According to the Census Bureau’s City and Town Population Totals: 2020-2021, Seattle is now the 18th largest city in the United States, with a population of 733,919, as of July 1, 2021. It sits above Denver (population 711,463) and below San Francisco (population 815,201). Seattle has experienced stunning growth in a short period of time. From 2010 to 2020, Seattle’s population increased by 21.1%, from 608,660 to 737,015, before dropping slightly by 0.4% from 2020 to 2021. Part of the reason for Seattle’s spectacular growth from 2010 to 2020 was due to the expansion of the city’s tech industry, becoming a sort of “Silicon Valley of the Pacific Norhwest.”
Not surprisingly, given this significant growth, the Seattle housing market experienced a dramatic rise in home prices and demand. Based on data sourced from RedfinRDFN 0.0%, five years ago, in October 2017, the median sale price for the Seattle metro area was $506,000. Five years later, in October 2022, the median sale price in the Seattle metro area had reached $762,500 — an increase of 50.7% in five years. Yet, like so many other housing markets across the country, rising mortgage rates in 2022, has dampened housing market activity in many of the cities that comprise the Seattle metro area.
Read on to find out key trends developing in the Seattle housing market.
Evaluating the data from Redfin, the Seattle metro area housing market is showing mixed signals of continued strength as well as weakening activity in the cities that comprise the Seattle metro area. In the city of Seattle proper, home prices have managed to sustain their year-over-year increase even as other housing markets, such as the Bay Area housing market, have displayed outright declines. The median sale price in the city of Seattle housing market increased by 7.6% year-over-year: From $785,000 in October 2021, up to $845,000 in October 2022.
However, there’s an interesting divide among the core cities of the Seattle metro area. We analyzed 56 core cities of the Seattle metro area, and 28 of them have witnessed year-over-year declines in home prices, while another 28 have seen year-over-year increases in home prices. The city in the Seattle area that experienced the biggest year-over-year growth in home prices was Enumclaw, which lies to the southeast of Seattle proper. The median sale price in Enumclaw grew from $547,000 in October 2021 to $828,000 in October 2022, for an increase of 51.4% in just one year.
On the other end of the spectrum, the city that experienced the biggest year-over-year decline in home prices was Lake Forest Park, which is just north of Seattle: From $1,009,400 in October 2021, down to $588,500 in October 2022, for an annual decrease of 41.7%. The city of Normandy Park, slightly south of Seattle, saw its median sale price drop by 37%: From $1,032,500 in October 2021, down to $650,000 in October 2022.
Thus, overall picture of the Seattle housing market is very mixed indeed. Many cities in the greater Seattle area have proven remarkably resilient to the disruptions caused by rising mortgage rates in other American housing markets. And the cities that witnessed year-over-year growth in their home prices weren’t simply affordable housing markets that got more expensive. Issaquah, for example, already had a high median sale price of $871,000 in October 2021, before it climbed by nearly 19%, to reach more than $1 million in October 2022.
Seattle Housing Market: Inventory and Days on Market
When there’s a slowdown in housing market activity, often there occurs an increase in available for-sale inventory. While home prices have increased in 28 cities in the greater Seattle housing market area, only two cities experienced a year-over-year decrease in available inventory: The cities of Gold Bar and Sultan. Everywhere else, housing inventory has increased from 2021 to 2022, and in some cities by quite a lot.
After most cities in the greater Seattle housing market area witnessed dramatic falls in available inventory from October 2020 to October 2021, they have proceeded to see huge percentage increases from October 2021 to October 2022. And it’s important to note that an annual increase of 100% means that available inventory doubled.
Another important factor in housing market activity is the length of time a home for sale spends on the market before being bought up. In the Seattle metro area as a whole, the median number of days on market of a home for sale rose from 7 days in October 2021 to 21 days in October 22, equal to an annual increase of roughly 200%.
Related to housing inventory is a market’s number of months of supply of homes. This metric tells you how long it would take supply to be bought up if no new homes came on the market. Based on the Redfin data, the months of supply of homes in the Seattle metro area rose from 0.5 months in October 2021 to 2 months in October 2022, which is a year-over-year increase of 300%.
The Bottom Line: Seattle Housing Market Forecast 2023
Based on the Seattle housing market data, the trajectory that many cities in the Seattle metro area are following seems to point to an increasing slowdown in homebuying activity. Though the Fed might loosen up on its aggressive rate hikes, leading mortgage rates to fall a bit, there is the looming specter of a recession coming in 2023. America’s first non-pandemic induced recession since the Great Recession of 2007-2009 would most likely cause a major cooling off in the Seattle housing market. Affordability has already been pushed to the brink by the rise in mortgage rates and an economic downturn, with its consequent rise in unemployment, would probably slow housing market activity even more than it already has.
All that being said, the Seattle housing market has proven more resilient than some other notable housing markets in the nation. An outright, devastating housing crash seems unlikely, but a soft-to-medium landing seems probable.