Reflecting on 2024: A Year in Review for the Real Estate Market

2024 Washington Housing Market Recap

The Washington State real estate market in 2024 demonstrated a unique blend of resilience and adjustment while we navigated federally mandated real estate changes (see my blog post here for more information on that topic), fluctuating mortgage rates, and a heated election. While looking at the overall trends of the year, the real estate market in King and Pierce Counties behaved somewhat normally with a slow January, an uptick in demand and pricing in the Spring, followed by a slow Fall and Winter. 

 Home Prices: Despite facing headwinds from rising mortgage rates and economic uncertainty, the Washington State housing market continued to appreciate in 2024, albeit at a more moderate pace than in previous years.

In King County, the median single-family home price reached $930,000 in the fourth quarter of 2024, a 6% increase from 2023. For the entire year of 2024, King County's overall median home price reached $955,000, an 8.5% increase compared to 2023 data. Notably, the fourth quarter of 2024 median sales price of $930,000 in King County was 2.6% lower than the annual median of $955,000, indicating a slower market during the fall and winter months.

Pierce County experienced a more pronounced rise, with the median sales price climbing to $570,000 in the fourth quarter of 2024, a 6.5% increase from 2023. Comparatively, Pierce County's overall median home price reached $565,000, a 5.6% increase compared to 2023. Notably, the fourth quarter of 2024 saw a median sales price of $570,000, suggesting a potentially more active market during the fall and winter months in Pierce County compared to the overall annual median home sales price of $565,000.

Inventory: A significant positive trend in the national housing market during 2024 has been the increase in active inventory, which is nearing the levels observed in 2018-2019.  Although those levels represent a five-decade low before COVID-19, the market was still functioning better than it did from 2020 to 2023.

Mirroring this national trend, King County's housing market has also seen a notable increase in supply. Year-to-date, we've averaged 3,482 active listings per month, a 30% surge compared to the 2,763 listings seen monthly in 2023. However, it's important to note that nationwide inventory still lags 22% behind 2018 levels.

Currently, King County has approximately two months of housing inventory, indicating that it would take two months to sell all available homes at the current sales pace. A balanced market typically exhibits around six months of inventory.

Days on Market: On average, in both King and Pierce Counties, days on the market increased by ten days year-over-year to 31 days, indicating a less competitive market.

A new report from Redfin shows that 64.7% of listed homes this past June stayed on the market for more than 30 days, which is up from 59.6% a year ago. It's the largest year-over-year increase for any month in the past year and the highest share for the month of June going back to 2020.

The percentage of homes on the market for two months or longer is also rising and currently sits at 40%, up from 38.4% last year. It's the third month in a row this number has grown and continues to rise in our slower fall and winter markets.

The rising share of stale listings is being driven by the factors that are handcuffing markets nationwide. Mortgage rates remain high and stubborn home prices aren't coming down despite a precipitous rise in both new and existing homes that are available for sale.

Interest Rates: Interest rates dominated the conversation throughout 2024, impacting every aspect of the housing market. Initial forecasts predicted a gradual decline in mortgage rates, but instead, they surged during the crucial spring home-buying season, effectively sidelining many potential buyers. In April, 30-year fixed mortgage interest rates were slightly over 7.30%.

The sudden increase in interest rates dampened buyer interest, slowed national home price appreciation, and created uncertainty in the market. It also worsened affordability, which has been an ongoing struggle since the outset of the pandemic. Despite a temporary rate cut in September, mortgage rate volatility persisted, making it challenging for both buyers and sellers to plan with confidence.

According to experts, these rate fluctuations were primarily driven by the bond market's reaction to economic and political headwinds. Concerns over government spending and the potential for inflation kept rates stubbornly high. 

Elevated interest rates have become an enduring reality in the housing market, significantly impacting affordability and deterring many would-be homeowners. Looking ahead to 2025, the outlook remains clouded, with rate stability contingent upon clarity following the transition to a new administration.

The Road Ahead: Looking into 2025

As we enter 2025, the big questions looming over the real estate market are: Are we finally going to see a housing market recovery? If so, how much and when? What about home prices?

 Pricing: Experts anticipate a moderate 3.5% increase in home prices nationwide in 2025. This prediction reflects the current market conditions, including elevated mortgage rates and a growing housing supply, which are expected to contribute to a slower pace of price appreciation than in previous years. However, some experts express concerns about potential underperformance. While outright price declines are not currently anticipated, several factors could contribute to lower growth. For example, if mortgage rates remain elevated for another year, home sales and prices may stagnate.

Inventory: Experts predict that Inventory will grow again in 2025 by 13% nationwide. The housing market of the last decade has been defined by consistently declining available supply of homes on the market. The inventory shortage reached an all time high during the pandemic when Americans were buying everything available. Inventory has been building for nearly three years. In 2025, continued inventory growth may finally change the supply and demand balance back to “old normal” levels.

 Interest Rates: Many experts forecast that mortgage rates will stay in the 6% to 7.25% range for most of 2025. To stay in this range, economic growth in the country must remain positive, avoid recession, and not show signs of re-inflation.

Going into 2025, American homeowners have record levels of equity, home prices are expected to remain steady, and the country still faces crisis levels of unaffordability, especially for first-time homebuyers. The 2025 real estate market presents both opportunities and challenges. Don't wait – take action now to position yourself for success!