Are you planning to buy your first home in the state of Washington sometime during 2024? What might the real estate market be like next year, and how could it affect you?
If so, you’re in the right place. Sammamish Mortgage created this report detailing the market outlook for Washington first-time buyers in 2024 so you can enter the market more prepared.
Buying Your First Home in WA State in 2024
Real estate markets in Washington have undergone significant changes over the past few years. And you probably already know much of this.
The market accelerated during the early pandemic years, cooled down in 2022 as mortgage rates rose, and became more competitive again in 2023 due to declining inventory.
But what about next year? Here are some trends and developments that are part of the market outlook for Washington first-time buyers in 2024 that are worth watching.
1. Be prepared to deal with low supply levels.
Housing market inventory across the state of Washington sank to an all-time low at the beginning of 2022. But supply levels have rebounded since then, giving buyers more options.
Overall, however, real estate markets across Washington continue to experience a shortage of inventory relative to buyer demand. This will likely be the case in 2024, at least during the first few months of the year.
According to a November 2023 report from Realtor.com:
“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…”
As of last month, the state of Washington had about a 2.2-month supply of homes for sale. That’s better than where we were a couple of years ago when inventory levels fell to their lowest point ever. But it’s still well below a balanced or regular housing market.
This is one of the main challenges first-time home buyers in Washington could encounter in 2024. With fewer homes on the market, buyers’ competition will be fierce. It’s the classic principle of supply and demand.
To overcome this challenge, buyers should be prepared to make a strong offer the first time around. If possible, keep your offer as “clean” as possible, limiting contingencies to only absolutely necessary ones.
You should also get pre-approved for a mortgage loan. Doing so will show the seller that you are a serious and qualified seller and help move the final mortgage process along.
2. Give yourself extra time for house hunting.
The house-hunting process tends to take longer when there are fewer properties available. In such times, buyers must allow extra time to find a suitable property within their budgets. Many first-time buyers in Washington will experience this firsthand in 2024.
Granted, real estate conditions can vary widely depending on the city where you plan to purchase a home. For instance, the Seattle metro area tends to be more competitive than some of the more rural parts of the state. For this reason, the best place to buy a home in WA State is outside Seattle, where home prices tend to be lower and competition is not as fierce.
But in general, Washington State first-time home buyers should allow themselves plenty of time for house hunting.
The home search process might only take a few weeks in a buyer-friendly real estate market with plenty of inventory. But in a tight market where demand exceeds supply, it can take months to find the right home.
Eventually, you’ll find the right property, but it may take some time. So until then, practice the three P’s of house hunting. Be patient, persistent, and positive!
3. Watch out for rising home prices in 2024.
Home prices across the state of Washington declined a bit during the second half of 2022 when mortgage rates rose. That same trend played out in most real estate markets across the United States.
Now, Washington home prices are beginning to show some upward momentum again.
According to Zillow, the statewide median home price peaked at an all-time high of $596,000 in June of last year. The median price declined for several months in a row after hitting that peak.
But those declines now seem to be at an end. Home prices in Washington have crept upward for the past several months in a row, a trend that could continue into 2024 as well.
When this article was published in late November of 2023, the median price in Washington was around $570,000 and climbing.
In 2024, first-time buyers in Washington should pay close attention to home price trends in their local area. If house values continue to climb over the coming months, as expected, it might make sense to purchase a home sooner rather than later.
4. You could benefit from slightly lower mortgage rates.
Let’s wrap up with some good news for those planning to buy their first home in 2024.
After rising sharply for the past two years, mortgage rates are easing somewhat. Some analysts, including those from the Mortgage Bankers Association, expect rates to be lower in 2024 than during most of 2023.
In late October, the average rate for a 30-year fixed mortgage hit a 15-year high of 7.79%, according to Freddie Mac. However, rates had declined since then and averaged 7.29% when this article was published.
According to a November 22 report from Freddie Mac:
“Mortgage rates continued to decrease heading into the Thanksgiving holiday. In recent weeks, rates have dropped by half a percent, but potential homebuyers continue to hold out for lower rates and more inventory.”
Some industry watchers expect rates to hover lower in 2024 than the highs we saw last month. That would be a positive development for first-time buyers in Washington, especially if home prices continue to trend upward.
More specifically, analysts with the Mortgage Bankers Association (MBA) expect mortgage interest rates to dip to 6.1% by the end of 2024. And by the end of 2025, mortgage rates are forecasted to go down even further to 5.5%.
Lower rates will make it more affordable to take out a mortgage, which should help offset any price gains in home prices across the state of Washington.
In closing, the market outlook for Washington first-time buyers in 2024 includes continued housing inventory shortages, hefty competition among buyers, rising home prices, and reduced mortgage rates. Anyone looking to enter the real estate market in WA should consider these factors before starting the housing hunting process.
Once you’re ready, contact a seasoned mortgage specialist to help you find the best first-time home buyer loan in WA State. At Sammamish Mortgage, we can help you navigate all the available first-time home buyer programs to ensure an affordable mortgage.