When paying ,000 above asking price feels like a deal: Here’s what a cooling housing market looks like in the Seattle area

The white-hot Seattle-area housing market has started to cool, by some measures. Last month, fewer new listings hit the market here and home prices dipped compared to a month earlier, according to data released Tuesday by the Northwest Multiple Listing Service.

Brokers report occasional price drops, and one local economist says we could be hitting a “price ceiling.” But a year of runaway growth has already done its damage.

Home prices across the Puget Sound region remain up by double-digit percentages compared to last year and 2019.

The dual realities — a cooling market with high prices — reflect the ongoing effects of the pandemic-fueled housing boom. Low interest rates, a flood of interested buyers and few homes listed for sale drove up prices here and around the country. 

Now, home-shoppers with extra cash are able to take advantage of deals as the market cools, but buyers with less to spend may find a market that has already stretched out of their reach.

“Those homes sitting at $350,000 10 months ago are now at $450,000,” said Darlene Heseltine, a Redfin agent focused on Pierce County. First time buyers especially, she said, are “not even able to purchase them at this point.”

Last month, the median single-family home price in Pierce County hit $515,000, up about 19% from the same time last year, according to the NWMLS.

In King County, the median home sold for $850,000, up 14% from last year. In Snohomish County, the median home sold for $694,900, up 25% from last year.

In Kitsap County, the $503,750 median is up about 16% from last year. In Thurston County, the $465,000 median is up 19%.

In King County, prices continue to climb quickest outside Seattle. Median home prices are up about 24% year-over-year on the Eastside and 23% in southeast King County, compared to 6% in Seattle.

However, in a sign of a typical late-summer cool-down, median home prices were essentially flat compared to July (down about 2% in King County, down 1% in Snohomish County and up about 1% in Pierce County). In all three counties, fewer new homes were listed for sale in August than in July.

Is a ‘price ceiling’ approaching?

Spouses Jason Owens and Minh Vo started looking for a new home in Snohomish County this spring, but took a break from their search after seeing the frenzied conditions in April. They started again in July, hoping for a break.

What they found wasn’t much easier.

With an $800,000 budget, the couple looked at homes listed for around $650,000, assuming they would sell for over the list price in what has become a new norm for buyers. When a house they loved sold for about $230,000 more than its list price, they had to adjust their strategy.

After “trying to nurse our bruised egos and hurt feelings and utter disgust” about losing out on the other house, the couple opened up their search to town houses, said Owens, who works in technology for a health care company. 

Last month, they closed on an $800,000 four-bedroom townhome in Lynnwood with space for a home-office and rooms for their teenagers, he said.

In the end, the couple paid $60,000 over the home’s $740,000 list price. 

That felt like a deal, “which—$60,000 is a massive amount of money,” Owens said. “To think, we’re excited we got it for ‘only’ $60,000 over.” 

Windermere Real Estate Chief Economist Matthew Gardner predicts the region may be “hitting a price ceiling,” he said in a statement Tuesday.

Gardner said he expects “the rabid pace of home price appreciation will continue to cool as we move through the rest of the year.”

Inventory remains tight. In August, all of the single-family homes for sale in King, Pierce and Snohomish counties could have sold in roughly two weeks, according to a measure of demand known as months of inventory. 

Blurry picture for condos

As single-family home prices shot up during the pandemic, the condo market was more volatile. Last year, local real estate brokers described home shoppers passing up condos in search of more space to ride out lockdowns and remote work.

This summer, condo prices began to rebound.

Lin Shih, a Coldwell Banker Bain agent focused on downtown Seattle condos, said higher-priced condos have “flown out the door” to buyers drawn to downtown amenities and views. “It’s really hard to duplicate that on Queen Anne or Capitol Hill,” she said.

August showed a mixed picture. In Seattle and on the Eastside, median condo prices were down about 2.5% from July. Compared to a year ago, prices on the Eastside are up 14% and Seattle prices are down 5%.

Condo owners took note when interest began to rebound.

This summer, Dan Pierce listed a one-bedroom Ballard condo for sale at $349,950. Soon after, the condo sold for $367,000 to an out-of-state buyer looking for a second home, Pierce said.

Pierce said he wanted to offload the property and another in West Seattle, both rentals, in response to tenant-friendly legislation from the Seattle City Council and the improving market.

“We listed it and had scheduled an open house the following weekend,” he said of the Ballard condo, “but before we even got to that, we had two competing offers that came in. So, it feels like that was pretty hot.”