Optimism wanted. The Seattle condo market update, December 2024
Welcome to the latest edition of The Seattle Condo Market Update. As always, to skip the detailed info and go straight to the stats, you can do so by clicking here. Otherwise, to get the most out of this update, continue reading below!
November 2024 wasn't the most dramatic month within the Seattle condo market. To be fair, Q4 is never really too dramatic regardless of the year as we see inventory decrease. However, that doesn't necessarily mean that buyer demand follows the same downward trajectory.
That piqued my interest, too.
As it turns out, November saw the second highest number of condo units enter pending status in the last 5 months. And we all know why October's numbers stand out, right? Right?
That's because mortgage rates in September hit 18 month lows! Those buyers got off the fence and into contract in October closing either that month, or in November. We have to go back to 2021 to see a November with more units sold than this last month.
Anyone who's been reading my reports understands the challenges the condo resale market has experienced over the past number of years. Some areas (the downtown core) more than others. I've not held back in identifying some of those headwinds including 20 year high mortgage rates, cost prohibitive HOA dues, restrictive HOA rules and regulations, the work from home trend pushing residents out of city cores and into the suburbs, etc. No need to rehash any of that.
Instead, let's look to end 2024 on a positive note identifying some factors that could potentially contribute to a market turnaround.
Here are the stories/trends/headlines I'm watching in 2025:
In no particular order:
1) The return to office trend. We know that Amazon is requiring employees back to the office 5 days a week starting in January. Will others follow? I have to imagine this is a huge positive for the entire downtown commercial core. I'm sure there's some truth to the belief that, as Amazon goes, others will follow.
2) Mortgage rates. Not that I brand myself any kind of mortgage expert, but I never saw rates staying as persistently high as they have the past 2+ years. Looking into 2025, I've learned to temper my expectations for a significant drop so I'm anticipating they'll hover in the 6.5% range, more or less, throughout the year. Inflation, the labor market, geopolitical issues, these are major headlines to continue watching on how this affects the financial markets.
3) People continue to move here. This article from the Urbanist shows that last year King County gained 30,000 new residents, with 60% of them moving inside Seattle. Obviously not every new resident moving here buys immediately. In fact, I'd assume it's a very small number that do, but the more people we get migrating here to outpace those immigrating elsewhere continues to put more strain on our infrastructure of existing housing inventory. Generally a net positive for homeowners. Additionally, this article from Axios shows that the Seattle metro area was tops in the nation for economic growth. Note, this is not including the Boeing workers strike so that was not taken into account.
4) A sane Seattle City Council - Matthew Gardner, former chief economist at Windemere, put it accurately when he said at a recent conference I attended, "the wack-a-doos" are gone. Of course, he's referring to former council members who have since been replaced with more pragmatic representatives who are likely to reverse many of the issues that plagued the city over the past number of years and promote healthier, more business and resident friendly environments. Will they be given long enough terms to undo the damage done by their precedents? Let's hope so.
Onto the stats:
The median priced condo in Seattle for November 2024 was $574,950. That's down 1.3% YoY and down MoM from $580,000. Total active inventory was up 32% YoY while pendings and sold inventory were up 19.8% and 30.6%, respectively. The months of inventory statistic dropped MoM slightly to 4.15 months from 4.22.
Have a wonderful holiday season and new year. Onward!
