As we move more into 2023, let’s see what the forecast for Seattle real estate market is. Find out what’s in store for real estate investors.
Table of Contents
- How Was the Seattle Real Estate Market in 2022?
- What Will the Seattle Real Estate Market Be Like in 2023?
- Should You Invest in the Seattle Real Estate Market in 2023?
- How to Find a Profitable Investment Property in the Seattle Real Estate Market
Since the pandemic, the Seattle real estate market has been strong, but things are now shifting slightly. Housing prices in the Seattle region are higher than a year ago, but the market is staying solid.
However, Seattle may experience a steeper drop than other markets, partly because increasing rates can put mortgage payments out of hand when housing prices are already high. If rents stabilize (or remain the same), the forecast may take a turn during the year.
Home prices are expected to stay constant or in 2023 and may decrease moderately. While pricing will remain a critical element, homeowners will have a far better understanding of what a prospective home purchase would cost.
In this article, you can find more about the outlook on Seattle real estate market trends and the reasons why you should invest in the Seattle market. Moreover, Mashvisor provides the latest data on the Seattle market, so stay tuned.
How Was the Seattle Real Estate Market in 2022?
The pandemic and the Fed’s efforts to get the economy back to normal are primarily responsible for the 2022 Seattle real estate market patterns. Particularly, years of government stimulus and historic admiration have driven the local housing industry to areas few could have predicted.
The following Seattle housing market trends have emerged from the shift in dynamics:
1. Trends in Supply
In 2022, with almost 7,200 active listings in the Seattle real estate market, the Emerald City enjoyed just more than two months of inventory. Supply is down somewhat from the previous quarters. However, rising property prices and borrowing rates were predicted to boost inventory levels.
Regarding the 2022 forecasts, home prices were projected to fall modestly as inventory levels rose. As competition for each listing decreased, sellers lost a bit of control over the decisions they made and were sometimes pushed to lower asking prices.
2. Housing Price Trends
The Seattle real estate market’s housing price trends differ from the national averages. Property values around the country have been continuously rising. On the other hand, Seattle real estate has been slightly declining since the second quarter of 2022.
The contrast did indicate that Seattle was somewhat ahead of the trend, with prices peaking sooner than in most other places. If nothing else, Seattle property values have been high for far too long. Consequently, they were more vulnerable to a downturn, similar to what we experienced the previous year.
3. Trends in Interest Rates
Year on year, mortgage rates statistics nearly doubled. In 2022, the average commitment rate for a 30-year fixed-rate mortgage was 6.92%. According to FRED, rates were as low as 2.98% in the fourth quarter of 2021.
The favorable real estate data resulted from the Fed’s attempt to combat inflation, and it was going up throughout the last year.
4. Investing Trends
In recent years, low loan costs and strong home prices have moved the Seattle real estate investing community into long term rental properties. Borrowing expenses helped offset high purchase costs, but housing prices limited profit margins on speedy flips.
Moreover, low borrowing rates allowed landlords to boost their monthly cash flow. In addition, Seattle’s real estate market tendencies continued to benefit landlords until prices slightly declined.
What Will the Seattle Real Estate Market Be Like in 2023?
Because of the holiday season, December 2022 recorded the fewest new listings, which was excellent news for purchasers. Additionally, mortgage interest rates were lower than they were a month ago.
Since experts expect interest rates to fall soon, homebuyers are already purchasing at market value with the opportunity to refinance when interest rates go down.
Now, let’s see more about Seattle real estate market forecast, as well as its possible trends for the year.
1. Seller’s Real Estate Market
The following housing market trends and statistics are based on listings for single family homes, townhouse homes, and condos on Realtor.com. Multi-unit buildings, land, and other forms of different property are not included.
In November 2022, the median list price for a property in King County was $840,000, a 12% rise from the previous year. Moreover, if the median listing price rises, the real estate market conditions are likely “hot,” and properties will sell faster.
Regarding the 2023 forecast, sellers will gain as prices rise. Houses in King County were sold for around the asking amount in September, and the ratio of sale-to-list price was 98.63%, according to Norada Real Estate Investments.
- With a median listing price of $588,800, Federal Way is the most inexpensive city in King County.
- The median listing price in Beaux-Arts is $2.3 million, making it the most expensive town in King County.
- King County is home to several of the best cities for investment properties with active listings.
2. Seattle Real Estate Market Conditions
Workers at local tech companies like Microsoft and enterprises with large operations in the area, such as Facebook and Google, fuel the Seattle real estate market.
Many of the local employees did not want to work from home (remotely) in small apartments during the pandemic, so they looked for larger residences with office spaces.
In addition, most of them are financially able to compete with other purchasers and drive up the Seattle housing price conditions. Inventory is most limited in the Puget Sound region’s four-county real estate market. Despite a considerable increase in inventory, there are still less than two months of supply.
To summarize the previous month’s figures and statistics, the Puget Sound area remains a seller’s market, with a forecast of fewer than two months of supply. The forecast is a bit below what is needed to meet the number of purchasers.
3. More Apartments in the Seattle Real Estate Market
In 2022, the Seattle region saw a historic number of new apartments completed, and the 2023 forecast says that the trend is expected to continue.
According to CoStar analyst Elliott Krivenko, around 12,000 new market-rate apartments will enter the real estate market in 2023. Many of the luxury skyscrapers coming in downtown and South Lake Union are one of many built in Seattle.
According to CoStar’s forecast, more than 50% of downtown homes give concessions like a free month to lure tenants when rents fall off, compared to only a fifth of homes in the suburbs.
According to Krivenko, the licensing and building of new apartment developments have begun to slow down despite all of the new homes. The forecast will become apparent as time passes, since building permits and construction might take years. He added:
“Expect things to slow down by 2024.”
Should You Invest in the Seattle Real Estate Market in 2023?
Here, we will tell you whether or not you should invest in the Seattle real estate market. But before that, below are the real estate statistics for Seattle, Washington, from Mashvisor’s December 2022 location data:
- Median Property Price: $877,986
- Average Price per Square Foot: $758
- Days on Market: 101
- Monthly Long Term Rental Income: $2,589
- Long Term Rental Cash on Cash Return: 1.66%
- Long Term Rental Cap Rate: 1.67%
- Price to Rent Ratio: 28
- Monthly Short Term Rental Income: $3,198
- Short Term Rental Cash on Cash Return: 1.46%
- Short Term Rental Cap Rate: 1.47%
- Short Term Rental Daily Rate: $192
- Short Term Rental Occupancy Rate: 60%
- Walk Score: 61
Pros and Cons of Investing in Seattle Long Term Rentals
You must know what you’re walking into to invest in the Seattle real estate market. Below, you can find key pros and cons when it comes to investing in long term rental in Seattle, Washington.
Pros of Investing in Seattle Long Term Rentals
Here are some advantages of investing in the Seattle real estate market in 2023:
- Lots of good potential tenants in Seattle: Because the real estate market is competitive, you will have a plethora of outstanding prospective renters to pick from. Simply choose the ones who will cause the minor problems and who you believe will be most trustworthy to pay rent in the long term.
- Housing is in high demand: Seattle has grown in popularity over the last decade, which means that total housing demand is relatively high. As a result, you will always have renters who wish to rent your home for many decades. They will provide you with a solid level of income security.
- Despite inflation, Seattle’s economy is good: Seattle is also a favorable economic location that draws highly competent individuals from around the world. It is expected to continue as an important economic hub for several years. Many individuals with decent employment will apply to rent your houses in the long term.
Cons of Investing in Seattle Long Term Rentals
Here are some disadvantages of investing in the Seattle real estate market in 2023:
- Seattle real estate is expensive: One disadvantage of investing in the Seattle real estate market is that property prices are already high, rising dramatically over the last decade.
- Homelessness as a big issue: Another downside of purchasing property in Seattle is that homelessness is a major issue likely to worsen due to housing scarcity.
- Locals can no longer afford Seattle: Many residents may be compelled to move from Seattle sooner or later due to unaffordable housing and rent rates.
Pros and Cons of Investing in Seattle Short Term Rentals
It is good to be prepared before you decide to invest in the Seattle real estate market. It’s why we compiled a list of pros and cons regarding short term rentals in Seattle.
Pros of Investing in Seattle Short Term Rentals
See some of the advantages of short term rentals in the Seattle real estate market below.
- Seattle’s population is developing rapidly: It is an excellent indicator not only because it demonstrates the city’s high degree of appeal but also expanding population. And it equals increased demand for rental homes, which may lead to higher property prices and rentals in the future.
- Tourists like visiting Seattle: They love Seattle, which is good for real estate investors since you may rent your home to them. Or, they will increase demand for housing, which will raise short term rental prices.
- Repairs won’t reduce returns: They will play a minimal factor in your cash flow estimates in Seattle due to the high property values and rentals.
- Rent control regulation is minimal: Seattle’s rent control laws are lax. So, landlords may raise rates quickly and acquire properties at low costs to make them more profitable.
Cons of Investing in Seattle Short Term Rentals
Below you can find some disadvantages when investing in short term rentals in the Seattle real estate market.
- Rents may not rise much further: Because property prices and rents have risen significantly in recent years, rent growth may decrease. It will make your Seattle real estate investment less beneficial in the long run.
- Tenants must endure chilly, wet winters: Another reason not to invest in Seattle real estate market is that your renters will need to cope with harsh winters. Numerous people like the sun, so purchasing the best investment property in warmer places may make more sense in this situation.
- Seattle’s shady neighborhoods: Seattle, like many other large cities, has numerous sketchy neighborhoods. You should be aware of it so that you do not purchase property in areas where no one wants to reside.
How to Find a Profitable Investment Property in the Seattle Real Estate Market
Due to heightened competition, finding a lucrative investment property in the Seattle real estate market in 2023 might be difficult. It is, nevertheless, doable if you adopt the right approach and tools. This is where Mashvisor comes to help.
1. Complete Your Research
It is critical to conduct research on the market before investing in real estate. Examine the most recent trends and statistics to understand the industry better. If everything goes as planned, it’s safe to contemplate investing in that region.
In such a scenario, you would like to know the median property price in Seattle real estate market. You should also look at the vacancy rate, rental rate, cash and cash return, and cap rate. The figures mentioned above and many more may be found in the Seattle location data previously given above.
In addition, keep up to speed on market regulations and norms so that state and local authorities do not catch you off guard. A skilled real estate lawyer can assist you.
Related: What Is a Good Cash on Cash Return?
2. Locate Good Neighborhoods
Examine the area in which you intend to invest as well. Not every neighborhood is the same. Mashvisor’s real estate heatmap will help you locate top-performing communities based on your desired parameters. It will assist you in determining which location will give you the most return on your investment.
If you choose a decent area on your own, you must thoroughly examine it to determine if the neighborhood has good schools, facilities, and security. However, if you utilize Mashvisor real estate app, you may identify areas with all the necessary amenities.
3. Identify Profitable Properties
After you choose the best neighborhood, the following stage is to locate lucrative homes to invest in. Mashvisor’s Property Finder tool makes that attainable.
Mashvisor’s Property Finder may assist investors in locating homes in every real estate market in the US. The software reduces the time spent looking for properties, so you don’t need to spend weeks or even months seeking.
Are you ready to invest in the Seattle real estate market? Start searching for profitable properties by taking advance of Mashvisor’s 7-day free trial.
Seattle’s real estate market is decent, with good demand for houses. Seattle is experiencing population growth, which shows little to no signs of slowing. The population expansion may increase the demand for homes and strengthen the local real estate market. As previously said, it is a seller’s market with little inventory and high demand.
For some investors, the Seattle real estate market might be difficult. However, you can avoid the obstacles by utilizing the finest real estate platform, such as Mashvisor. The platform will help you find the most lucrative property available.
To successfully invest in the Seattle real estate market, schedule a demo now.