The median home price in King County topped $1 million last month, a record high even as elevated mortgage rates continue to keep many would-be homebuyers on the sidelines.
Beyond a typically busy spring real estate market, the million-dollar median price highlights the dual pressures Seattle-area home shoppers have faced over the last two years. High mortgage rates have driven up monthly payments and suppressed demand for new homes, which should cool prices. Instead, prices remain high and rising, in large part because there are so few homes for sale in the region.
King County’s median home price last neared $1 million in April 2022, just as interest rates began to climb.
Median prices are up from last year across the region. Even so, prices are rising more slowly than at the height of the pandemic-fueled market, according to May data the Northwest Multiple Listing Service released Wednesday.
King County’s median single-family home price of just over $1 million is up 10% from the same month last year. The jump appears to be driven by the Eastside, where the median house sold for $1.7 million, up 17%. The median house in Seattle sold for $965,000, up 7%.
Even as migration to Seattle has slowed, Seattle and other pricey West Coast markets continue to attract people to high-paying tech jobs, said Zillow senior economist Orphe Divounguy.
“When you have factors that boost demand and factors that suppress supply, then you’re going to get higher prices,” Divounguy said, noting the need for new housing construction.
Median homes sold for $828,000 in Snohomish County, up 6% from May 2023; $560,000 in Pierce County, up 3%; and $580,000 in Kitsap County, up 4%. Median means half of homes sold for more and half sold for less. The prices reflect May’s closed sales, which likely took place about a month earlier.
Condo prices also climbed to a median of $595,000 in King County, up 18% from a year ago. Condos include homes in multifamily buildings and accessory dwelling units, or ADUs, that resemble small single-family homes and are sold as condos.
Buyers are finding little relief from high mortgage rates.
Rates ended the month at about 7%, up slightly compared to the past few months. With higher monthly costs, “the purchasing power of prospective buyers remains constrained relative to a few years ago,” Washington Center for Real Estate Research Director Steven Bourassa said in a news release.
Just how constrained? Many buyers in the region are facing monthly mortgage payments between $4,000 and $6,000.
To afford a median home for sale in the Seattle area at today’s interest rates, homebuyers with a 20% down payment would face a monthly mortgage payment of $5,800, a 10% increase from a year ago, according to Redfin.
A similar analysis from Zillow estimates a $4,000 monthly payment to afford the “typical” mid-tier house in the region with a 20% down payment. That’s 13% higher than a year ago and more than double pre-pandemic payments. (Zillow and Redfin have different methodologies for estimating monthly payments.)
As these dynamics keep some people out of the market, others are still willing to give it a shot.
Tacoma agent Heidi Hurst has seen a recent uptick in clients who are adjusting to higher rates and interested in shopping for a home. At the same time, six of her buyer clients have stopped looking altogether since the start of the year. Some opted to rent instead.
Many buyers and sellers in the market are facing work relocations or other necessary moves, said Hurst, an agent with Windermere Abode.
“We’re in a have-to market, not necessarily a want-to market,” Hurst said.
One factor keeping a lid on inventory is the position many homeowners find themselves in: Sitting on low interest rates they secured in 2020 or 2021. The prospect of selling their home and buying a new one now means taking on a higher rate and higher monthly payment.
The result is the so-called “lock-in effect” keeping people from listing their homes for sale. New listings in the Seattle area remain well below pre-pandemic levels.
But that logjam appeared to loosen a bit last month.
Sellers listed more homes for sale in May than during the same period last year, according to the multiple listing service. That was especially true in King County, where new listings of single-family homes were up 33% and new listings of condos increased 38%.
That boost in inventory “should have an impact in stabilizing price levels over the summer months,” Bourassa said.
As sellers reenter the market, some are starting with list prices that prove too high for today’s market. Even as many homes sell quickly, nearly a quarter of Seattle-area listings had a price cut in May, down from 17% the month before, according to Zillow.
“The pendulum is swinging, but swinging very slowly,” Divounguy said.
