T
he Seattle-area real estate market experienced a year of stagnation in 2024 due to elevated mortgage rates and high home prices. This led many potential buyers to stay on the sidelines, while homeowners were discouraged from selling their properties. The cost of borrowing money also affected developers, causing them to hesitate on new apartment projects that could have added to the region's housing supply.
Experts predict a slight jolt in the market for 2025, with interest rates expected to dip. However, affordability challenges are likely to persist. Here are five predictions for the Seattle-area real estate market:
1. Home prices will continue to rise, potentially by 4-5% next year, making it difficult for first-time buyers to afford a home.
More affordable cities like Tacoma and Renton may attract first-time homebuyers, while condos in Seattle could become a more viable option. However, for many millennials and Gen Z buyers, the cost of homeownership remains out of reach.
2. Mortgage rates will hover around 6-6.5% next year, offering little relief to potential homebuyers.
Economists expect mortgage rates to remain high due to factors like inflation and a strong economy. This may lead to increased sales activity as buyers take advantage of lower interest rates before they rise again.
3. Rents will remain high but slow to rise in 2025, thanks to an influx of newly built apartments in Seattle.
The rental market has seen a surge in new construction, which has relieved pressure on rents. However, this trend is expected to reverse around 2026 as fewer developers seek permits for apartment towers.
4. The office market will continue to struggle, with demand for space remaining below pre-pandemic levels.
Tech companies have been slow to return to the office, and many office buildings remain partially empty. Despite this, some employers are encouraging employees to return to the office, which may lead to increased leasing activity in 2025.
5. The debate over building new housing will continue, with a focus on where to locate new developments.
The Seattle City Council is set to discuss the city's comprehensive plan, which includes upzones to allow for more density in certain areas. However, neighborhood groups are opposing changes, and the issue is likely to be contentious in 2025 and beyond.
