since 2012.

What’s the Outlook for 2024 in Terms of Supply?

Tight inventory could affect Seattle buyers in 2024 and pose continued challenges. However, more properties could come onto the market if mortgage rates ease enough to reduce the seller reluctance mentioned previously.

The general consensus among housing market experts is that inventory conditions will remain tight in 2024. Several overlapping factors are driving this long-range outlook. For one thing, an ongoing labor shortage and higher material costs have limited the number of new homes built here in Seattle and nationwide.

However, some experts believe that inventory conditions may improve in the second half of 2024 as construction picks up and more homeowners decide to sell. This would help take the pressure off buyers.

Compromise Is a Home Buyer’s Best Friend

We’ve already established that an inventory shortage could affect Seattle buyers over the next few months. When supply levels run low, home buyers often have a more challenging time getting everything they want in a house. Flexibility and compromise become the name of the game.

Here are some areas where a little flexibility could go a long way:

1. Be willing to purchase a smaller home for now.

This is a classic compromise that many home buyers make, especially in competitive markets like Seattle. A smaller home can reduce your housing costs and give you more options. You can always sell the smaller home and upgrade to a larger one when your needs change.

2. Stretch out your commute.

If you are willing to commute further to work, you will have more options. You can afford a more expensive home in a more desirable neighborhood. There are plenty of areas just outside of Seattle where home prices are significantly lower than in Seattle.

Tacoma, for example, is only about a 30- to 40-minute drive from Seattle, but prices are much lower. Right now, the average home price in Tacoma is $465,245, according to Zillow. Compare that to Seattle’s current average home price of $826,592 as of November 2023. That’s a difference of $361,347!

3. Consider buying a fixer-upper.

Buying a fixer-upper could help you get into a home in a desirable neighborhood without having to pay top dollar. This kind of compromise will give you more homes to choose from, increasing your chance for success.

And remember, some fixer-upper homes are entirely livable and move-in ready from day one. This is especially true when the necessary repairs are cosmetic in nature. You could add instant equity into your home by making simple cosmetic updates, which means you can add value to your home right out of the gates.

4. Consider waiving contingencies.

Contingencies are clauses in a purchase agreement that allow the buyer to back out of the contract under certain circumstances. For example, a home inspection contingency gives the buyer an exit strategy if the inspector uncovers problems they’re unwilling to accept.

Contract contingencies can help prevent home buyers from losing their earnest money deposit. But they could also make your offer less attractive to sellers by having more “strings attached.”

If you are willing to submit a “cleaner” offer without any contingencies, you might gain an advantage over competing home buyers. Of course, waiving or leaving out contingencies also brings more risk for the buyer. So it’s not for everyone.

This strategy becomes more common when Seattle’s housing inventory runs low, which is the current situation in the city. Be careful with submitting a “clean” offer, as you’ll have fewer protections. Make sure you work with a seasoned real estate agent to ensure your offer is competitive but also doesn’t leave you vulnerable.

5. Look for listings that have been on the market for more than 3 months.

If time is on your side, consider sitting by the sidelines and waiting until you come across a listing that has been on the market for much longer than the current market average.

For example, the average number of days sellers wait before selling in Seattle is 14 days, according to Redfin. If you see a property on the market for more than a month, you may have a bit of negotiating power. Ideally, the home will have been on the market for much longer than that.

More specifically, a listing that has been around for at least 90 days or more might mean an opportunity for more wiggle room when negotiating with the seller. After so much time on the market, the seller may be more desperate to sell and may entertain a slightly lower price than what they would have initially accepted.

So, what can we expect in Seattle’s housing inventory in 2024? Unless new housing starts pick up the pace and mortgage rates remain as high as they are, we could see continued housing shortages in Seattle and across Washington State throughout the better part of next year. In closing, it’s essential for anyone looking to get into the real estate market to know how inventory could affect Seattle buyers next year.

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