The average home price is over $1 million in King County.

While property prices in the greater Seattle area have been on the rise in the last few years, the Seattle housing market is showing signs of cooling. In many parts of Seattle, the average home price is dropping. Some homes are selling for below their asking price, hinting at a potential buyer’s market in 2023.

If you bought your home in the last few years, you may not be able to sell it for a profit in 2023. However, if you benefited from the recent rise in property prices, it may be the best time to sell. This is why it’s important to understand the state of the Seattle real estate market and how experts predict the market will evolve this year.

Want to learn more about Seattle real estate? Read on for everything you need to know about real estate in Seattle and the opportunities for real estate investors.

Property Prices Likely To Fall

It’s no secret that the Seattle real estate market experienced a massive boom during the pandemic. This boom was largely due to the growing tech industry and the economic climate at that time. Seattle was not alone in this boom as property prices in Nevada, Texas, and other parts of the country also grew exponentially.

It’s important to remember that the Seattle property market was already incredibly valuable. This made the recent property boom even more significant when you compare it with other parts of the country. However, the rise of home prices did make inequality in the city worsen.

As the economy cools down from pandemic highs, prices around the country are starting to settle. As mentioned by Christine Clarridge and Sami Sparber in their Axios report, the rising interest rate is taking a major toll on homeowners. Many are seeing their monthly mortgage payment increase by around 50%.

In the report, Christine and Sami break down a simple mortgage loan of $684,900 that was taken out at a rate of 2.75%. The monthly mortgage payment for this home would work out to be $2,796 over 30 years. The same mortgage would cost around $4,282 since the interest rates have risen to 6.4% today.

This massive rise in mortgage payments has made homeownership difficult in the Seattle area. Affordability directly relates to the increase in properties being listed on the market. However, the supply of homes on the market only helps decrease the demand for housing.

Since there’s more supply than there is demand, experts are all predicting that property prices are going to flatten out and fall this year.

Opportunity for Buyers?

Whenever we talk about falling home prices, the first thing many people think is that it’s an opportunity for buyers. However, a recent report by The Seattle Times shows that this may not be the case in Seattle.

The property market expanded so rapidly that homes are far out of reach for most people in the area. This means that even if home prices were to fall by 5% in the next year, people still wouldn’t be able to afford them.

The report indicates that homebuyers would need to earn at least $169,000 a year just to afford the median home in the area. This is only possible if they also have the cash on hand for a 20% down payment on the home. The reality of the Seattle property market is that people in the area simply can’t afford a property at this price point.

This is a clear indication that property prices may have to decrease by more than 15% to attract new buyers later this year. If you have a home and want to sell, waiting for the market to turn may not be the best idea. The truth is that if you can get a buyer for your home today, the best idea would be to sell it now.

Rent Prices Are Falling

When property prices increase, it’s only natural for rent prices to increase as well. This is because real estate investors have to invest more money to buy the property. In return, they want to make more money from the property to pay off their costs.

However, the reverse isn’t always true. When the property value decreases, property investors tend to keep rental prices the same. While this does mean that tenants can benefit from no increases in rent, the underlying affordability issues pose a serious threat.

This is because affordability is causing many people to move to other cities in the country. This has increased vacancy rates in the city, causing property owners to decrease rental prices. While this effect has not occurred yet, the early signs are starting to show.

A recent report by Angela King and Katie Campbell for NPR stated that many people are opting to rent a home rather than buy one. Inflation and rising interest rates have made homeownership incredibly expensive. The economic uncertainty of 2023 combines all of this to result in a more cautious approach for tenants and potential buyers.

More Affordable To Rent

The bottom line is that it may actually be more affordable to rent instead of buying a home in Seattle right now. It’s true that property prices are trending down, but they are still incredibly expensive. On the other hand, rents are looking softer and more stable.

Besides being the more cautious option, renting can also help you save towards a bigger down payment. This is an important concept as a larger down payment can make buying a home more affordable. Your total loan amount will reduce, so the inflated interest rate won’t have as much of an impact on your monthly payments.

Affordability Issues

Seattle housing is not cheap. The important thing to remember is that Seattle property wasn’t cheap even before the real estate boom in 2021. This means that the current state of the Seattle property market is massively out of reach for many people in the area.

Even if the property prices were to decrease, they would still be far out of reach for locals. The current economic climate is also causing many people to sell their homes and move away to more affordable cities in the country. This leaves the local market with even less demand for property.

Incoming Recession

It’s no secret that a recession may be imminent in the United States. Even though it was not officially declared, a technical recession did occur in 2022. However, the full impact of this on the economy was only realized once major companies started shedding jobs.

The tech industry was one of the biggest industries to slim down their workforce. Headlines spread around the world about companies like Microsoft and Amazon cutting thousands of jobs overnight. While this may be in preparation for a recession, acts like this tend to increase panic and cautiousness in the market.

This means that demand for massive investments like property tends to decrease significantly.

The Influence of the Tech Industry

The tech industry is massive in Seattle. International tech giants such as Meta, Google, Amazon, and Microsoft all have offices in the area. This has brought thousands of high-paying jobs to the area, causing local property prices to skyrocket.

This influx of talent caused property prices to rise steadily over the last decade. While this was great for real estate investors, it does highlight the clear link between the industry and the property market. This means that the property market continued to rise as these companies continued to pull in record profits.

However, the tech industry has stumbled in the last couple of months. Major players in the area have announced layoffs, causing thousands of people to lose their jobs across the country.

Amazon, Google, and Microsoft all announced that they would be cutting thousands of jobs in the Seattle area in 2023. However, Meta shed 13% of its entire Seattle workforce. This is around 1,400 jobs in Seattle alone.

Since all the tech companies are cutting jobs, it’s very unlikely that these professionals will quickly get another position in the industry. This has led to panic in the tech industry and can have a major impact on both property and rent prices in the area. If these professionals decide to move to California or New York, the demand for local housing will plummet.

Nate Bek illuded to this in an article on GeekWire in December 2022. This report also indicated that the influx of property on the market will see prices fall throughout 2023.

The Economic Climate

As mentioned earlier, there are clear signs that a recession is on the way. Even if a recession doesn’t happen, the fear of a recession is enough to plunge the local real estate market. This is because buyers don’t want to commit to a big investment like a home right now.

Buying a home is a serious commitment. Most people buy a home with a mortgage that spans 20 or 30 years. This means that it’s a massive financial commitment that you have to prepare for.

If you’re not confident in your job or the general economy, you’re not going to want to invest in a home right now. This is why many people are skeptical and would prefer to rent. Since rent prices are softening, it’s actually proving to be more affordable to rent in 2023.

The Seattle Housing Market: Key Takeaways

The Seattle housing market is unique and set to evolve in 2023. As these market reports suggest, Seattle home prices seem to have peaked and are trending downward. This makes it the perfect time to sell your home.

If you’re thinking about selling your home in Seattle, here are some of our key takeaways from these Seattle housing market reports:

• Home values have passed their peak and are trending down
• If you bought your home in the last few years, you may not be able to flip it for a profit right now
• Don’t wait around for the market to change direction, you may end up losing even more money
• Since property prices are down, you’ll be able to find an affordable home easily
• Listing your property by yourself could take months or years to eventually sell
• An upcoming recession could impact home prices even further
• The shrinking tech industry could signal lower property and rent prices in the near future
• If you sell your home, renting may be a more affordable option

Home prices are set to decrease throughout the year. While it may be a natural reaction to wait for prices to rise further, this may never end up happening. Waiting for too long could mean losing even more money before finding a buyer for your property.

A Buyer’s Market

It’s clear that the Seattle real estate market is currently a buyer’s market. So, how do you ensure that you can still get the best price for your home? This is where iBuyer can step in to help you get an accurate price for your home in no time.

iBuyers from around the country can give you a cash offer for your home in the blink of an eye. This means that you don’t have to wait around and showcase your home for months before finding a qualified buyer. Instead, you can get an online evaluation and a cash offer instantly.

If you want to sell your home in Seattle, we are here to make the process as easy as possible. You can visit our website today and get an instant home value estimate online. Don’t hesitate to reach out to us if you have any questions or concerns.

The post Seattle Housing Market: 4 Reports on 2023 appeared first on iBuyer Blog.

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