Jan 3, 2023 - Real Estate

Forecasting Seattle's real estate market in 2023

Illustration of the year 2022, with a keyhole for a zero, which zooms in so you can see through the keyhole to the year 2023.

Illustration: Brendan Lynch/Axios

Local experts predict 2023 will bring lower home prices to the Seattle-area market, writes Axios' Sami Sparber.

Why it matters: In one of the nation's most expensive housing markets, would-be buyers and sellers are avidly watching market trends.

Details: Inventory in King County is expected to be "higher than we've seen over the past three years," Matthew Gardner, chief economist at Seattle-based Windermere Real Estate, tells Axios.

  • J. Lennox Scott, CEO of John L. Scott Real Estate, forecasts a peak of new inventory during the pre-summer months of May and June.

Quick take: Gardner predicts home prices will continue to slow following the frenetic markets of 2020 and 2021.

  • "With inflation starting to cool, mortgage rates are modestly pulling back, which is good news for home buyers," Gardner says.
  • Buyers can expect a wider selection of homes to choose from, plus fewer multiple-offer situations with premium pricing, Scott says.

Yes, but: Those buyers who do get in the market will have more negotiation power. But high interest rates and other economic factors may chill demand, says John Manning, managing broker at RE/MAX Gateway.

  • "At the same time, homeowners that purchased or refinanced in recent years will be less likely to sell, with many opting to hang onto their low mortgage rates," Manning tells Axios.

Zoom in: Zillow senior economist Jeff Tucker told Axios Seattle that houses are staying on the market longer and buyers are finding friendlier conditions and less pressure to sign away contingencies such as an inspection that could reveal problems with the home, he said.

  • Boomers and other high-equity homeowners are in a good position to sit tight or sell, though admittedly at off-peak rates, and move to more affordable or warmer climes, Redfin deputy chief economist Taylor Marr told Axios Seattle.

But, but, but: Affordability remains a huge challenge for want-to-be homeowners who missed last year's low-interest-mortgage boat.

By the numbers: The interest rate hikes seen since last year translate into monthly mortgage payments that ballooned by more than 50% in 2022, Tucker said.

  • The monthly mortgage payment on a $684,900 loan in September 2021 — when the 30-year-fixed rate was 2.75% — penciled out to $2,796. At 6.4%, the rate as of yesterday, monthly payments soar to a whopping $4,284.

Be smart: A nice drop in interest rates would help would-be owners the most, said Tucker, but that's not expected in 2023.

  • In the meantime, homeowner hopefuls can prepare for better shopping days by paying down debt and working on credit scores, he said.

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