Amazon to the rescue? The Seattle condo market update, January 2025
Welcome to the latest edition of the Seattle condo market update. As always, you can jump right to the stats by clicking here. To get the best out of the data with context, I urge you to continue reading below.
As of earlier this month, Amazon's RTO (return to office) mandate has been in effect requiring employees to work from the office 5 days a week. Just like the old days, remember those?!? This should hardly come as a surprise as Amazon had been gradually requiring workers back after granting WFO orders during the height of the pandemic fueled shutdown. A voluntary return then changed to a hybrid model and now we're back to RTO 5 days a week.
Some have opined with conspiracies as to the real motivation for this mandate. Some of my favorites have been:
This was a politically greased move. The city of Seattle and their leaders colluded with Amazon to require workers back to the office in order to help revitalize downtown businesses and culture.
My favorite conspiracy suggests that the mandate was calculated to induce resignations. Rather than announce layoffs, which is never good for employees or employers, perhaps requiring everybody back to the office 5 days a week, a move Amazon knew was already unpopular with many of their employees, would induce those employees into resigning, thus avoiding having to execute layoffs themselves? That doesn't sound too crazy.
Whether or not there's some truth to these conspiracies, we might never know, but this mandate could very well be the spark needed to ignite a resurgence in the downtown Seattle condo market. A resurgence that's badly needed.
The years of 2023 and 2024 were the LOWEST number of condos sold in the downtown core (downtown, Belltown, lower Queen Anne, Capitol Hill, First Hill, etc) since 2010-11! For those of you unfamiliar with ancient history, 2010-11 was the absolute bottom of the housing market due to the Great Financial Crisis imploding a few years prior.
The median days on market for a downtown core condo reached 40 days twice in 2024. While you may be thinking that doesn't sound that bad, keep in mind this is just data on the condos that did sell. MANY, hundreds, if not thousands of condos were listed in 2024 that never ended up selling. Perhaps a better figure would be to look at the months of inventory stat.
Remember how rough 2020 was for the downtown condo market and all the headwinds sellers faced then? 2024 pretty much told 2020 to "hold my beer". Not that downtown conditions were anywhere as out of control as they were in 2020, but for one reason or another, buyer demand faded and the months of inventory statistic reflected this. Only one month in 2020 was there a month of higher inventory than 2024 (August 2020 4.9 vs August 2024 4.7).
More abstractly, there were roughly 33% fewer sales in 2023 and 2024 (averaged) than in 2020. Furthermore, total sales in 2010-11 (averaged) were only 26.5/units more per year than in 2023-24. That's barely 2 sales a month! This, I believe, is 100% related to affordability.
I believe that condos have been disproportionately impacted by the housing unaffordability crisis relative to single family homes. Even if we assume values are stagnant (not necessarily the case, let's just assume that's the reality) HOA dues in many buildings have skyrocketed to cover increases in taxes and insurance. This is in addition to mortgage rates remaining elevated (currently we're hovering near 7 month highs with rates averaging 7.25-7.5% for owner occupied condos). What does downtown living offer to offset such a significant expense? Perhaps proximity to an office one is required to spend 40 hours/week at? As Amazon goes, maybe the rest of the tech industry follows?
That being said, as I'm in the middle of this report, I'm learning that META (Facebook) just announced a layoff of 5% of it's workforce. I don't see where those jobs are located (I'd assume mostly in the Bay Area), but it's possible some are in the Seattle area. More locally, Redfin also just laid off 46 employees, too. Not to be outdone, but their competitor, Zillow, also announced layoffs. If/how this impacts the local housing market will remain to be seen. I doubt these collective layoffs will make much, if any, impact, but I'm already hearing of some local buyers pausing their home search until they get more clarity in the security of their employment.
Onto the stats: The median priced Seattle condo in December 2024 was $550,000. That was down 6% YoY and down MoM from $575,000. Inventory YoY was up 40.9%, yet the months of inventory settled at 2.98 months, which is down from 4.15 the month prior. In fact, the months of inventory has not been this low since March.
One final thing to report: Seattle Mayor Bruce Harrell's One Seattle Plan, aimed at increasing density by rezoning many neighborhoods in Seattle to make them conducive for multi-story and multi-family buildings, is still progressing. If you'd like to comment, and/or keep track of how this is progressing, click here. As the co-president of my neighborhood community council, we're getting LOTS of questions from neighbors and it's good info for all Seattleites to have.
I hope you had an amazing holiday, New Year, and have an awesome 2025 planned.
