The Worst Performing Seattle Neighborhoods: An Optimistic Guide for Homebuyers and Sellers in 2024

The Evolving Landscape of Seattle’s Real Estate

While some Seattle areas shined in 2023, others lost a bit of gleam. Seattle’s prestigious Magnolia and Queen Anne neighborhoods were among the latter. These areas turned out to be the worst performers in terms of median sales price over the last 12 months, declining by 10.6%, almost double Seattle’s overall 5.4% drop. That’s the bad news. The good news is that these ‘hoods always rebound, and we expect that to be the case in 2024.

Without further adieu, here are the Seattle neighborhoods that experienced the most significant downturn in 2023.

Prestige Neighborhoods: A Closer Look

Queen Anne and Magnolia, synonymous with luxury and exclusivity, previously thrived in a hot market fueled by competitive bidding. However, the recent market slowdown has seen a recalibration of property values due to reduced competition and tighter financing.

1. Central Queen Anne: A Steep Decline with a Hopeful Outlook (-21.6%)

   • Why It Dropped Off: Central Queen Anne, experienced a massive 21.6% drop in median prices. But not all is as it seems. Median price per square foot actually increased 11.8% in Central Queen Anne during 2023. This is possible because Central Queen Anne only sees only 25-30 residential sales each year, and that includes some very expensive properties. It’s easier for a small change in the quality of what’s sold to have a huge impact on the median prices, even one contrary to the price per square foot trend.
   • 2024 Forecast: Queen Anne will undoubtedly perform well in 2024’s lower interest rate environment. Potential homeowners and home sellers should in this case ignore the median sales price trend and focus instead on the upwards trend of price per square foot.

1. Lawton Park (North Magnolia): Facing Corrections with Positive Prospects (-19.8%)

   • Why It Dropped Off: Lawton Park experienced a 19.8% price decrease in 2023 because it experienced a 26.6% increase in 2022. There was, in effect, a minituare Lawton Park Bubble. The area became very popular in 2022 as a more affordable opportunity for buyers looking to live in Magnolia. Compared to West and Southeast Magnolia, Lawton Park was actually an attainable goal for first time home buyers. However, this also means that it was the first to decline as the buyer pool dried up. Further, return to work orders in 2023 meant that Lawton Park residents, though geographically close to Amazon in South Lake Union, were suddenly faced with a much longer drive to work. This could very well have made the area less desirable to city workers looking for an easy commute.
   • 2024 Forecast: As financial conditions improve, Lawton park will likely rebound back to it’s historical 5-15% year over year growth trend. That makes Lawton Park a potential top pick for those looking to buy in an appreciating neighborhood, particularly if you’re able to find a house in the first quarter of 2024.

1. West Magnolia: Adjusting to a New Reality (-12.5%)

   • Why It Dropped Off:  West Magnolia is a sun-drenched urban-suburban residential wonderland filled with large, expensive homes, often sporting ocean views. Generally, if you owned an expensive home in a prestigious neighborhood like West Magnolia and had a refinanced mortgage at 3-4%, you would not be inclined to move somewhere else and buy another very expensive home at a mortgage of 7-8%. For those who did sell, they saw a much smaller pool of buyers than they would have traditionally, and for the same reason–expensive homes are much, much more expensive in a high interest rate environment.
   • 2024 Forecast: Like many high-cost neighborhoods, West Magnolia is prone to volatile price adjustments. While it may not be the hottest market of 2024, we do expect it to experience at least a moderate recovery as buyers look for value in upscale, family-friendly areas.

Market Dynamics: What Buyers and Sellers Can Expect

For buyers, these adjustments mean potentially more accessible opportunities in neighborhoods that were previously out of reach. The anticipated easing of interest rates in 2024 could further enhance the attractiveness of these areas. But, buyers should know that any potential “deals” will not last long. As the market rebounds, so will Magnolia and Queen Anne, with a vengeance.

Sellers, on the other hand, should be cautiously optimistic. A rebound may not immediately bring prices back to their peak but could lead to more stability and interest in these prestigious neighborhoods. Pricing strategies should be aligned with these evolving market conditions to attract discerning buyers.

Conclusion

The prestigious neighborhoods of Central Queen Anne, Lawton Park, and West Magnolia have weathered significant market shifts. As we look towards 2024, there are signs of a moderate rebound, driven by potentially lower interest rates and the enduring appeal of these areas for their proximity to downtown and lifestyle offerings. Understanding these dynamics will be key for both buyers and sellers in making strategic decisions in Seattle’s real estate market.