Seattle Real Estate Market Update June 2023 

What’s happening in the Seattle real estate market this June 2023? 

In this post, I’m sharing: 

– How inflation is impacting interest rates

– When interest rates might start to decrease

– What Seattle home buyers need to know right now 

– What Seattle home sellers need to keep in mind

– Whether or not you should wait to buy or sell, depending on your unique situation

– How you can get ahead of the curve (if you want) 

How is Inflation Impacting Interest Rates? 

As you may have already heard, the FED has indicated that they’re going to pause on raising interest rates. 

Well, I did some calculating. Inflation is slowly decreasing, and if it continues to decrease at the same rate it has been for the last few months, by the end of 2023 inflation will be below 3% (currently we’re at about 4%). 

Once inflation is at 2-3%, we’ll be close to the target the FED is looking for to lower interest rates. 

If all of this comes true, we might be at the low point in the market right now.

My guess is that the FED is thinking the same thing, because at the moment, they are pausing interest rate increases. So, if things proceed at the same pace, interest rates should probably start coming down by the end of Q1 and beginning of Q2 of 2024. And when this happens, people are going to flood the real estate market. Home prices will keep going up. 

For the past ~2 months, Seattle home prices have been trending up (this even includes condo prices!). The current trend might be observable to those who are paying extra close attention, but the masses will realize this trend next year. (Don’t forget, the news media is always at least a month behind on reporting these changes).

Here’s a look at Seattle’s median price for the past year compared to where it was last year: 

And here’s a look at King County’s median price for the past year compared to where it was last year: 

As you can see, the trends are very similar between Seattle and King County. This makes sense, given that the market changes are being driven by national, rather than local factors. Prices were up year-over-year until the start of 2023. But they are beginning to catch back up now. This is where inflation and interest rates come in.

Here are inflation numbers this past year and how they compare to the year before: 

Inflation peaked in May and June last year, roughly around the time the FED started to seriously intervene with rate increases. Now that cuts have been occurring for a while, you can see the newer trend of inflation numbers coming down month by month.

Inventory is also WAY down and numbers of sales is way down, which means volume is down: 

We can show this another way.

What about interest rates? Where is the market heading?

What Does All of This Mean for Seattle Homebuyers? 

1. If you require a lower interest rate to buy the home you want, you may want to wait to buy a home.

You will probably need to wait until the 3rd or 4th quarter next year, because it will take time for interest rates to decrease. You might even want to wait until the second quarter of 2025, if you’re not in a rush. 

2. Right now COULD be a great time to buy a home.

If you need to buy a house sooner than later, and interest rates aren’t limiting your budget to get what you want, then right now is a great time to purchase a home. As interest rates decrease, home prices will start going up in a dramatic way. (And in fact, they are already trending up, according to median prices and market velocity.) If you buy now, you can get the lower home price, and just refinance when interest rates go down. 

The X-factor here might be the big tech stock market. Seattle’s many tech workers are our number one buyer of homes. They drive the market. There’s a good chance they could start to feel more optimistic once layoffs have fully ceased. Add to that consistently rising tech stocks (the big names are up at least 20% over the past two months) and RSU incomes are quickly increasing. These means more confidence and more money for down payments. Tech workers might soon start re-entering the market in earnest. This could make buying harder for the rest of the buyer pool as time goes on.

3. Many people are waiting for better interest rates, so as soon as rates start to go down, people will flood the market.

And when this happens, everyone will think that this is their moment! This scenario will be especially problematic for people with a downpayment that’s less than 20%. If this is you, then now is your time to buy a home since it’s less competitive at the moment. Now, great homes are still selling in multiple offers and over asking. But it’s going to become even more competitive next year. 

What Does All of This Mean for Seattle Home Sellers? 

1. If I owned a house that I wanted to sell in the near future, I would wait until interest rates start to go down.

Once this happens and homebuyers start to flood the market, your house will likely sell for a higher price. 

2. That being said, if you need to sell your home now, go ahead and sell!

Idyllic single-family homes are still very competitive. If your home is in the right location with the right floor plan and it’s fresh and ready to go, your home is going to do great on the market. We are still seeing highly desirable homes get 8-10 offers. 

However, if your house is in rough shape, doesn’t have a desirable floor plan, is not in a good location, or something else is wrong, you can expect your home to sit longer on the market. These homes are selling eventually, it just might take a few weeks instead of a week. These same things are mostly true for townhomes as well; great townhomes are still selling, and everything else is taking a couple of weeks to sell. 

3. During the last few months, condos have been doing better and better on the market.

This is good news for condo owners—condo prices have been on the decline since 2019 and they did not fare so great during Covid. However, we’re starting to see price increases. So if you’re in a condo and ready to “move up,” now might be the time!

Have a question about buying, selling, or renovating? We’re always happy to chat! It’s never too early to strategize. You can get in touch with us here.