What 2024 could bring to Seattle-area real estate
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Residential rents could go up as much as 4% and office space vacancy may continue to rise in the Seattle area, according to local real estate experts who were asked for their 2024 predictions.
Why it matters: The coming year could remain challenging for many, including commercial landlords and would-be homeowners who may not see their dreams realized in 2024, John Manning, managing broker of Re/Max Gateway in Seattle, told Axios.
- He said the lack of residential inventory — due primarily to homeowners with locked-in mortgage rates of 2–3% staying put in current homes — is staggering.
What they're saying: "I have never seen the number of available homes so low," Manning said.
Yes, but: Zillow senior economist Orphe Divounguy predicts prospective buyers in the Seattle area will soon see more homes for sale.
- Homeowners who've been waiting to sell, hoping rates would drop, will finally go ahead and move — meaning more listings coming on the market, but also plenty of competition to buy, Divounguy said.
Zoom out: Nationally, home prices are expected to fall 1% year over year in the second and third quarters, when the home selling season is in full swing, according to Redfin's 2024 predictions.
The intrigue: Much will depend on mortgage interest rates, which could land at around 6% if the economy is steady, Greg McBride, Bankrate's chief financial analyst, told Axios.
- That number could also fall more steeply if the economy stumbles, writes Axios' Brianna Crane.
- Lower interest rates are generally good for buyers but could ultimately push prices higher if demand surges and inventory remains low.
- This will be hardest on first-time buyers in the starter home price range who feel the effects of high interest rates and high prices the most, said Manning.
Zoom in: In King, Pierce and Snohomish counties, very few new projects are expected to break ground in at least the first half of 2024, according to Elliott Krivenko, Seattle's analyst for the real estate information company CoStar Group.
- The completion of new multifamily units will slow, he said, so rent increases will resume with a predicted year-over-year rise of 4%.
Here's a look at some other areas:
Office space
- Office rents will decrease about 7% year over year as office vacancies continue to rise across the area, with an additional 6 million square feet of vacancy predicted over the next year, Krivenko told Axios.
- That would set a record for an annual net loss of occupied office space, he said.
Industrial space
- The region is expected to see 7.5 million square feet of new industrial space completed this year, the second-highest after 2022, when 8.6 million square feet were delivered, Krivenko said.
Retail
- Downtown Seattle still has higher than normal retail vacancies, but that could turn at some point this year, Krivenko said, with the region expected to see more retail mixed-use development.