Seattle Condo Market 2023 Year in Review

There’s something fishy going on in the Seattle condo market. Here’s our take.

Back in September, we described the unexpected Seattle Condo Market Turn Around. After languishing for years, it appeared that the beleaguered Seattle condo market might just have hit a tipping point. Now, we have data for the entire year, and it appears the trends held up.

2023 vs 2022 in the Seattle Condo Market

In our earlier article, we discussed the sad state of the Seattle condo market circa 2018-2022. Instead of rehashing old history, we want to present our year-in-review analysis by comparing the last two years in a head to head competition. Here’s how the condo market of 2023 stacked up against 2022.

*All numbers are medians unless otherwise noted*

Key Takeaways

1. Condo sales were way down in 2023, but the drop-off was comparable to what we saw in the single family residential market.

2. Of the homes that listed, most sold. Condos always have a higher failure-to-sell rate than other property types, but we saw no change in the numbers year over year.

3. Prices were up. The median sale price of condos jumped 6% from 2022. This is far, far better appreciation than anything we’ve seen in the last half decade in the condo market. But, there’s a caveat…

4. Price per square foot was down. How is it possible that prices rose 6% while price per square foot decreased? The only way for this to happen would be if condos suddenly go larger. How is that possible?

5. The sale of non-traditional condos rose. The sale of condos other than the traditional 1-2 bedroom apartment style condos, rose proportionally by more than 3% in 2023. As the Seattle Times recently postulated, this could have been due to an increase in backyard cottages and townhome complexes being more frequently listed as condos. But is that right?

6. Backyard Cottages and Condo Townhomes Swayed the Market. It is! Notice how the median year of condos sold jumped from 1992 to 1997. That’s a huge jump, indicating a much higher proportion of sales being new or newer homes. These new/newer condos are more often townhouse/cottage style, and larger by comparison to the apartment style condos. Notice also that the percentage of downtown condo sales decreased by 4% in 2023. This would come as a surprise, given that back to work mandates drew more workers towards the downtown core in 2023. Except it comes as less of a surprise when you consider that all of these new townhome and cottage style condo sales took place outside of downtown–there are no cottages at Pike Place Market!

SUMMARY

In the end, it appears the 2023 Seattle condo market held steady. It certainly did better than the Seattle single family residential market. However, we have to admit that 2023 wasn’t quite the boon it may at first appear. Townhome/cottage style condo sales inflated the market numbers, making things look better than they really were. For this reason, comparing the condo markets of 2022 and 2023 isn’t quite “apples to apples”. We’ll see if the trend of large, neighborhood condos holds up as builders reassess their strategies going into 2024. Reception to these setups has been tepid, but builders may not have much other choice when bumping up against zoning and building regulations.

What to Expect in 2024

The Seattle condo market historically tracks closely with the total residential market. We expect 2024 to be more of the same. Good condos, priced well, will sell relatively quickly. Lower quality condos in less desirable neighborhoods will struggle. However, as rates go down, we do expect to see a small uptick in condo sale prices. The sad truth is that there are many people who want to buy a house in Seattle but can’t afford it. It seems inevitable that, given enough time, the condo market will pick up again as a viable alternative to single family residences. The real question is whether the growth of cheap, compact townhomes will continue to hamper condo sales. These townhomes are often viewed as slightly more expensive, if less luxurious, alternatives to buyers who would otherwise be entering the condo market. Only time will tell.

Stay tuned for more Seattle condo market insights and local real estate knowledge!