M
ark Koks and his wife began house hunting in Seattle this year, confident they could find a bigger and nicer home within their $1 million budget. However, after touring several single-family houses in Greenwood, Phinney Ridge, Ballard, and nearby neighborhoods, the reality of the city's high prices set in. "We've had to come to terms with the fact that the perfect home doesn't exist within our price range," Koks said.

    Even a $1 million-plus budget no longer guarantees living in Seattle's high-priced market. The median price for a single-family home in the city hit $1 million last month, meaning half of all sales were above this price point. Real estate agents say that single-family homes priced at or under $1 million are scarce and often draw fierce competition from buyers.

    "It might be the entry level for some neighborhoods," said David Palmer, a Seattle-based agent for Redfin. Ryan Palardy, another agent, noted that $1 million buys "a pretty reasonable townhouse in a decent location" but only a small fixer-upper or an older home on the fringes of the city.

    Koks and his wife are planning to stay in the city despite their setbacks, hoping to find their dream house within their budget. They remain selective, looking for a single-family home with more space than their current townhouse. However, the shrinking size of homes that can be purchased for $1 million has become a reality in Seattle.

    According to Zillow, the typical Seattle-area home worth $1 million was 2,120 square feet as of January, down from 2,530 square feet five years ago. This "shrinkflation" is primarily due to escalating home prices driven by strong buyer demand and limited supply. The imbalance has pushed more properties above the $1 million threshold, with the Seattle metro area having 60,523 homes valued at $1 million or more at the start of the year.

    Sharon O'Mahony, a Seattle-area broker, said it's possible to find sub-$1 million single-family homes in certain neighborhoods. However, these properties often sit on the market longer due to their location and lack of amenities. Even once-affordable suburbs like Burien and Skyway have seen price increases due to their proximity to downtown Seattle.

    The property type also matters in Seattle, with single-family homes drawing multiple bids while condos and townhomes rarely do. In some areas, a teardown property can cost over $1 million, reflecting the value of the land rather than the structure itself. Homebuyers are not expected to get much price relief due to high development costs and the difficulty of building affordable single-family homes within city limits.

    Builders are turning to smaller lots, taller buildings, and attached single-family homes like townhomes and condos to make the math work for potential homebuyers. Real estate agent Palardy recently experienced this firsthand when trying to land a single-family house in Seattle. He was outbid multiple times before finally closing on a home that needed significant repairs.