Is Now a Good Time to Buy a Home in Seattle?

Thinking of buying in Seattle? Here's what you need to know.

Seattle isn't just a hip city -- it's a city loaded with opportunity and a great place to settle down. If you're thinking of buying a home in Seattle, here are some things you need to know.

Housing inventory is very limited

In May, Seattle had a mere 0.49-month supply of homes on the real estate market, according to data compiled by Housing Tides, an EnergyLogic company. That represents a 1.15% decline from a year prior.

To be clear, limited inventory isn't just a problem in Seattle. Rather, there's a shortage of available homes to buy on a national level. In May, national inventory sat at just a 1.13-month supply. For context, it takes a 4- to 5-month supply to create an equalized housing market -- one that doesn't necessarily favor buyers over sellers or vice versa.

Since housing inventory is so low in Seattle, you might struggle to find a property that falls within your price range. Or you might struggle to find a home with the features you're looking for.

Seattle home prices have risen

Back in February of 2016, the median home price in Seattle was $405,000. In May of 2021, the median home price reached $738,000. That represents a 26.2% increase from the previous year, which is a pretty substantial jump.

Of course, it's not just Seattle where home prices have risen. Property values are up on a national level as a result of low supply and high demand. But given that median $738,000 price point, buying in Seattle right now may be a push, financially speaking.

Mortgage rates are still competitive

Home values in Seattle may be up, and inventory may be extremely limited. But mortgage rates are still holding steady at competitive levels.

As of this writing, the average interest rate in Washington State for a 30-year fixed loan is 3.16%. Meanwhile, the average 15-year mortgage rate is 2.47%. These rates are quite low, historically speaking, and they could allow you to buy a home that's on the more expensive side.

In fact, if you lock in a 30-year, 3.16% fixed mortgage on a $738,000 home for which you put down 20%, your monthly principal and interest payment will be $2,539. That figure, however, does not include other expenses of homeownership, such as:

• Property taxes
• Homeowners insurance
• Maintenance expenses

Should you buy a home in Seattle today?

To buy a home in Seattle, you'll need a pretty hefty down payment based on what property values look like. You'll also need to make sure you can swing your ongoing mortgage payments.

Ask yourself the following questions to see if you're ready to buy:

• Is my credit score in good shape?
• Do I have a low level of existing debt?
• Can I swing 20% down on a Seattle home? And if not, can I afford the cost of private mortgage insurance on top of my mortgage payments?
• Is my job stable?
• Have I done my research and determined that Seattle is where I want to settle down?

If the answer to all of these questions is yes, then now may be a good time to buy a home, especially with mortgage rates being so competitive. That said, there's nothing wrong with holding off if you'd rather house hunt at a time when there are more properties to choose from. Low mortgage rates probably aren't going away for a while, so there's certainly no need to rush your decision.