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2023 Real Estate Predictions for Washington State
As we close in on the final weeks of January, many look to the first quarter to signal what to expect for the real estate market in 2023. However, many are suspicious of market change, with the housing market quieting down after an uproar in 2020.
So we’ll cover the national real estate market with specific insights into popular Washington regions.
National Trends
Home sales are declining at significant rates, but that doesn’t mean that a buyer’s market is absolutely around the corner. Instead, the slowed closing rates are due to multiple market factors:
- Time of year: December is notoriously a quiet month for home sales, as many sellers and agents prepare to list new inventory in January. However, that supply could reach demand within a few months.
- Rising interest rates: Interest rates are at a twenty-year high. Pair that with runaway inflation, and many would-be buyers are forced to wait.
- Average market supply: Even while sales decrease, there is still a higher demand for homes than the market can supply.
- Work from Home Changes: Over 85% of the US workforce is now working at least a few days a week from the office. As fewer people are allowed to work 100% remotely, commute becomes an important home-buying factor again. This narrows the market from shopping in any state to shopping relatively close to the office.
National Market Predictions
So, what should a home buyer or seller understand from the current market? Redfin listed twelve predictions for the new year, including:
- Mortgage rates should taper off and drop, closing the year around 6%.
- Builders will continue to focus on multi-family homes, like condos and townhomes.
- Millennials and Gen Z are likely to continue the rental trend.
- Investors will likely take a break through spring, then rebound efforts later in the year.
- People will likely settle locally to work, ending the COVID upheaval of national relocation.
- Home values will drop for a negative year-after-year valuation for the first time in over a decade in the first half of 2023.
- Expect home prices to slowly build up in the second half of the year.
Implications for Local Washington Markets
National trends can help home buyers understand the atmosphere driving home sales. Still, there are always local nuances that can significantly change your home sale or purchase. So local context is just as important as national trends.
The Washington market is slowing, but this change reflects a return to a normal market, not a crash or a bubble bursting. So home prices are predicted to drop slightly, but not to pre-pandemic levels.
Zillow forecasts rising YTY valuation for Washington metro areas.
City | YTY Valuation for August 2023 |
Bellingham |
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Kennewick |
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Longview |
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Mount Vernon |
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Olympia |
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Seattle |
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Spokane |
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Yakima |
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Smaller towns are already declining in inventory, with some rural areas reporting a buyer’s market already.
Looking to Buy or Sell in Washington in 2023?
We are Washington locals, proud of our in-depth, hands-on knowledge of Washington real estate. Contact us at UC Northwest to confidently navigate this changing market for your new chapter in 2023!