2024 Market Recap & 2025 Market Predictions: A New Normal for Seattle Real Estate?

2024 Market Recap

As we wrapped up 2024, the Seattle-area real estate market cooled significantly, with December showing a marked slowdown in activity compared to earlier months. This seasonal dip is not uncommon, but it comes against the backdrop of broader challenges for buyers and sellers alike. Despite three interest rate cuts by the Federal Reserve over the course of the year, mortgage rates remain stubbornly high, hovering around 7%.

Steven Bourassa, director of the Washington Center for Real Estate Research (WCRER) at the University of Washington, summed it up nicely: “The 30-year mortgage interest rate was actually higher at the end of 2024 (6.85%) than at the end of 2023 (6.61%). We may well be experiencing the pains of adjusting to a new normal, with persistent interest rates of 6% or higher.”

Affordability challenges continue to mount, with home prices up 4.3% year-over-year. For many prospective buyers, rising rates combined with climbing prices make purchasing a home feel out of reach. Yet, there are signs that the market is adapting. December saw a 25% increase in active listings and a 19.8% jump in sales transactions compared to December 2023, suggesting that both buyers and sellers are finding ways to navigate this higher-rate environment.

The big question: Are we settling into a new normal? Maybe.

2025 Market Predictions

I understand why prospective buyers and sellers are pumping the brakes on a 2025 real estate transaction. However, I feel the Greater Seattle real estate market in 2025 can present great opportunities for both buyers and sellers, and here's why:

For Buyers

1. Increased Inventory

   Active listings have been on the rise since late 2024, giving buyers more options than in previous years. This uptick in inventory provides breathing room in what has been an ultra-competitive market. While there is very limited inventory at the moment, we expect to see an uptick of available homes for sale by mid-February.

2. Price Growth Stabilization

   While home prices in Seattle have risen modestly (4.3% year-over-year in 2024), the pace of appreciation has slowed. This shift could make entering the market more feasible for first-time buyers or those moving up. With home prices continuing to rise despite stubborn interest rates (see below), it will only become more expensive to enter the market. There is a cost to waiting, even though interest rates are “high” compared to 2020-2022, freshly minted homeowners are still gaining equity.

3. Mortgage Rates Will Remain Around 7%

   Economists expect interest rates to remain near 7% for the rest of 2025. Although this may not be the most favorable news, at least rates have stabilized. This stability allows buyers to plan their monthly expenses and confidently shop for properties. This will also lend to more effective strategic negotiations with sellers and might lead to price concessions from those keen to finalize transactions.

For Sellers

1. Continued Demand

   Seattle remains a destination city with strong demand from a growing workforce, especially in the tech and biotech sectors. The need for housing isn’t going away anytime soon.

2. High Market Activity

   Sales transactions saw nearly a 20% increase in late 2024 compared to the previous year, signaling that buyers are still active and adjusting to higher interest rates. Sellers who price their homes competitively can attract motivated buyers.

3. Opportunity to Cash In on Equity

   With home prices still climbing steadily, many homeowners are sitting on significant equity. Selling in 2025 could be an opportunity to take advantage of that, whether to upsize, downsize, or relocate.

4. Less Intense Competition

   While inventory is increasing, it hasn’t flooded the market. I know a handful of buyers sitting on the sideline because they’re waiting for the “something special” property. And trust me, they’re willing to pay good money to get their hands on their dream home! Sellers still have an advantage if they prepare their homes well and price them strategically.

You know me well enough to know that I would never pressure you into a home sale or purchase. There is truly only one best time to buy or sell a property, and that is when you’re ready. You can try to time the market all you want, but I’ve very rarely seen that work out perfectly!

Call/text/email, you know how to reach me. Let’s chat about your next move so that when you’re ready, you will have done your homework.