Seattle starter homes now requires 6-figure income to afford

Mortgage rates fall to lowest level this year

Mortgage rates are at the lowest level this year as inventory hits a post-pandemic high.

SEATTLE - A recent report from Redfin reveals that while mortgage rates have eased slightly, the affordability of starter homes in the Seattle remains a challenge due to high home prices.

The report shows that the income needed to afford a starter home in Seatle now stands at $178,332 annually, reflecting minimal change from last year despite national improvements.

The typical starter home in the Seattle is now priced at $564,450, a 4.5% increase year over year. Even though mortgage rates dropped from 7.07% last year to 6.08%, home prices continue to rise, making it increasingly difficult for buyers to enter the market.

Keep reading to learn more about the Redfin report and Seattle's housing market outlook.

Income requirements in Washington to purchase a starter home

The Redfin analysis highlights that in the Seattle, buyers must spend 42.4% of their income to afford a typical starter home, well above the recommended 30% threshold. This makes homeownership a significant financial burden for many. The trend mirrors broader national challenges, where home prices have increased by 51.1% since 2019, while income growth has lagged.

In September, home prices in the Seattle city limits were up 9.4% compared to last year, selling for a median price of $875,000. On average, "homes in the Seattle city limits sell after 21 days on the market compared to 14 days last year," said Redfin. "There were 570 homes sold in September this year, down from 637 last year."

Although U.S. homebuyers saw a small reprieve with the first decline in mortgage rates in three years, Seattle’s housing market remains less accessible. The city’s booming real estate market, coupled with limited inventory, has left many prospective buyers priced out.

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Seattle saw the nation's 3rd-largest spike in home prices in August

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Seattle saw the nation's 3rd-largest spike in home prices in August

In addition to seeing rising home prices, active housing inventory was up 41.4% year over year.

National context on median starter home prices

Nationally, the median income required to buy a starter home has decreased slightly to $76,995, a 0.4% drop compared to last year. This marks the first annual decline since 2020, offering some hope for affordability. However, starter homes remain far less affordable than pre-pandemic levels, when buyers earned significantly more than they needed for entry-level homes.

Housing market outlook

Redfin warns that starter home affordability may not improve much further in the near future, as housing prices tend to rise over time and mortgage rate reductions may already be factored into the market. In addition, first-time buyers are increasingly competing with older, wealthier buyers, adding to the affordability squeeze.

For prospective buyers in Washington, staying informed about market changes and acting quickly when opportunities arise will be key as the local housing market continues to evolve.