Buying a house in Seattle: A how-to

If you’re thinking about buying a house in Washington, Seattle is probably near the top of your list. However, planting permanent roots here isn’t easy. Housing prices here have always been fairly high, and they soared throughout the pandemic. The good news: That rollercoaster climb is starting to level off. Redfin recently reported that Seattle’s housing market is cooling down faster than anywhere else in the country.

If you want to take advantage of the changing market, 2023 may be the time to make your move. Read on for everything you need to know to buy a house in Seattle.

Why buy a house in Seattle?

While Seattle has a high cost of living, the list of reasons to live here is as tall as Mount Rainier. Microsoft, Amazon, Boeing and Starbucks are just a few of the major companies that have huge operations here, and it’s a major player in the tech sector, so there are plenty of professional opportunities. But Seattle life isn’t all about working: It’s about enjoying the outdoors, and the quality of life here in that respect is exceptional.

Plus, the city is growing — fast. Some estimates predict Seattle will have a bigger population than San Francisco by 2040. As more people choose to call the Puget Sound region home, the area will see an increase in property values. Buy now, and you’ll likely be able to sell for a nice profit down the road.

Finding an affordable Seattle home

Seattle is not for anyone on a budget. Redfin data shows that the median price of a single-family home here in December 2022 was $785,000. However, if you can fit into a smaller space, you’ll be in much better shape: The median price of condos and co-ops was a much lower $471,500.

It’s not just about the type of property, though. Where it’s located plays a key role in determining affordability. For example, median sale prices in SoDo and Beacon Hill stood at $656,000 at the end of 2022, and West Seattle had a median price tag of $737,500, according to SeattleMet. If you don’t need to be in the middle of everything and you don’t mind some driving, start your house hunting a bit further from the downtown core. Suburbs like Des Moines, Burien and Kent all offer the beauty of the Pacific Northwest without budget-breaking prices.

Is now a good time to buy?

It depends on how you define “good.” It’s definitely a better time to buy a house in Seattle than it was in 2020 and 2021, when homes were receiving multiple offers and selling for way above list price. While today’s higher mortgage rates are bad news for your budget, things are starting to look up for buyers here. Redfin data shows that 21 percent of listings had price drops in December: a clear signal that buyers are gaining more bargaining power.

What to know about buying a house in Seattle

How much will you pay in closing costs?

Washington state has notoriously high closing costs — the fifth-highest in the country, with an average total of nearly $14,000 in 2021, according to ClosingCorp. However, the seller usually pays for the bulk of those expenses, including excise taxes and a title insurance policy. You’ll still need to budget for a number of other expenses, though, like an appraisal, a home inspection and a lender’s title policy. Make sure you compare multiple mortgage lenders, too, to find options that charge low origination fees (or better yet, no fee at all).

How much will you pay in property taxes?

As is the case everywhere, Seattle property tax rates vary based on the location and assessed value of your home (which is different from the actual purchase price). Data from King County shows that the typical 2022 property tax bill was just over $5,000 near the SeaTac airport, while it was more than $23,000 in high-priced Medina, where Jeff Bezos and Bill Gates live.

What else will you need to pay for as a homeowner?

While Bankrate’s data shows that average homeowners insurance in Washington is cheaper than many other places in the country, it’s important to note that you may need to pay for additional property protections. Seattle is part of the Cascadia subduction zone, which carries serious earthquake risk, and the region’s beautiful waterways, including Puget Sound and Lake Washington, carry flooding concerns. You may need to budget for earthquake and flood protection, neither of which are standard parts of a typical insurance policy.

How long will your commute be?

If you work in a downtown office, it’s important to consider how much time you’re willing to spend in a car each day — and how much you’re willing to budget to get around. A recent study found that Seattle is an expensive place for commuters, with average annual costs of nearly $10,000. The typical one-way commute time is 28 minutes.

How safe are the neighborhoods?

Like any big city, Seattle deals with its fair share of crime. But keep in mind that safety varies widely from neighborhood to neighborhood. Research local crime activity in the areas you’re interested in to determine which parts of the city you will feel comfortable in.

Tips for buying a Seattle home

Save for a down payment

The average down payment on a home in Washington was $77,800 in the spring of 2022. That’s a staggeringly high sum of cash for anyone on a tight budget, particularly if you’re living on a low or moderate income and don’t have a lot of extra money to stash away in savings. Down payment assistance is available, though: You can borrow extra funds for the upfront costs of buying a home thanks to some programs for first-time homebuyers in Washington state. For example, the Home Advantage DPA Needs Based program can help you borrow up to $10,000 with a 1 percent interest rate over 30 years.

How much will you actually need for your down payment? If you have excellent credit and qualify for a conventional loan, you may be able to just put down 3 percent of the purchase price. So, on a home with a list price of $800,000, you would need at least $24,000 — plus additional funds to cover your closing costs. There are loans out there that require less money upfront, or even none. But if you can afford to make a bigger down payment, you should: The less you need to borrow, the less you’ll pay in interest. Use Bankrate’s new-house calculator to get a sense of how different down payment amounts will impact your borrowing costs and your monthly payments.

Find a local Seattle real estate agent

With the limited housing inventory in Seattle, it’s especially important to find the right real estate agent to help you find listings that can fit your needs and your budget. And as the market continues to cool off, agents can help you avoid offering too much and overpaying for a home. If you’re moving from out of state, an agent is even more important. If a hot listing comes up, timing is everything, and he or she can help determine if you need to make an immediate offer.

Get preapproved for a mortgage

Before you start touring homes and attending open houses, get preapproved for a mortgage. A preapproval letter shows that a lender has already looked at your financial information and is likely to loan you the money you need. As you look at lenders, you’ll want to have an idea of how much money you’re going to need to borrow. The conforming loan limit in King County is $977,500 for 2023. So, if you think you’re going to need to borrow more than that amount, you’ll need a jumbo loan. That means you’ll need even better credit — and a bigger down payment.

Understand the playing field

Keep in mind that, while you might be researching mortgage options, there could be other buyers who don’t need to borrow money at all. A report from Orchard shows that 16 percent of real estate transactions in Seattle between January and May 2022 were cash deals. It can be tough to compete with an all-cash offer. Sellers like a sure bet, particularly in a time of economic uncertainty. However, there are ways to make your offer look more compelling, including cash-backed bids. Also, having the right real estate agent can help you develop a strategy for crafting an offer that stands out in a seller’s market.

Bottom line

High mortgage rates and home prices in Seattle might have you wondering whether you should buy a house now or wait. However, the longer you put off the investment, the more you’ll have to spend on rent — and according to data from Rent.com, Seattle is one of the most expensive rental cities in the country. Instead of handing over more cash to your landlord, consider these tips to start saving up for a down payment.