Learn more about the housing market in Washington

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Washington State Housing Market Overview

Located in the Pacific Northwest, Washington is a state known primarily for its vast mountain ranges that cover a considerable portion of its land. Sharing a border with Canada, it sits in the northwest corner of the continental United States. Washington thrives on a number of different industries, but data from IBISWorld suggests that Real Estate, Rental, and Leasing was the second-highest contributing sector to the state’s 2023 GDP, behind only Information. This suggests a notable housing market in the state that is worth looking further into.

At the beginning of the year, experts predicted that the housing market in Washington would continue to see an increase in both housing prices and the number of prospective buyers, though the interest rates across the state would settle. As of April 2024, these predictions all appear to have come true, with certain indicators that these trends will continue. 

In fact, historically high interest rates have seen a significant decrease across the country. The national average 30-year fixed mortgage rate in late 2023 approached 8%, but settled in April 2024 to just below 7%. As we will discuss later in this article, a similar trend can be seen in the Washington housing market, reflecting easing inflation that is bound to benefit a growing demographic of prospective homeowners across the country.

Washington Market Trends 

To understand the Washington real estate market, it’s important to keep up with trends. Let’s take a look at some key ones in Washington:

Note: These statistics are based on Redfin’s monthly housing data from April 2024.

Median Home Price

The median price of a home in Washington in April 2024 was $658,500, according to Redfin’s monthly housing market data. This is an increase of 6.6% from April 2023, accurately reflecting predictions of continually increasing housing prices in the state. In Seattle, the most populous city in the state by a significant margin, the median housing price is significantly higher at $885,000 in April 2024, itself a 5.9% increase from April 2023. It is important to remember that in any state, statewide data is pulling from a plethora of housing markets experiencing a variety of different influences and factors.

Number of Homes Sold in April 2024

8,556 homes were sold in Washington in April 2024, which is a 4.4% increase from April 2023. This number can be expected to increase in the summer months. It is important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%.

Despite this, number of home sales from the previous two years have failed to reach the same peaks that were recorded in the summers of 2020 and 2021.

Median Days on Market (DOM)

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage.

The median DOM in Washington in April 2024 was 13 days, an increase from 12 days in April 2023. This means that, on average, listings only spend around two weeks on the market until they are purchased. While an increasing DOM suggests an increasingly noncompetitive market, Washington State’s DOM has been relatively stagnant in the past year.

New Supply Statistics

In April of 2024, there were about 7.36 new residential construction permits per 1,000 people in Washington. This statistic, which points to the rate of new housing supply, is higher than the nationwide average. Increased housing supply is predicted to ease housing prices and increase affordability in many markets across the U.S. in 2024.

Property Tax Rate

According to Rocket Mortgage, the average property tax rate in Washington is 0.87%. This is close to the nationwide median, and Washington state is ranked 23rd nationwide. The average annual property tax in the state is $3,193.47. As previously mentioned, it is important to keep in mind that this statistic reflects the average of a lot of data with significant geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.

Foreclosure Rate in Q1 of 2024

In the first quarter of 2024, 1 in every 3,875 homes in Washington experienced a foreclosure filing, according to recent data from ATTOM. This is one of the lowest rates in the country, and the state is ranked 44th for foreclosure rates.

Hottest Local Markets in Washington State

1. Seattle

Seattle is the most populous city in Washington State by a significant margin. As previously mentioned in this article, its median home price is significantly higher than the statewide median at $885,000 in April 2024. Its median DOM is also lower than the statewide median DOM at only 7, and has stayed stagnant over the past year. This suggests a relatively more competitive market. Some of the most popular neighborhoods in Seattle are Broadway, Belltown, and Greenwood.

2. Spokane 

Behind Seattle, Spokane is the most populous city in Washington State. Its median housing price in April 2024 was lower than the statewide median by a considerable margin at only $381,498, which is a 3.1% increase from the previous year. Its median DOM is also lower than the statewide median at 8, which is only an increase of 1 from the previous year. This means that the market is comparatively more competitive than the statewide market, and listings only spend around a week on the market before being purchased. Some of the most popular neighborhoods in Spokane are Lincoln Heights, East Central, and West Central.

3. Vancouver

Vancouver is also one of the most populous cities in Washington State. Its median housing price in April 2024 was $499,000, which is an increase of 4.5% from April 2023. Its median DOM of 9 is lower than the statewide median, and it represents an increase from 5 the previous year. This indicates that although the market is very competitive, it may be getting increasingly non-competitive when compared to other populous cities in the state. Some of the most popular neighborhoods in Vancouver are North Image, Esther Short, and Cascade Park East. 

Economic Factors Impacting the Washington Housing Market

A holistic view of Washington’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s take a look at a few below.

Mortgage Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. As previously mentioned, national averages have dipped from last fall’s record highs, and Washington is no different. According to Zillow, Washington’s current average 30-year fixed mortgage rate is down to 6.62% after approaching 8% at the end of 2023. This accurately reflects predictions that interest rates in 2024 would settle but stay above an average of 6%.

Inflation and Cost of Living

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Washington. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.

Population Changes and Demographics

A changing population ca also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Washington State is 4.9%. This is one of the highest rates in the country. However, unemployment rates all around the country are down, suggesting economies that are thriving and bound to bring more potential homeowners to the state.

Washington Housing Market Forecast 2024

As previously mentioned, experts considered the housing market Washington State has been facing over the past few years and predicted that prices would continue to rise throughout the year. This has proven true over the course of the year, though steadying interest rates and a hope for increased supply in the housing market signified by an increase in sales may indicate a slowing growth in prices.

Likelihood of Washington Housing Market Crash

Though continually rising housing prices in Washington may seem concerning, experts have maintained that a crash is significantly unlikely. There are many reasons for this, including a healthy economy signified by low nationwide unemployment rates and the decline and stabilizing of interest rates. The market seems poised to continue appreciating, but it is unlikely to reach any significant or concerning threshold in the near future.

Forecast for the U.S. Housing Market

Now that we’ve looked at Washington’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?  

The United States’ current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9.

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Washington Rental Market

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.

This short summary leads directly into Washington’s current rental market. Below are just a few of the current trends for Washington’s rental market based on data pulled from Zillow:

Washington Rental Market Key Trends

• Median rent: $2,079 

• Month-over-month rent change: +$79 

• Year-over-year rent change: -$116 

• Available rentals: 12,390

Conclusion

As we have covered throughout this article, any state’s housing market is bound to be made up of diverse influences, factors and variables, and summative data cannot tell the whole story. However, as a whole, the Washington housing market in 2024 has seen many significant indicators of a stabilizing and healthy housing market that buyers and sellers alike should watch closely. Experts and analysts will continue to monitor this market, as well as nationwide factors like interest rates and new construction.