WASHINGTON - The Seattle housing market is growing strongly, according to recent data. In the second quarter of 2023, home values in the Seattle metro area are expected to be higher than they were last year. This is due in large part to the well-paid tech workers who can afford to compete with other buyers to buy a home. The average home value in Seattle increased 17.3% in the past year to $830,000, which is good news for home buyers. Prices are also expected to continue to increase.
A few factors will determine how much the housing market will change during the next few years. First, the market will likely remain a seller's market. There was just 0.3 months' supply of homes for sale in Seattle last year, below the minimum required to allow buyers to buy a home. Second, the number of new homes on the market will remain low, limiting the number of buyers. Meanwhile, the construction industry is experiencing labor shortages.
The Seattle housing market is also expected to continue seeing steady price increases. In fact, in 2023, home prices in King County, Pierce County, and Snohomish County will all increase by more than 5%. The US housing market has been a seller's market for the past several years, but early predictions indicate that the market will turn around by the year 2023.
While inventory levels have increased slightly, Seattle's inventory remains historically low. As a result, it is still a seller's market, but this is a sign that more sellers are entering it. This may even help ease the market and reduce the feeling of buyer fatigue.
Another positive indicator is the rising interest rates. The 30-year fixed mortgage rate reached 5.42% in May, while the 15-year fixed mortgage rate was 4.65%. This means that Seattle home buyers should be encouraged to sell their homes, as rates will continue to rise. However, as mentioned above, many homeowners are still priced out of the market. In addition, the recent increase in people leaving the Seattle area adds to the urgency to sell their homes. According to a recent Redfin report, the number of people leaving the Seattle area for cheaper places is six times what it was before the pandemic. This trend is partly due to higher home values and increased employment opportunities.
Seattle housing prices will likely rise slightly in the next few years. Prices in the $700K to $1 million range are expected to increase by 5.4% annually, while prices in the upper end of the market will increase at a slightly slower pace. Home prices in Seattle are already at the highest levels in more than four decades, and the low inventory should further fuel prices.
As a generation of Millennials enters the housing market, the demand for housing will increase. Millennials are expected to form households at record rates. This will increase home prices and rents. As long as the demand for housing remains high, rents will continue to rise.
