Seattle-area home prices fell in 2023 after years of growth

Seattle-area home prices dipped last year at levels unseen in more than a decade, signaling the hit the region’s housing market has suffered since high mortgage rates dampened buyer and seller enthusiasm.

The price drops, reflected in year-end data the Northwest Multiple Listing Service released Thursday, are a sign that the Seattle-area housing market is “finally coming back to reality,” said Mason Virant, associate director of the Washington Center for Real Estate Research at the University of Washington.

The “off-the-charts” double-digit price spikes of the early pandemic years have given way to a smaller “correction,” Virant said.

The 2023 cooldown played out differently across western Washington. While home prices ticked up in more affordable rural counties, such as Clallam, Cowlitz and Skagit, they dipped 3% to 4% in counties closer to Seattle.

The median home price reached about $876,000 in King County, down 3%; $737,500 in Snohomish County, down 4%; and $535,000 in Pierce County, down 3%. This was the first time median home prices fell year-over-year in all three counties since 2011. (King County prices last dipped by 1% in 2019.) 

One outlier in the region was Kitsap County, where the $540,000 median price was flat from 2022 to 2023. 

But even as prices fall, would-be homebuyers are finding little comfort.

Across all four counties, a household earning the county’s median income cannot afford the mortgage on the median priced home, according to a Washington Center for Real Estate Research housing affordability index.

In fact, median households can afford the median priced home in only three of Washington’s 39 counties. The analysis, using data from the fall, assumes a 20% down payment and defines affording a payment as spending no more than 25% of gross household income on the mortgage payment.

The price dips aren’t enough to offset the rates at which prices skyrocketed early in the pandemic and until 2022. The median home in King County now costs 30% more than in 2019. 

With the rise of remote work, outlying areas have experienced even more dramatic growth since 2019: 48% in Snohomish County and 45% in Pierce.

Facing high prices, some buyers turned to more affordable condos.

Although single-family home prices dropped in King County, the median condo sold for $509,000 in 2023, up 2% from 2022. 

That was largely driven by Seattle, where the median condo price ticked up 4% to $558,000. On the Eastside, condo prices dipped 1% to $617,000.

Condos in Seattle can be units in condo towers or accessory dwelling units — essentially small single-family homes — sold as condos under city zoning rules.

Home-shoppers who could have afforded single-family homes in 2020 or 2021 are now priced out of those markets and looking to more affordable condos, Virant said.

Few listings, fewer sales

Fewer homes sold in 2023 than in prior years, when ultra-low interest rates allowed many new buyers to jump into the market. The market began…