King County home prices plunge 10% as Northwest housing market shifts

Seattle-area home prices dropped again in March, signaling another shift from the pandemic-fueled market, yet homebuying still remained out of reach for many.

The median single-family home in King County sold for $840,000 in March, down about 10% from a year earlier, according to new data released Thursday by the Northwest Multiple Listing Service. Prices dropped sharply on the Eastside, where the median home price plunged 17% to $1.4 million.

The price drops reflect the market shift underway since the Federal Reserve began increasing interest rates last summer. Rate hikes and economic uncertainty led buyers and sellers to hold off, reducing the number of listings and sales compared to the same time a year ago.

Nearby counties are reporting similar trends.

The median Snohomish County home sold for $724,000 in March, down 9.5% year over year. The median Pierce County home sold for $526,000, down 6%. The median Kitsap County home sold for $517,500, down 4%. 

Real estate agents, home shoppers and economists say the effects of the slowdown vary in different corners of the Seattle market.

Homes priced between $1.5 million and $2 million are “flying off the shelves,” said Seattle RE/MAX broker John Manning. But townhomes, typically a more affordable option for first-time homebuyers, are “sitting around unsold,” Manning said.

Tech layoffs in the Seattle area have shaken the confidence of younger tech workers who would be townhome buyers, Manning said. That’s especially true for tech employees on work visas, who can be forced to leave the U.S. if they don’t find another job.

“They are sitting back and not getting in the market as much because they’re worried about where they will be employed,” Manning said.

The result is a mixed bag for home shoppers. 

On one hand, higher rates and economic uncertainty lock some would-be buyers out entirely. Although mortgage rates have dipped from their peak last fall, the average rate of 6.3% is more than 1.5 points higher than a year ago and double the rate in early April 2021. 

Higher rates translate to higher monthly payments and less buying power for home shoppers. The monthly payment on the typical Seattle-area home with a 20% down payment was about $3,500 in March, nearly $500 more per month than last March, according to Zillow.

On the upside, buyers who are still shopping face less competition.

Patrick Hill, a retiree who was renting in Seattle’s Othello neighborhood, encountered calmer market conditions when he bought a nearby townhouse in February. 

After moving to Seattle five years ago, Hill said he had all but written off the possibility of buying a home in a city where median prices hovered above $800,000. “It just wasn’t going to happen,” he said. 

But when Hill found a three-bedroom townhome near his rental listed in the $500,000 range, “I told my wife, ‘You’re not going to believe this,’” he said. The couple bought the home for slightly above its list price, competing with another buyer, but without the dramatic bidding wars Hill had read about in recent years.

“It was the price point that was the most important factor for us,” Hill said. 

The condo market is seeing mixed trends, too.

The median condo price in King County was $507,000 in March, down 6% from a year earlier. The Eastside recorded a 7% drop in condo prices, while Seattle saw prices tick up 5%.

The increase in Seattle condo prices was an outlier among the rest of King County. 

Windermere broker Javila Creer, who specializes in condos, attributed the uptick to buyers returning to urban neighborhoods after a “mass exodus” to suburban and rural areas earlier in the pandemic. Creer said her clients aren’t always looking to be closer to office jobs, but to cultural events and day-to-day needs.

Condo shoppers are looking for areas that are walkable, she said. “Not just ‘I want to walk around my neighborhood,’ but ‘I want to walk to the grocery store. I want to do all my errands on foot.’”

Some home shoppers have adjusted to higher interest rates, but are still struggling to find a property from the slim selection of homes for sale.

The number of deals King County buyers and sellers made, known as pending sales, increased from February to March. But the volume of single-family home sales is still short of last year at this time. There were 33% fewer pending sales last month than in March 2022.

Similarly, new listings picked up from February to March, typical of the spring market, but remained 29% lower than last year in King County. And some homes lingered on the market. The number of King County listings still available at the end of March was nearly 84% higher than in March 2022. 

“Buyers now are as motivated as they ever were,” Manning said. “The bigger concern now is actually finding a property… We never have enough homes to sell [in Seattle] and now it’s way worse than that normal baseline.”

It would take nearly five weeks to sell all the homes currently for sale in King County. That is up from less than two weeks a year ago, but still shy of the four to six months the listing service considers a balanced market.

“The lack of homes hitting the market explains why the market is moving fast even though sales are still down,” Redfin Deputy Chief Economist Taylor Marr said in a report released Thursday. “The lack of new listings is also one reason why sales are down: Buyers can’t buy if sellers don’t want to sell.”