If you've been watching the Seattle real estate market, you’ve probably noticed home prices have increased significantly. But why is this happening now? The short answer: buyer demand is rising while home supply remains low.

Let’s break down the three key reasons why home prices have surged—and what it means for buyers and sellers.

1. Buyers Were Waiting, But Now They’re Back

Over the past year, many buyers paused their home search due to high interest rates. As rates peaked, some decided to wait and see if conditions would improve.

Now, with lower mortgage rates and more confidence in the market, those buyers are jumping back in. This sudden increase in demand is creating more competition, which naturally pushes prices higher.

What it means for buyers: Be prepared for a more competitive market. Having a solid strategy in place—including pre-approval and strong offers—will help you stand out.

2. The Supply of Homes for Sale Is Still Historically Low

Even though the number of homes for sale in February 2024 was higher than February 2023, the overall supply is still far below normal levels.

Why is inventory so low?

• Many homeowners are locked into low mortgage rates. Sellers who refinanced at 3% rates in previous years are hesitant to list their homes and take on a 6-7% mortgage.

• Fewer new homes are being built. The pace of new construction is not keeping up with demand.

• High rental demand means some property owners are holding onto their homes rather than selling.

With so few homes on the market, buyers are competing for limited options, driving prices up.

What it means for sellers: If you’ve been thinking about selling, now is a prime opportunity to list your home and maximize your sale price.

3. Interest Rates Are Coming Down

Mortgage rates likely peaked in the fall of 2023 and have slowly started to decrease. As rates drop, buyers can afford more expensive homes while keeping their monthly payments the same.

Example:

If a buyer could afford a $600,000 home at a 7.5% interest rate, that same monthly payment could now afford them a $650,000+ home if rates drop to 6.5%.

This shift means even more buyers will enter the market, further increasing competition and prices.

What it means for buyers: Waiting for lower rates may not be the best strategy. As rates go down, demand will only increase, making it harder to find and secure a home. Acting sooner rather than later could help you buy before prices rise even more.

What Should Buyers and Sellers Do Next?

For Buyers

You can still win in this market with the right approach.

• Get pre-approved before house hunting.

• Be prepared to act fast on homes you love.

• Work with a skilled agent who can help you negotiate and find off-market opportunities.

For Sellers

If you're thinking about selling, now is the time to list your home while demand is high.

• Position your home correctly to attract multiple offers.

• Use a strong marketing strategy to get maximum exposure.

• Work with an expert agent to ensure your home sells for top dollar.

Seattle’s real estate market is heating up due to low inventory, rising demand, and falling interest rates. Whether you're buying or selling, having the right strategy is essential to navigating this competitive market.