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Is Seattle a Good Place to Invest in Real Estate in 2023?

Is Seattle a Good Place to Invest in Real Estate in 2023?

According to a recent report from the National Association of Realtors, Seattle is one of the ten most expensive markets in the US right now. Average home sale prices currently sit at a little less than $709,000.

Yet, prices are trending downward. And though the rental market looks to soon follow, renters in Seattle are still willing to pay top dollar for the right space.

There may be no better time than now if you want to invest in real estate in Seattle. In this guide, we explain why. Keep reading to learn more.

Current Conditions in the Seattle Real Estate Market

In March, The Seattle Times reported that recent bank failures could potentially help stall interest rate hikes. That theory failed to play out, but The Times was right about one thing: the Seattle real estate market has evened out.

This is due, in part, to interest rates being lower today than they were a year ago.

Real Estate Prices

Seattle homes are currently selling right at asking price, if not a little below asking. That indicates a market that is balanced toward buyers and sellers. At the same time, home values are down by 7.5% year over year.

In March 2022, homes were selling significantly over asking. The median listed sale price was $815,000. Meanwhile, the median price of all homes sold during that month was much higher at nearly $875,000.

Today, the spread has reversed. reports that the median listing price for homes in Seattle was $799,000 in March. Yet, the median sale price was only $792,500.

While the market is balanced for now, it's leaning closer toward sellers. But you need to move fast. Days on market for homes in the area are dropping, meaning buyers have taken notice of the relatively lower home prices.

In January, the median home remained on market for a whopping 74 days. That number has declined steeply to 37 days on market in only two months.

Average Rent

Seattle is currently the 13th most expensive metro market for rentals. A one-bedroom apartment can cost as much as $2,000. Meanwhile, the average two-bedroom apartment is significantly more expensive at $2,750.

According to Zillow, Seattle rent prices are 0.76% higher than the national median. The average rent currently sits at $2,166. That is only slightly lower than the rent prices at this time last year.

Compared to home sales, rents have not dropped near as much. What's more, demand is relatively high, especially for rental properties in the $1,200 to $2,400 range. There are currently nearly 3,500 rentals available in the area.

At a more granular level, though, rents are trending downward. Month-to-month rent hikes have stalled to only 1.5–1.9%, signaling that Seattle, like the rest of the nation, is about to see a rental market cool off.

If you want to get the most out of your rental property in Seattle, now is the time to capitalize before rents start going back down.

Seattle Real Estate Inventory

Like the rest of the country, Seattle's real estate market suffered from alarmingly low supply over the past few years. This, coupled with steady demand, means many potential sellers were sidelined and unable to find new homes.

As mentioned, homes stayed on market much longer than usual earlier this year. That allowed for inventory levels to increase, especially in certain markets, including Kitsap County and Pierce County.

Meanwhile, available homes in the Snohomish County market have decreased 40% from 2019. And in King and Seattle Counties, inventories are even lower. King and Seattle Counties are still firmly in a seller's market.

Of course, properties in King and Seattle Counties can demand higher rents than in surrounding areas. But if you are looking for a lower cost of entry, Kitsap and Pierce Counties may be the place to search.

But make sure to search quickly. If demand rises any further, buyers will snatch up the good houses before you can get your hands on them.

How to Evaluate a Seattle Real Estate Investment Opportunity

So, have we convinced you that now is the best time for investing in real estate in Seattle? If so, here are some tips for evaluating properties for your real estate portfolio.

Look for Rental Vacancies

Vacancy rates are an indicator of relative demand. A neighborhood with too many homes sitting on market or, worse, that are abandoned can mean that no one wants to live in the area. And you definitely don't want to buy there, either.

You can learn how to calculate the vacancy rate around your rental property in this guide.

Check Out Local Tenant Default Rates

Low-income areas may provide unique opportunities for investors. But you don't want to end up with a rental property in an area where tenant defaults are common. The potential upsides just aren't worth the headaches.

Weigh Rents Against Sale Prices

Ideally, you want your mortgage to pay for itself. In other words, you want the monthly rent you charge to be greater than or equal to your monthly mortgage payment.

How do you make sure a property can do that for you? Look for homes in markets with high rents but relatively low home sale prices.

Now Is the Time to Invest in Real Estate in Seattle

Are you planning on buying real estate in Seattle? If so, now is the best time to invest in real estate before rent prices decline and demand for homes goes back up.

Have you found the right Seattle rental property for your portfolio? If so, you may need a little help managing it from afar. Learn how Next Brick helps investors like you maximize the cash flow from Seattle investment properties.