Is the condo market turning around? Amidst the multitude of return to office orders from local tech sector employers, the Seattle condo market appears to be on the rebound after experiencing net-zero growth from 2018-2022. What does that mean for you? If indeed #BacktoWork mandates are the new normal, then now may be the time to start seriously considering investing in condos again.
Seattle Condo Market by the Numbers
Check out these charts comparing overall median price changes for single family homes (SFH), condos, and townhomes. Between 2018 (we’re using rolling 12 month averages here) and 2022, condos were on the bottom of the pack, and had a net appreciation of a mere ~1%. In that same period, SFH and townhomes appreciated >20% and >10%, respectively. But things have changed. In the last 6 months, condos are the only market sector to experience a net year-over-year appreciation rate. Compare this to single family homes and townhomes, both of which have depreciated by >5%.
Why is this happening?
1) #BacktoWork is the new normal, and people need to live closer to their jobs in the city core, even if they are working hybrid schedules.
2) With a market as hot as Seattle, growth can only stagnate for so long. As the price of single family homes puts them progressively more out of reach, people will turn to the more affordable substitute that is the condo market.
3) Many of the newer condo buildings in Seattle have finally started selling out, after flooding the market with inventory over the past two or so years.
4) Townhomes have lost their edge. As townhomes come to predominate the market in Seattle, many people are starting to notice the quality and value dip. This makes the more traditional condo an intriguing prospect by comparison. In no small part because condos are typically one level living, which nearly everyone prefers to three level homes.
What Should We Expect From a Resurgent Condo Market?
If the condo market is indeed returning to normal, what should we expect in terms of future appreciation? Well, let’s say you had bought ~8 years ago, in early 2015. Since that time, Seattle condos have appreciated 85.71% (keep in mind that’s including the last few years where they struggled). That means that condo owners have seen an annual appreciation rate of 7.48%. That’s 5.2% per-year even after accounting for inflation! So, if the market returns to a more traditional balance between houses and condos, we can expect condos to see a high rate of return, hopefully one jump started by years of flat appreciation in the sector. Condos could return to what they always were: a gateway to wealth-generation for those not yet ready to either afford or maintain a single family home.
Should we temper our excitement? Maybe, but probably not.
One caveat to keep in mind–Seattle has changed a lot since 2015, and not all for the better. This is specifically true in parts of Seattle with the highest concentration of condos: downtown, Capitol Hill, First Hill, etc. It may take time and something more than #BacktoWork mandates to turn things around fully. All we can say for now is that condo appreciation is outpacing single family home and townhome appreciation in Seattle. We expect this change to be greatest in the more desirable areas close to downtown, like Fremont. In any event, if you’re going to take the plunge, make sure you’re prepared to stick it out long enough to see the return you desire!
Condo Market in One Sentence
For those interested in building wealth through equity, put condos on your list. This might be your very best chance.
Curious if condos are right for you? Don’t hesitate to reach out. We’re always here to answer your real estate questions! And get in on the Seattle condo market yourself with by checking out our newest, freshly renovated condo in the coveted Fremont neighborhood!