What are our Seattle real estate market predictions for 2023? We may not see double-digit growth in home prices like we saw last year, but we could still see some increases this year. It’s very possible we will see interest rates ease up, although they will never be as low as 3.5% again, for example. Once this happens, the market will start to move faster, and you may miss out on buying in a slower market. We predict that the 3rd and 4th quarter could have more frenzied buying than we are used to. This year could be a great time to buy your first home as there is a lot less competition (and in some cases, none). It could also be an excellent time to sell your first home and buy your second, aka “buying up.”
Many buyers who have been sitting on the sidelines for the past couple of years are ready to make the jump. They understand that interest rates will be what they are for a while. Buyers can use this slower market to make informed and methodical decisions.
Roy, What Kind of Coffee Are You Drinking Today?
Today, Kim and I are drinking the Forestal Columbia Roast from Máquina Roasters out of Oakland, CA. The tasting notes for this coffee are listed as “Raisin, Chocolate, and Marshmallow.” The beautiful packaging matches the smell and taste of this light but brute roast. It reminds me of warm spring mornings where you can feel the days are getting longer. This is one of the best coffees I’ve had in a long time, and that’s saying something.
I’m brewing it through this beautiful glass pour-over system from Pure Over. I got this as a Christmas gift from Katy, and I love it. There is no paper filter, so it took a little bit of work to dial in the grid settings, but this setup is fantastic. It’s my go-to coffee-making setup these days and will likely be so for the foreseeable future.
Coffee with Roy | Seattle Real Estate Market Predictions for 2023
I’m Roy Powell with Team Diva at Coldwell Banker Bain. Last year I started making these videos to help explain the Seattle real estate market and to take some time to enjoy a nice cup of coffee. As we start to ease into 2023, I want to talk about the concerns that buyers and sellers have going into a different market than we have had the past few years.
My clients, friends, and family ask these types of questions constantly. Should I buy it right now? Should I sell? Does moving make sense for my situation? To answer these questions and go over our predictions for 202,3 I would like to introduce you all to my teammate, Kim Colaprete. Kim has been a real estate agent in Seattle for 20+ years. She and Chavi started Team Diva back in 2010 and we have been working together for 8 years now! Wow! Thanks for joining me, Kim.
What are the fears people have in this market?
Roy: Everyone is watching the financial markets for what we should do next. We have been trained to watch the stock market and profit reports to predict the best time to buy or sell a house. But I don’t think they are linked as closely as everyone would want them to be. Buying and selling is such an emotional decision and should be treated as such. I don’t think we will see the double-digit growth in home prices this year the way we saw last year. However, we could still see some slight increase in prices over the year. You may still have to compete to win some houses but I think the market will have smaller peaks and valleys than in years prior.
Kim: I totally agree, Roy. The market is quite unpredictable, especially this early in the year. Will there be as many buyers as last year? Will we get the normal Spring peak in activity? And how will the inventory change throughout the year? Right now there are more condos and townhouses than buyers for those properties. But there are still very few detached single-family homes on the market and we have already seen homes sell in multiple offers this year.
Roy: I think politically we are going to see a lot of discussion about housing at the state and local level. There are 5 bills at the state level that are looking to tackle housing affordability either through zoning, lot splitting, getting rid of parking minimums, or backyard cottages. There are even more about rental caps and registration to help keep apartments affordable. Our electors are looking to make buying a home more affordable which I think will scare some current homeowners into thinking their values will go down. Spoiler alert, they won’t!
Kim: That’s a great point. Housing affordability has become a massive challenge in our city and in our county. But the fear that creating more affordable housing for those who need it will in any way impact home values is unfounded.
What are the risks in this market?
Kim: I do think one of the biggest risks of this 2023 market is that folks who want to buy try to chase the market down and sit on the fence too long. Especially as interest rates start to ease up more and more over the year—and they will. They may never be 3.5% again any time soon but they will for sure come down. Once that train starts, we have no idea how fast it will move. If you are waiting for rates to come down to the bottom before buying, you could miss the mark and lose out on buying in a cooler market. One of my real estate predictions for 2023 is that we could see a more frenzied 3rd and 4th quarter than we are used to. So no “deal season.”
Roy: True, Kim. That type of seasonal shake-up and unpredictability could have sellers facing a slower market on the sale side. Then, they could see a faster market when they turn around to buy. A home’s value in any market is what someone is willing to pay when the home is for sale. We of course have tools to help predict this. But in reality, it takes sellers willing to sell and buyers willing to purchase to make a deal come together. 2023 could be a market where buyers are more cautious earlier in the year and less so later on.
What are the opportunities in this market?
Roy: The opportunities in this market are that this could be a great time to buy your first home. It could also be a great time to buy your second home and sell your first. We call this buying up. If you have equity in your current home that you can use to buy a larger home or in a different location, this could be a great time to do it.
Kim: Very true. It’s a great time for folks who have solid equity and want to make the jump up to go for it. Sure, you may not sell your home for thousands over asking. But you could also take advantage of this more stable market to make that leap up. It’s also an excellent time for condo and townhouse buyers. There are few buyers in these markets and higher inventory so you might be able to get a deal. Just make sure you are buying in a solid condo building with a strong HOA and good reserves. And if you are buying a new construction townhouse, make sure you are buying from a reputable builder.
Who do you predict is going to take advantage of the opportunities in this market?
Kim: I think this is an excellent market for first-time buyers. They have an opportunity to buy without much competition and in some instances, with no competition. No waiving financing or inspections. Heck, I think we have written more inspection responses these past few months than in the past few years. I don’t think that trend will go away anytime soon. This could also be a great time for investors. Snagging a condo or a townhouse as a long-term rental investment is a great idea. Just make sure you find yourself a good property manager. And of course, we can definitely help you on that front!
Roy: I think that buyers who have been sitting on the sidelines for the past couple of years are ready to make the jump. They understand that interest rates are going to be what they are. They have watched all of their friends buy houses in the past few years and those friends did not have the ability to inspect or have a financing contingency. I also think there is an opportunity for buy-up buyers who saw home prices rise too quickly to jump to their next home. They can now use this slower market to make an informed and methodical decision on their next house. Use your equity to buy what you really want. Kim, You also made a great point about investors.
February 2023’s Seattle Real Estate Market Update aka the Demand Rate
If you’ve already checked out a few of my Coffee with Roy videos and blogs, then you know that I always look at the Demand Rate in my market updates. If you need a refresher, no problem! The Demand Rate is a helpful way to see how many buyers are in the market at any given time. Check out “Coffee with Roy: February 2022 Seattle Real Estate Market Update” to see how the demand rate is calculated. Keep in mind that the demand rate can change day by day, and neighborhood by neighborhood.
February 2023 Seattle Real Estate Market Update aka The Demand Rate
- Luxury Homes – Demand Rate 10.75
- Single Family Homes – Demand Rate 7.51
- Condos – Demand Rate 2.19
Below, I’m going to share exactly what each of these numbers actually means.
Luxury Homes – Seattle Real Estate Market Update
We consider Luxury Homes to be homes valued at $3M or above. Luxury Homes in Seattle are now at a demand rate of 10.75. There are currently 43 active homes in this market and only 4 pending sales. The luxury market inventory continues to climb.
Single Family Homes – Seattle Real Estate Market Update
Right now, single-family homes have a demand rate of 7.51. There are currently 533 active homes in this market, and 71 pending sales. This is significantly higher than it has been in the last year.
Condos – Seattle Real Estate Market Update
The demand rate for condos is at 2.19. There are currently 357 condos on the market and 163 pending condo sales. This is really stable for the condo market.
Thank You For Watching Coffee with Roy | Seattle Real Estate Market Predictions for 2023
What are our Seattle real estate market predictions for 2023? While we may not see the double digit growth that we saw last year in home prices, we could still see increases this year. It’s also very possible that interest rates will ease up, but keep in mind they will never be as low as they were. Once interest rates go down a bit, the market will start to heat up. Once that happens, you may miss your chance to buy in a slower market. We predict that the 3rd and 4th quarter could have a hotter market than we are used to.
This year could be a great time to buy your first home. This is in part because there is a lot less competition (and in some cases, no competition!). It could also be an ideal time to sell your first home and buy your second home, aka “buy up.” Many buyers have been sitting on the sidelines for the past couple of years, and they are ready to make the jump. These buyers understand that interest rates will be what they are for a while. Smart and savvy buyers can use this slower market to make informed and methodical decisions.
Links to Learn More
Want to dive even deeper on everything we talked about? Where are links where you can read related articles and review data:
- WA bills seek to cap rent hikes and register rentals, landlords object – The Seattle Times
- Washington’s 2023 Middle Housing Bill, Explained
- The Vast Potential of Pairing Transit and Homes in Washington State
- New Washington Bill Would Legalize More Homes and Businesses by Transit
- Washington Bill Would Boost In-law Apartments Throughout the State
- Washington Lot Split Bills Would Create Starter Homes, Support Community Stability
Previous Episodes of Coffee With Roy:
- February 2022 Coffee With Roy | Seattle Real Estate Market
- March 2022 Coffee With Roy | Seattle Real Estate Market
- April 2022 Coffee With Roy | Seattle Real Estate Market
- May 2022 Coffee With Roy | Seattle Real Estate Market
- June 2022 Coffee With Roy | Seattle Real Estate Market
- August 2022 Coffee With Roy | Seattle Real Estate Market
- September 2022 Coffee With Roy | Seattle Real Estate Market
- October 2022 Coffee With Roy | Seattle Real Estate Market
- November 2022 Coffee With Roy | Seattle Real Estate Market
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