Are you considering investing in real estate? If so, you’re making a wise decision! Rental properties are expected to remain a solid investment in 2025, offering investors the assurance of excellent returns.
Real Estate Market in Washington
In June 2024, the number of homes for sale rose by 19.8% compared to the same time last year, marking the fifth consecutive month of growth in the housing market. Key highlights include:
- Median Days on Market: Homes are spending a median of 14 days on the market, an increase of 3 days year over year, reflecting strong demand in the Washington real estate market.
- Housing Inventory and Supply: Buyers now have more choices, with inventory up by 18.7%. Currently, there are 27,463 homes for sale in Washington, with an average supply lasting 2 months.
- Average Home Prices: The median home price stands at $650,700, but it’s expected to decline as inventory increases in the latter half of 2024. The sale to list price ratio is 100.3%, a drop of 0.32 points from last year.
- Home Sales: Home sales dropped by 7.1% year over year, with 8,229 homes sold compared to 8,856 in the previous year.
- Average Rent Prices: Rent prices vary across the state, with a median rent of $2,150 and a month over month increase of $49.
Why Is Washington Currently a Seller’s Market?
The Washington real estate market offers a balanced inventory of homes, combined with a steady rise in median home prices, creating favorable conditions for sellers. Homes spend just 14 days on the market, highlighting the competitiveness of the market.
Here are some key factors:
- Fewer Days on the Market: Homes are selling fast, with an average of 14 days on the market before going under contract. In metro areas like Seattle and Federal Way, this number drops to 79 days, reflecting even stronger demand.
- Multiple Offers on Homes: Washington’s market is highly competitive, as shown by Seattle’s Compete Score of 85 and Kenmore’s 93, according to Redfin. Many properties receive multiple offers, with some being sold without contingencies.
- High SaletoList Price: Homes typically sell for about 1% above list price, while in hotter markets, the sale price can exceed the listing price by up to 3%. In Seattle, the average sale to list price ratio stands at 101.3%.
- Homes Selling Above List Price: On average, 31.2% of homes are selling above list price. However, in June, 30.9% of homes experienced price drops, compared to 26% last year, signaling a potential gradual shift toward a buyer’s market.
Washington Housing Market Predictions for Late 2024 and 2025
Here are the expected trends for Washington’s housing market over the rest of 2024 and into 2025:
- Increase in Home Buyers: As inventory expands and homes spend more time on the market, more buyers are anticipated to return. High interest rates discouraged buyers in 2023, but easing inflation and stabilizing rates are likely to draw house hunters back.
- Rising Home Prices: Home prices have risen steadily across major Washington metros, reaching $652K in June 2024. Cities like Othello and Centralia are projected to see a 3.6% increase in home prices by March 2025.
- Growth in New Home Construction Sales: According to the Washington Building Permits Survey, 21,257 new private housing units were authorized, with continuous growth. This new construction will help meet the high demand in Washington’s housing market.
- iBuyers Offering Lowball Offers: iBuyers like Opendoor and Offerpad, which once offered 104.1% of market value in 2021, are now offering around 70%. These lower offers create more opportunities for individual buyers to compete in the market.
Impact of the NAR Settlement on the Real Estate Market
The recent NAR settlement has led to a major shift, completely eliminating buyer agent fees from the MLS. Here’s how this change is expected to impact the market:
- Buyer Agents Will Be Affected: With buyers now responsible for paying their agents directly, many may opt to search for homes independently. This could lead to a decline in the demand for buyer agents, potentially making them obsolete.
- Increase in Seller Concessions: Without the burden of paying buyer agent commissions, sellers may face more requests for seller concessions and off market transactions. Builders are also offering large concessions to attract buyers, further influencing market dynamics.
- Increased Competition Among Builders: Homebuilders are enticing buyers with incentives like mortgage buydowns valued at $30K, adding more pressure to the market.
- Sellers May Offer Fees for Services: To speed up sales, sellers may offer buyer agents a commission of 1%-2%. Rising competition from builders could push sellers to offer additional fees to attract buyer agents.
To learn more about investing in rental properties or to discover the services we provide, reach out to us today.