2025 Seattle Real Estate Predictions

Christian: [0:01] Hello, hello, and welcome to another episode of the Awesome in Seattle podcast. This is your host, Christian Awesome, with the Awesome Awesome Group at Wilson Realty Exchange, Inc, and today we are doing my second favorite, because last episode was my favorite episode of the year, and that is our 2025 predictions episode. So this is where we will look at and predict what we see happening in 2025 in the local Seattle area real estate market, as well as nationally, as well as with rents and with mortgage rates. We're gonna have a special guest come on at the end, um, to talk about that. So it'll be a full packed episode where we have gathered all of the intel, all of the predictions that the major experts, quote-unquote, have predicted for both Seattle and nationally. We put them all into one episode for you so you don't have to go out searching for all that info. So let's get started. My co-hosts today are, as always, the lovely Joanna Beecher.

Joanna: [1:01] Hello.

Christian: [1:02] And the very smart and handsome Varun Jain.

Varun: [1:06] Thank you. You're very kind.

Christian: [1:09] They are both real estate agents, I guess, technically brokers here at the Awesome Awesome Group at Wilson Realty Exchange, Inc, and they are my awesome co-hosts for almost every single episode. It's always fun having them on. So let's get into Seattle predictions. So locally, some experts are anticipating a modest increase in home prices, uh, in Seattle and on the East Side in 2025. If you listen back to what happened in 2024 in our last episode, where we did a year in review, um, you'll see that Seattle increased 8.6% year over year, whereas the East Side actually went down just slightly, uh, i- in both single family homes and condo values over 2024. So pretty interesting-

Varun: [1:54] Yeah … Speaker: dichotomy. Yeah. Yeah. Very dyn- very different dynamic than I expected. Windermere's principal economist, Jeff Tucker, who's the new guy after Gardner left, I don't remember his first name, he's brilliant, they're both very smart, he is predicting a increase of 4 to 5% over the next year for the area. However, Zillow is predicting a potential drop in the Seattle-Tacoma-Bellevue metro area of 2.2% through the summer of 2025. So I'll say this. Over the, I don't know how many years I've done this same exact podcast, I think five, four or five years ever since we started doing this podcast, Zillow is always wrong. I haven't seen a single year where they got it right, unfortunately. They keep predicting that Seattle's gonna go down, and it just hasn't. So maybe they're just sticking to their, their, their drum and that beat, and they're just gonna stay with it forever. I don't understand it.

Joanna: [2:50] Well, I also… and, I mean, pardon me if I'm misunderstanding this, but, like, if you're grouping Seattle, Tacoma, and the East Side together, that's gonna really- Ski- greatly affect the- numbers- Yeah … 'cause Tacoma, I mean, I guess we'll get into this in a minute. I won't give my prediction. Mm. But, like, all of those areas, I would predict different things happening-

Christian: [3:09] Totally.

Joanna: [3:10] Yeah … in as well. I agree. So I'm like, if you're putting them together, that's gonna skew that number huge to me.

Christian: [3:15] Potentially, yeah. Yeah. Inventory challenges. So The Seattle Times, they're saying that one of the biggest trends expected to persist in 2025 is continued low inventory. That means just there's not enough homes for sale based on the number of people that want to buy. Despite ongoing construction efforts, many sellers just are hesitant to list their house because they have these low interest rates that have been locked in at- Mm maybe 2%, probably 3 or 4%. Yeah. And with rates hovering around high sixes, low sevens, they just don't have that motivation yet to move and get rid of that lower interest rate to get that higher one.

Varun: [3:56] Yeah.

Christian: [3:57] I see that possibly starting to shift, really, if interest rates do drop into the mid to low sixes, which we'll have an expert on at the end to talk about that. I could see a lot more people willing and able to move- Mm … because the price point just, their monthly payment just changes so dramatically- Yeah … at that point, that it, it makes more sense. But I know a lot of people that- Even with their small house that they're in, or condo or town home that they're in, even though it's, they've kinda outgrown it- Mm-hmm they're still not willing to move yet, 'cause the price difference is just too much.

Joanna: [4:30] Yep, I've heard that as well.

Christian: [4:32] Yeah. There's, it's also not, especially in Seattle, really the east side too, especially Bellevue, it's not simple to get permits to build.

Varun: [4:40] Yeah. That's the other challenge, is the permit timelines, yes.

Christian: [4:43] Yes. And there is a lot going on with, as of June 2025, there will be a lot of zoning changes statewide, which are going to change, in my opinion, the entire state's dynamic with housing.

Varun: [4:58] It will.

Christian: [4:58] It will, 100%.

Varun: [4:59] That could be one of the years where Zillow probably is right.

Christian: [5:03] Yeah.

Varun: [5:04] Median prices might come down because we, there are more smaller units available. But- True … for the different reasons than- Yes … why Zillow's predicting

Christian: [5:10] it. Yeah, exactly. Yeah. That's a really good point. House prices are going to remain stable or sle- see slight gains, and this is, again, where The Seattle Times suggests we might not see major price drops, but experts like Zillow and Redfin do predict, again, moderate appreciation in the Seattle area. They're still seeing sustained demand, and they're thinking that prices could increase 2 to 3%, especially in high-demand neighborhoods. The condo market, that was a total f- for the last, uh, really ever since COVID, um, the condo market's really been struggling. There just hasn't been a lot of demand for it. Right. With the new Amazon back to work-

Dan: [5:52] Mm-hmm … Speaker: demands that are happening, that could potentially shift. Yeah. Finally, which is what they've been waiting for, people that own those condos downtown.

Joanna: [6:00] I think with the lender changes- Mm-hmm … in 2023, though, that really stumped the condo market- Yes … in this area. So I think that was a big piece that has played into this, and is still going to play into this, 'cause now they have such strict-

Christian: [6:16] Mm-hmm … Joanna: you know, lending regulations on that. Yes. So. Which by now, a lot of those condos have had time to clean up their act.

Joanna: [6:24] I hope so.

Christian: [6:25] I hope. Um, so that they can qualify for financing. Mm-hmm. Um, what had happened, just briefly, condos nationwide, both Fannie Mae and Freddie Mac instituted some very, very new strict condo guidelines for who can actually, what condo complexes can get loans, and they had to meet some very strict guidelines, and s- uh, quite a few- Mm-hmm … didn't meet those. And so they've had to either build back up their reserves or get some work done on the complex. All of these things take time. And so-

Joanna: [6:59] Basically calling out HOA mismanagement- Yes … and that has been happening for decades- Mm-hmm … and that is not something that you can just turn around in a couple months. Yeah, exactly. Yeah. That's something that takes- A lot of work and due diligence by the HOA, and hopefully people are really tuning into that. I did have a lot of HOA run-ins in the past year- Mm-hmm … with some clients, and unfortunately, there's still HOAs that don't know about this. So- Somehow. If you are looking into townhomes that have HOAs or condos that have HOAs, really get with somebody who knows what they're talking about lender-wise and realtor or broker-wise. Yep. That will just make the most sense for you- Yep … and make it a much more streamlined process. And we

Christian: [7:40] do have an entire podcast where Joanna and I go over this- Mm-hmm … in detail, um-

Joanna: [7:45] Yes … Speaker: I don't- I can't remember what that podcast is off the top of my head, but if you just search back, it was sometime in 2024, I believe, that we went- Mm-hmm over that. Maybe- We did … end of 2023. Yes. I think,

Christian: [7:55] yeah- So might've been end of 2023 … it was, it was wintertime.

Joanna: [7:56] I know that.

Christian: [7:57] Yeah. Mm-hmm. One thing that could also shift the demand for condos, and we talked about this in our 2024 recap, is DADUs. DADUs, yeah. Mm-hmm. So detached accessory dwelling unit. This is basically otherwise known as, like, a backyard cottage. Those are becoming more and more popular. Uh, like Varun and I discussed at the beginning of this episode, there are gonna be more and more of those coming up- Yep … statewide. Thank goodness. Yeah. Mm-hmm. And this could- Have a, an adverse effect on condos because what used to be the most affordable way to buy a house was to buy a condo, 'cause they're generally more… less expensive than a single family house or a townhouse. Mm-hmm. DADUs are starting to pop up, or ADUs, which are attached to another structure. Those are starting to pop up more and more. Yeah. And those, depending on the area, can be a better entry point price-wise.

Varun: [8:49] Yeah, and they- they're in the same price points. Mm-hmm. Same bed/bath count, but- But

Christian: [8:55] they don't have- Those- … those high HOA dues

Varun: [8:58] And no shared walls. Yeah. And- Mm-hmm … maybe a yard, right? Like- Yeah … so many things going for ADUs- Yes … and DADUs. Mm-hmm.

Joanna: [9:04] Especially for those pet owners. Mm-hmm. Mm-hmm. I mean- Yeah … that gives you- Absolutely … so much freedom. There's so many condos which unfortunately have, you know, pet restrictions, which a lot of those are illegal in King County, FYI. But when you don't have to approach that, you know, even going into looking at something like a DADU or an ADU, it's just such a huge relief for the buyer. Yeah. So, I mean- Mm-hmm … as a, you know, the- the pet lady- Mm-hmm … on here at this moment, it's, I very much would rather look at a DADU or an ADU- 100% … over a condo.

Varun: [9:38] Yeah. Absolutely.

Joanna: [9:39] So.

Christian: [9:39] Yeah. Yeah. Another thing to keep an eye on that is going to shift a little bit of our market is the back to work policy- Yeah … which we talked about just briefly. But that's gonna bring a lot of people out of the suburbs and back into the core of the Eastside and Seattle.

Varun: [9:56] Yeah. ' Speaker: Cause people just aren't gonna wanna commute for an hour, hour and a half, two hours each way. Yeah, yeah. So there will be a trickle effect of that policy being enforced. Mm-hmm. Uh, also Apple bought a huge- Yes … space in Seattle downtown.

Christian: [10:09] Mm-hmm.

Varun: [10:10] And I don't know what their policy looks like, but I'm guessing because they have office space, they will have folks in there-

Christian: [10:16] Yes … Varun: which will again pull more people into the core of Seattle. Yep, yep. They took over, it's the biggest commercial lease since 2019, I think is what I saw.

Varun: [10:25] Yeah.

Christian: [10:26] They took over a huge portion of Meta's former space on Lake Union on the, uh, East Lake. Or no, on West Lake Union.

Varun: [10:34] Right. Right.

Christian: [10:34] Kinda on the- The border of South Lake Union and West Lake Union. That's gonna be interesting to see how that affects things. Yeah. And that's, I think, gonna play into a part of Seattle's home prices going up, whereas the suburbs might teeter out a little bit, 'cause during COVID they all went bonkers. Right. Yeah. Right. The suburbs outs- outskirts all went crazy, 'cause everyone wanted to move out and get more space. That might slow down quite a bit. The growth out there might slow down quite a bit- Mm-hmm … and, and we might see more demand in the Seattle area, which is gonna increase Seattle's prices, 'cause more demand, not enough supply.

Varun: [11:08] Yep.

Christian: [11:09] You got that imbalance, which is what we've seen already.

Varun: [11:11] Basic economics.

Christian: [11:12] Yep.

Joanna: [11:12] Yep, there goes that cycle.

Christian: [11:13] Exactly. Affordability will continue to remain one of the biggest issues- Yeah … in Seattle- Mm-hmm … in 2025. This is where I am hoping that the new legislation that the Seattle1 plan, which Varun and I went in depth on a whole podcast episode about this, we will continue to update that-

Varun: [11:34] Yeah … Speaker: topic over and over as the plan gets more finalized. But becau- as of June, 2025, we will have a very clear idea of what the next 20 years for Seattle's zoning will look like. Yeah.

Joanna: [11:48] That's a great podcast- Yeah … for anybody who hasn't heard it, that is just even thinking about buying in Seattle. Even if you're not an investor or anything like that- Mm-hmm … it just really helps to hear you guys talk about what is happening with that. Because I think just approaching it on your own, you're gonna be like, "Oh, no, never mind. It's too much. It's too overwhelming." But hearing you guys break it down, I cannot stress this enough, super, super helpful if you are thinking about buying in the Seattle area- Yep … anytime soon.

Christian: [12:15] Between the two of us, I, no joke, we probably spent- 50 hours combined going over everything in that plan- Easy and condensing it. Yeah.

Varun: [12:25] Mm-hmm. And, and continue to do that, right? And

Christian: [12:27] continue- Because- … ' Varun: cause things are continuing to change.

Varun: [12:29] Yeah. Yeah. It's, it's still dynamic. City's just, like, released another update- Mm-hmm … like, last week.

Christian: [12:34] Yep.

Varun: [12:34] And so they're continuing to refine the plan. Yeah. Mm-hmm. So yeah, there's a lot to come in 2025 on that particular topic.

Christian: [12:40] Yeah. Mm-hmm. In general, though, what it's saying is more and more ADUs and DADUs are going to be allowed on every single lot throughout the city of Seattle, but also statewide. Yeah. Whether that's where a current single family house is now in Seattle, you can do four units and potentially six units. Other parts of the state, you could do every single family house is gonna allow two units. That's statewide, regardless of how big your city is. It's gonna be interesting, and that, the effects of that aren't really gonna be known until some time in 2026.

Varun: [13:14] Yeah.

Christian: [13:15] Probably middle to end of 2026, because it takes, you know, a few months to get through the permitting process, and then it takes, you know, six to 12 months to actually build the stuff.

Varun: [13:25] Right. So. And again, this is a new thing for the city, so it'll take some time for them to- Understand their, their permitting process … go through the, yeah, go through a few cycles of permitting and- Yeah … figuring out what needs to change. So it'll take a few while for the first few to get permitted.

Christian: [13:38] Mm-hmm.

Varun: [13:39] But once it's dialed in, just like the ADUs and DADUs- Yep … they're gonna start cranking these out. Yep. And I know a lot of investors are just waiting on the sidelines. Yes. So you're gonna see a lot more units, smaller, hopefully more affordable units-

Christian: [13:51] Mm-hmm … Varun: which is what the aim is with- Yeah … the Seattle one plan. Exactly. Exactly. So that's something to keep an eye on. That will hopefully bring down- The median sale price overall for the city, but again, that's, that's still at least a year and a half to two years away- Right, right … from

Varun: [14:08] it

Christian: [14:08] happening. Let's talk about nationally. So we just went over a lot of things to pay attention to locally. Let's go nationally. Joanna, what, what's going on?

Joanna: [14:16] Well, nationally, home values are expected to grow at a modest rate. Zillow, Zillow forecasts a 2.6% increase in home values for 2025. They, it's like

Christian: [14:26] a decrease for us, but nationally it's gonna go up.

Joanna: [14:28] Okay. Obviously. Sure. Come on, now. And that just indicates that a softening that could be welcome news for buyers. Hmm. I mean, hey, we'll take it, right? Yeah, I

Christian: [14:36] mean, if it

Joanna: [14:36] happens.

Christian: [14:37] Shoot. Yeah.

Joanna: [14:37] Existing home sales are projected to rise to 4.3 million, which is up from just 4 million in 2024- Mm-hmm … suggesting a gradual increase in, uh, market activity. We love that. We love market activity. More sellers, more sellers.

Christian: [14:51] Please.

Joanna: [14:52] However, though, affordability challenges persist and buyers should prepare for another competitive market environment. I mean- Mm … have we ever not been prepared for that? I mean…

Christian: [15:03] Over the last decade- In Seattle, I just- … it, that's just the way it's

Joanna: [15:05] been … know. Yeah. I'm like, "We're, we're there." Yeah. But nationally if, you know, if you're going somewhere else.

Christian: [15:11] It's funny, I actually get phone calls from other agents across the country asking my opinion on what's going on in our market. I just had one yesterday. An agent down in Arizona called me up and said, "Hey, you guys generally lead the trends nationwide. What is happening? How do you prepare for this?" Yeah. "How can I best represent my clients nationally?" I was like, "Oh, well, here's what we're doing and here's what works, and here's what doesn't work," and so it's just interesting to see that, that people are kinda looking to us. Yeah. It used to be California, but there's so much going on in California- Mm … and so many people are leaving, and now with the LA fires, I don't even know how that's gonna affect things. Right.

Joanna: [15:48] So it's, that- I've been thinking about that a lot, actually- Yes, yeah … because that could drive a lot of people up here.

Christian: [15:55] Mm-hmm. Right, I could very easily see that. Mm-hmm. Yeah. Because we are a very desirable pl- uh, b- desirable place for people to move-

Joanna: [16:02] Exactly … Speaker: that are in California and in the LA area. And a- again, our- Which threw- … obviously- Yeah, this threw a wrench into how I was prepping for this episode. Yes, for sure. I was like, "Wait a minute. Now you have to potentially most likely factor that in," and that's huge, so. It's a

Christian: [16:16] lot of people.

Joanna: [16:17] Yeah.

Varun: [16:17] Even on the legislative side, I've seen in the last six months more and more governments or, uh, cities nationwide permitting the ADUs.

Christian: [16:26] Mm-hmm.

Varun: [16:27] Like, it, this is a trend that is sticking- Yes … and Seattle's been leading the charge, and we are getting ready for the next phase of this whole- Mm-hmm … development cycle to promote m- building of m- new homes. Yes. Which has been the shortfall- Yes … like, which has been the crux of the- The whole area inventory issue- Yes … that we've had for the last decade. Yep. Yep. So.

Christian: [16:45] Yep. And it is, we are kinda leading that charge, and a big reason why governments are becoming more and more open to ADUs and DADUs is because it gets more taxable income for them. Think about that. Yeah. From that point of view, which no one ever talks about, but you add in the backyard of a house that maybe was worth, let's just give a random, random number, $700,000, and now you add another unit on that same exact lot. You didn't really change the value. Maybe it went down to 650 of the existing house that was there. But now you added another $500,000 worth of property taxes- Mm … that you can get from that new unit that was just added. Yeah. You didn't expand your city boundaries, you just added more density.

Varun: [17:28] Right.

Christian: [17:28] That is- There's more property tax income for the city, and this is why it's going to spread across the country. It will ha- It already is starting to happen.

Varun: [17:37] Yeah,

Christian: [17:37] it will. It will happen more and more.

Varun: [17:38] It has to happen. It's not only the property taxes, but the expenditures the city has to take on to Service someone who's moving out of the city limits-

Christian: [17:49] Mm-hmm … Varun: or the government has to take on in that locality is a lot more. They don't want you to sprawl. Yeah. Because then- No … all your services, like fire response, police response, everything slows down. Yep. And all the infrastructures are then spread thin. Yes. They just don't want sprawl, and the only way to stop that is- More density … Varun: more density on the existing lots. Mm-hmm. Yep. And they don't want big apartments buildings in the middle of a, you know, residential- Neighborhood … area. Yeah. So you add a backyard cottage, ADU, DADU instead, and that meets the goal while not changing the whole feel- Right … of the neighborhood.

Varun: [18:22] Right.

Christian: [18:23] And there's also a lot of people that are aging in place. They don't want to have to move. They would love to stay- Yeah … in their neighborhood where their local doctor and pharmacist and all their friends and community is, and they can do that with a backyard cottage or an ADU.

Joanna: [18:37] Exactly.

Christian: [18:38] But there's so many reasons why they make so much sense.

Varun: [18:40] Yeah. It makes, it makes a lot of sense- Yes on a lot of different

Christian: [18:44] fronts. Yep. That said, inventory nationwide, just like in Seattle, is gonna continue to have issues. There's just not enough sellers willing to sell, we kinda touched on this earlier, because of those low interest rates. Mm. Until interest rates do drop down, when and if they ever do, they will. But when and how much, it'll just depend on, on when people are finally willing to sell. Yeah. Yeah. We'll go over interest rates here in a few moments. But first, let's, let's shift over to rents in the Seattle area. Varun, what's going on with that? What's predicted there?

Varun: [19:17] Yeah. So rent, with over one million multifamily units under construction in late 2024-

Christian: [19:23] Wow.

Varun: [19:23] Holy cow … uh, there could be a little bit of decline in rents. Mm. But that is just one aspect of the equation, right? The other aspect could be there is, there could be an oversupply in also the short-term rental market. So some of those could convert into long-term rentals. Yep. That is the supply side. But on the demand side, we already touched upon this, is the, uh, back to office policy for Amazon. And if other tech companies who have presence in the area start following that- Mm … that could have the counter effect of the supply and balance it out. So we expect rents to either stay stable or just come down slightly if so. But for the most part, it's gonna be a wash. Yeah.

Christian: [20:03] Mm. Well, and go back to what happened last year where rents, there was actually a bit of oversupply. Yeah. The back to work policy hadn't kicked in yet, and there were too many rents, uh… or too many units available for rent, so they, home price- or rental prices did drop a little bit.

Varun: [20:18] Right.

Christian: [20:19] We didn't see that on our smaller units, but on these big new apartment buildings we were seeing that.

Varun: [20:23] Right. Right.

Christian: [20:24] All right. Let's talk about our 2025 predictions. You guys ready for this?

Varun: [20:31] Sure.

Christian: [20:31] It's my favorite part of the episode. I'm gonna let you two go first, and then I will- Of

Joanna: [20:35] course.

Christian: [20:35] Geez … end, just 'cause that's just, when you're the host you get to do that, so. Joanna, you get to go first.

Joanna: [20:40] Oh, God. So- Basically After the research and the videos that I've watched-

Christian: [20:50] Mm-hmm

Joanna: [20:50] with, you know, just certain other people around this area, I feel that Dun, dun, dun, dun. It's gonna be very similar to this last year.

Christian: [21:02] Yep.

Joanna: [21:02] Um, sorry. I wanted it to be bigger than that. But honestly, just with everything, with inventory not increasing that much- Mm-hmm … if at all, and rates basically being the same-

Christian: [21:16] Mm-hmm

Joanna: [21:17] I'm predicting not much growth as far as, like, either home sales- Mm-hmm … I figure they're probably gonna be pretty similar to this year. Pretty stable, yep. And I also feel like, I do think home prices are still gonna go up, but probably just about the same rate that they were going up this year.

Christian: [21:35] So what is your prediction?

Joanna: [21:37] Ah, I don't like to…

Christian: [21:39] You're skirting around it, Joanna. I know, I know. I need you to actually say a number, so then next year we can go, "You were right, you were wrong."

Joanna: [21:44] I was so wrong this, this last one. So I'm gonna c- I'm gonna be a little bit more ambitious with this one. Uh-huh. And I will say that I think, we're talking home, home price percentage going up? Mm-hmm.

Christian: [21:56] Yeah, we'll just say Seattle specifically, just to make it easy.

Joanna: [21:58] Seattle specific, nowhere else. Yep. I think the home prices, uh, will go up s- 6%.

Christian: [22:04] There you go. All right. 6% from Joanna. Varun, what, what's your prediction for 2025? So-

Dan: [22:09] Seattle real estate prices.

Varun: [22:12] I would say, I would agree with Joanna. I'll start off with saying yes, I expect Seattle home prices to go up anywhere from 5 all the way up to 8%. Mm-hmm. It depends on how quickly permits get issued for new construction. I think that is going to lead the charge on- Mm … the prices.

Christian: [22:30] Yeah.

Varun: [22:30] And I don't think interest rates are gonna change a lot, but again, that's not my area of expertise.

Christian: [22:35] Mm-hmm.

Varun: [22:35] But we didn't see a lot of movement in 2024. If that stays true, then that's a wash. But if interest rates do for some reason come down significantly, that's gonna even add more fuel to the fire and push prices up. Yeah. So that's total k- unknown that we need to- Yeah … factor in for. So

Christian: [22:54] you're thinking…

Varun: [22:56] More like 6 to 9, 6 to 7, 6 to 8% probably is where- 6 to 8% … 6 to 8% is my range, yeah.

Christian: [23:02] Okay. I'm gonna go kinda similar to you guys. My prediction for the 2025 Seattle real estate market is a 5 to 7% increase in home prices. Again, there's so many factors that could change that dramatically, but I do think the continued supply and demand just out of whack-ness- Mm-hmm … that's a totally technical term- Yeah. Um- Nailed it … is, is gonna continue to increase and prop up values. As a home buyer, take advantage of that.

Varun: [23:32] Yeah.

Christian: [23:32] This will not happen forever- No … where home prices increase that much. At some point they will slow down. But take advantage of it sooner than later. If you're able to buy, you should probably consider doing it. That said, real estate is not a short-term investment. Real estate is a long-term investment. Right. Never look at it as a one-year, even though we're only talking about it as a one-year- Mm-hmm … l- like view lens. Always look at it as a three to five to 10-year minimum. I always tell people think of it as a five-year minimum. If you're thinking of owning a house or buying a house, and you think you're gonna move in two years, you probably shouldn't buy. Three years, it's like, okay, maybe, depending on what you're going to buy, and if you're buying something that you can add value to, to increase the value of the home, then yeah, maybe you can get away with a two to three year, you know- Mm-hmm length of time that you're gonna own it. But if you're just buying a place, and then you're not really gonna do anything to it, and five years later you're gonna sell, you probably should own it for five years. That's just the safe bet in general, and that's what we've always said. And you can look back at four or five years of this podcast and hear it over and over again. Yeah.

Joanna: [24:40] I just read somewhere, it was saying about the Seattle market specifically, it says, "Get in as soon as you can and hold it."

Dan: [24:48] Yeah.

Christian: [24:48] Yeah.

Dan: [24:49] Yeah.

Joanna: [24:49] So I'm like, yeah, that- 100% accurate … very bluntly put, but- Yeah … it's true.

Christian: [24:54] It is true. The, the net worth of people that own a home versus rent a home is-

Varun: [25:02] Is significantly

Christian: [25:02] higher extremely higher. It's 40%- Mm … increase. So I think it's, it adds an additional $253,000 to your net worth just by owning a home, like that over a five-year timeframe. Yeah. Yeah. That's, that's data that we, that I stole from our, this podcast from last year.

Joanna: [25:18] Oh, nice.

Christian: [25:18] So go back to that if you want the stats, but- … I think it was very similar to that. Like, the in- the amount of net worth increase for owning is just dramatically- It's dramatic … Joanna: higher. Yeah, I do remember that- Yeah, yeah … Joanna: for sure. Yeah. Let's go over what some of the hottest parts of Seattle are predicted to be. And Varun, you get to go first this time. Yeah. So where do you think some of the hotspots are gonna be?

Varun: [25:38] S- I'm gonna put my investor hat on. Yes. So I looked at some of the data from Redfin that they publish as investor purchases. Mm-hmm. And I'm not surprised by this, they predict they saw a lot more investor purchases in the North Seattle zip codes. Yep. 98115 and 98103 zip codes came up.

Christian: [25:57] So that's Northeast Seattle and North Seattle.

Varun: [26:00] Right. And this is really by Green Lake, uh, View Ridge- Yep … all of those neighborhoods. Mm-hmm. And it makes sense, because these are the neighborhoods where you have larger lots- Mm-hmm … more development- Mm … opportunity. And so I do expect those to be the hottest markets because you'll see a lot more new construction there.

Christian: [26:17] Yeah. Nice. That makes sense. Joanna, what do you think?

Joanna: [26:19] Well, I was thinking, but I guess maybe I'm thinking too far ahead. This is what happens when I start reading articles about, you know- … what's happening in the next couple of years. But I was thinking more in West Seattle and just south of that, like down to basically, like, the Burien and maybe Tukwila areas. Mm-hmm. I just feel like there's a lot of opportunity there. If you're willing to be on the forefront of doing that.

Christian: [26:48] Yeah.

Joanna: [26:49] It, I think it's putting on you know, your brave hat to be like, "Okay, you know, let's, let's start bringing- New blood to these areas that maybe have been overlooked-

Christian: [27:00] Mm-hmm … Joanna: for quite some time. But, you know, that's where you get a really solid price point, and you can get a good amount for your money. Yeah. Yeah.

Joanna: [27:08] I

Christian: [27:08] think. I think that could make sense, especially with the back to work policies in office, and those areas have been somewhat neglected. They just, people just- Yep … weren't paying attention to them. Mm-hmm. And with home prices increased and interest rates higher, that's one of the last affordable areas- Yep … in the city, or- Exactly … ish, city-ish. So I could totally see that as well. Makes a lot of sense.

Joanna: [27:30] And I have clients looking there, and, you know, the more you see people and buyers that you're like, I don't know, that you feel a connection to-

Christian: [27:41] Mm-hmm

Joanna: [27:41] moving to a place that you didn't think about, it then all of a sudden is like, "Oh, this is viable." Yeah. Okay.

Christian: [27:49] Yeah.

Joanna: [27:49] So.

Christian: [27:49] Yeah. And then my prediction is not necessarily an area. I personally love to invest in North Seattle. Yeah. Which we have, I have a flip and ADADU construction going on there right now. Already done a couple there. Did one in Magnolia, which is also a spot that I love. You live, actually, you guys both live in Magnolia. Yes. I'm surprised neither of you said that. I guess there's not as much availability there.

Varun: [28:11] Yeah, and the high price points make it- Right … difficult to- It's

Christian: [28:13] a high price point

Varun: [28:14] flip or invest there.

Christian: [28:15] Yes, exactly.

Joanna: [28:16] We're just trying to keep it to ourselves, okay? Yeah. Yeah, you just don't want

Christian: [28:19] the word to get out how amazing Magnolia is. I get it. I get it. I, again, love North Seattle for long-term holds. I love the U District. I've gone on and on about that. That's where I have the majority of my rentals. Um, I think, to answer it slightly differently, I think anywhere that you can find lots that you can add ADUs or DADUs to, those are the areas that are going to go the most crazy.

Varun: [28:45] Yeah.

Christian: [28:45] Mm-hmm. Um, and it's, I don't think it's necessarily an area of the city, it's specific lots that still allow that to happen- Right that haven't already been built on.

Varun: [28:55] I agree. Yeah. I, I would add one more thing, is I would also, I also expect a lot more development around the light rail corridor.

Christian: [29:04] Same. Yeah.

Varun: [29:05] The light rail corridors- That's where the West Seattle came in. Yeah. Mm-hmm. And, uh, that's where they're pushing a lot more density- Yes because they want people to not have cars individually- Mm-hmm … and use the public transit that they've spent millions and billions of dollars on.

Christian: [29:19] Yes.

Varun: [29:20] Yeah. That will be the other just corridor up and down- Yeah … where we'll see a lot more development.

Christian: [29:24] Yeah. And so I've talked about this since '07, when they had the plan initially to build the light rail, the initial light rail plan. That's when I bought on North Beacon Hill, knowing that that light rail station was going in there, and it worked out very well for me. I think that it's been said so many times now that everyone now is ignoring it.

Varun: [29:44] Mm-hmm.

Joanna: [29:45] Mm-hmm.

Christian: [29:45] And they're not paying attention to the Ballard and West Seattle lines that- Yeah will be coming up. They keep thinking, "Oh, it's so far out. It's so far out." It's, like, 10 years away It's not that far out. Right.

Joanna: [29:56] No. I'm like, it's 2027 for West Seattle. Yeah. And they've like, they've really narrowed down where- Where it's going … it's gonna go. So, I mean, that's gonna be huge.

Christian: [30:05] Yeah. Yeah. So there are some big changes afoot with the light rail that the expansion lines that are coming out. Again, I think people are just kinda ignoring it, 'cause it just seems so far out.

Varun: [30:16] Yeah.

Christian: [30:17] But it's not that far out

Varun: [30:18] anymore. It's not that, it catches up very quickly. Mm-hmm. Yeah, yeah.

Christian: [30:21] All right, so let's go over if you should buy or sell in 2025. So Varun, I'll let you take this one. What do you think?

Varun: [30:30] It'll be a gr- if it makes sense for you, do it. Yes. If it makes sense for you to buy, then please buy. Like, if you are able to buy it, buy. Do not try to time the market. Mm-hmm. Just buy the property you can comfortably buy. Yep. And if you are in a situation where you can sell and maybe upgrade to it. Yes. One thing about real estate, don't try to time it, right? Yep. Like, it's the biggest lesson we've learned.

Christian: [30:53] Yes.

Varun: [30:54] It's not timing the market, it's time in the market.

Christian: [30:57] Yes.

Varun: [30:58] So if you're able, buy.

Christian: [30:59] Yep. As the old saying goes, don't wait to buy real estate. Buy real estate and wait.

Varun: [31:04] Yes.

Christian: [31:05] It is such a good statement, and it's so, so true. Yeah. And it has been tried and true, to be honest. We talked about how real estate is a longterm asset. We don't need to go over that anymore. We talked, well, we haven't, I guess- Wasting your money on rent, if you don't think you're gonna be in Seattle or in that home for, again, like we said earlier, more than three years, probably shouldn't buy. But if you think you're gonna be here for the long term, three to five-plus years- Mm-hmm it probably makes more sense to buy. Yeah. There's so many tax advantages to owning real estate.

Varun: [31:39] Agreed.

Christian: [31:40] If you need to, there's a great podcast episode that I did where I interviewed Matt Bontrager of True Books, who is a c- a CPA. He's the most famous, uh, CPA on Instagram. Um, we had a great interview where we dove really deep into the pros and cons of owning real estate and the tax advantages. So- Yeah … look back, find that, that episode, and, and learn up about that.

Varun: [32:03] One thing I would say is, on the contrary, I've been trying to convince at least who- whoever's into kind of thinking of investing- Mm-hmm … and on the sidelines and renting, I'm like, even if you're not gonna stay in that home long, buy, and after two years any gain is tax-free.

Christian: [32:17] Yeah.

Varun: [32:18] Stay in it for two years.

Christian: [32:18] Yeah.

Varun: [32:19] And if you, bonus, if you buy a lot with the development potential, great. You can build on it, or at least you'll get more dollars for it in the future.

Christian: [32:29] Even if you don't develop it.

Varun: [32:30] Even if you don't develop it. Because you

Christian: [32:31] have that potential

Varun: [32:31] to develop. Exactly. Yeah. So I'm like buy now. Even if it's one year, two years, three years, it doesn't matter because in the next five to 10 years you're gonna see this wave of a lot more development- Totally … thanks to the new density push. Yep. Mm-hmm. And so whatever land you can lock down, that's all bonus.

Joanna: [32:48] That's so smart.

Christian: [32:49] 100% true. Yeah. Anyone that can, like you said, lock down some land.

Varun: [32:55] Exactly. It's land banking.

Christian: [32:56] Yeah, exactly. Yeah. Exactly. Another way to do it is to just get creative. There's a lot of your family that probably has some money that they're willing to lend you or gift you. I'd say probably a third of the people that we help that are first time home buyers, not even just first time home buyers, just home buyers in general, they get assistance from family.

Joanna: [33:17] Yes.

Christian: [33:17] It is so common. This is not an unusual thing. So if you are like, "I just don't have a big enough down payment," which you probably do have a big enough one, you just don't realize it. The biggest myth in real estate is that you have to have a 20% down payment. Most of the buyers that we help have a 5 to 7% down payment.

Joanna: [33:35] Yep.

Christian: [33:35] And that's the average in Seattle. 68% of home buyers in Seattle have a 5 to 7% down payment or less. So if you don't think you have a big enough down payment, you're probably wrong. But if you don't actually have a big enough one and you need more, that family of yours, or friends that are really close like family, they might be willing to help you out, and it happens way more than you might think, 'cause people just don't talk about it publicly, but we see it.

Varun: [34:01] Yeah. Mm-hmm

Christian: [34:02] Another reason that you could buy is if you're looking to buy an investment property that you're gonna live in as well. So a, a-

Varun: [34:09] Oh, yeah … Speaker: duplex, triplex, fourplex, you can now, as of November 2023 you can buy up to four units with just a 5% down payment. 5% down. That… Yeah.

Christian: [34:21] Insane.

Varun: [34:22] That, that's just crazy for me. Like, uh, I'm so glad the guidelines changed-

Christian: [34:26] Yes … Varun: because th- that, that allows, again, more affordability, right? Mm-hmm. Like, now you can buy a much larger property. Mm-hmm.

Varun: [34:33] For example, if you're buying a million dollar property, you just need 50,000 down- Yeah … to get into the property, and if it has four units- Chances are your mortgage payment is much lower than if you were to buy a single unit.

Christian: [34:46] Mm-hmm.

Varun: [34:47] Exactly. A cheaper single unit.

Christian: [34:48] Like a condo. L-

Varun: [34:49] like a condo- Yeah … because there are three other units paying part of your mortgage- Mm-hmm … or most of your mortgage.

Christian: [34:54] Yep.

Varun: [34:55] And you have a much nicer, bigger value asset.

Christian: [34:58] Yep, exactly. Yeah. And after a year you can move out. You don't have to be in there forever.

Varun: [35:02] Yeah, and the rate stays. Rate doesn't move. That's another thing- Yes … that people think that the rate changes once you move out. The rate's locked in. Mm-hmm. That's it. After a year, you move out, no one's gonna come back and say, "Oh, no, no. You don't stay here."

Christian: [35:12] Yeah. " Varun: We're gonna change the

Varun: [35:13] rate on

Christian: [35:14] you." The loan, the loan documents literally say you just need to be there for 12 months- Right where that's your owner occupant. Mm-hmm. You're, you're the one living there, 'cause that's how you got the loan.

Varun: [35:22] Right.

Christian: [35:24] Yeah. 5% down for up to, I think it's up to f- 1.5 or $6 million now.

Varun: [35:30] Wow. That's

Christian: [35:31] crazy. Yeah, yeah. It's, it's insane. So like $75,000 for your down payment, and you can buy a $1.4 million fourplex.

Varun: [35:38] Right.

Joanna: [35:39] That's insane. That's, yeah. Great.

Christian: [35:41] It's nothing. If you are looking to become an investor or invest some more in 2025, please reach out to us. Varun and I both are local investors in the Seattle area. Yeah. We both have long-term holds. We have dadu developments. We've done flips. We can help you out with that. Yeah. We can help you understand what makes sense, help you come up with a plan that makes sense for you. I just met with a past client last night, um, going over this exact same thing, coming up with a plan for him so that he can eventually not have to work. Yeah. And he has multiple streams of income coming in.

Varun: [36:17] Or if you just wanna be a passive investor- Totally … take like deploy cash sitting in your bank- Mm-hmm … and make sure that money's working for you. That's- So become an investor- Mm-hmm … just by passively investing. D- don't have to be actively involved. Again, talk to us. We have a lot of these different- Yeah partnerships that are available.

Christian: [36:35] Yep. And that's exactly what my friend last night, past client, he's gonna do. He doesn't have the ability to do it all right now, but he wants to just passively invest-

Varun: [36:44] Right … Speaker: until that nest egg gets bigger and bigger, and he can go out and do it on his own. So if that's you, we have options. We won't share rates, 'cause we're not supposed to do that, on what that could look like, but talk to us and we'll help you out. Yep. And remember, too, although buying a home does seem very daunting and like a huge u- undertaking- It's really not if you are educated. Unfortunately, the majority of real estate doesn't do a great job of educating you. We have really demystified that home buying process. After doing this Beers and Home Buying class, which we've done for over a decade now, we have simplified this home buying process so- Yeah … well and so simply, and it's just a common sense step-by-step approach. Do this first, then that, then this, then that. When you go through the whole process, that's when you make the informed decision of whether or not you should buy. Yeah. It's your choice. We're not gonna push you or pressure you to do anything. But you need to go through the process, and the very first step is coming to our very free, no pressure Beers and Home Buying classes. We do at least one a month. Some months we do more than one. If you are interested in coming, just look at our website, beersandhomebuying.com (opens in a new tab). Beers as in the drink with an S at the end, beer S, and homebuying.com. All of the classes are… Each month the class is posted. Sometimes there's multiple months on there, and you can sign up right there, again, totally free. So that is the first step in this home buying process. Now we're gonna take a moment to talk about interest rates, mortgage rates, so we're gonna bring in an expert, Mr. Dan Keller of New American Funding, to talk about that.

Dan: [38:32] Hey, guys. It's great to be back.

Christian: [38:34] Yes. Thank you, Dan, for coming on- Yeah … and sharing your mortgage expertise with us. So for 2025, what are all the experts and what are you kinda thinking, in your opinion, uh, is gonna happen with mortgage rates in 2025? 'Cause it, 2024 was a bit of a weird year, lots of ups and downs, but really kinda ended out even-

Dan: [38:53] Yeah … Speaker: at the end of it all. Yeah.

Christian: [38:54] What are we seeing for 2025?

Dan: [38:56] So I hate to spoil it, but none of this matters. It doesn't matter what I think. It really doesn't. 'Cause I'm a nobody. Yeah. Um- Yeah … I just do mortgages. I love mortgages. It's what I've done for, shoot, almost 18 years. And so what I can tell you, I'll tell you who I follow and then their track record for getting it right or wrong. Yep. But I think both you and I… I mean, I met you right after, gosh, it was like 2011, 2012- Mm-hmm … right after I kinda got in the mortgage industry in '08. And so what guys like you and I can do from experience- Yes … is we, we just know how markets move. Mm-hmm. I can say that I haven't been, other than the past two years, haven't been in a market like this with high interest rates. So- Yep … we've got, this is year number three experience with higher interest rates. Let me tell you what I do every single year, and you and I have done re- market reviews and market forecasts for, like, four or five years, six years in a row, right?

Christian: [39:47] Yeah, yeah. If not more, ' Dan: cause, uh- We used to do it on the radio show, too. Yeah. What I do is there's four entities that I follow, I track, I listen to, I take their data, their information, and then I apply it to real time economics. Like, like today we got a, uh, CPI, core CPI report. Well, that caused the market to move. So I take what realtor.com National Association of Realtors. Mm-hmm. So two entities in your world. Yeah. Well, actually, the third one's Zillow. Mm-hmm. And because they pay a lot of money and have some really high-end economists- Yes … on their teams. On staff, yeah. Yeah, on their staffs, right? Yeah. So they produce information, data-backed, but the fourth is MBS Highway, and that's backed by Barry Habib. I really- Mm-hmm … respect him in the mortgage industry. Yeah. Now, he wins the, what do they call it? The, it's not the Gold- I wanted to say the Golden Globe. But he wins the Crystal Ball Award every year as an economist 'cause he's really close. So year over year, he's closer to hitting his estimates- Mm-hmm … his projections, predictions, than any of these others. So what are they all saying for 2025? So they're saying a year from now today- Mm-hmm … they're expecting, realtor.com is saying mortgage rates, 30-year rates, 6.2%. Hmm. Okay? So remember the last podcast, we talked about rates in review, where rates at today, what's gonna cause them to move. We're at about 7% as we're talking- Yep right now. So that's about a one-point decline. Almost, yeah.

Dan: [41:13] Almost. Now, the National Association of Realtors is saying near 6%, so- Hmm … you know, right around the same. Similar, yep. Zillow just doesn't wanna play. They're just like, "Ah, N/A. We're not interested." Okay? Interesting. Which is funny, as of right now. I'm sure they'll jump in after they see the, the, the, the cards that the other guys have put. See what

Christian: [41:30] everyone else says- Yeah, yeah … then they'll be like, "Eh, we'll be in the middle of them all." Yeah,

Dan: [41:33] I think they're wanting to hold out just a little. That's funny. But MBS Highway-

Christian: [41:37] Mm-hmm … Dan: surprisingly, 'cause they're typically very conservative, 5.75. Wow. So they're saying maybe a little bit below six. So you take all of that, Christian, 5.75 to 6.25 is- Mm-hmm is where we can, a year from now, expect rates to touch. Yeah. And that, that's not, doesn't mean they're gonna stay there. No. Because remember last year. Yeah. Seven, dropped all the way down to six, back up to seven. So about a point fluctu- fluctuation. It's kind of like what we saw last year. Mm-hmm, yep. Very interesting. Yeah. So for you as a potential home buyer and as a potential seller, and maybe as a potential seller and buyer for a new house, this could make a big difference for you. Your mortgage interest rate changes how much you can qualify for and how much you can afford way more dramatically than- Yeah … the actual purchase price of the home. Yep. And that's what people just don't realize until they start talking to an expert like Dan- Yeah … and they look at different mortgage rates and what they can cor- currently qualify for. Same goes for your down payment. Your down payment amount, you put down $50,000 more or $100,000 more, it doesn't change your monthly payment- At all all that much. It's pretty minimal compared to what interest rate changes can do for you. Yeah,

Joanna: [42:53] yeah.

Christian: [42:53] So-

Joanna: [42:54] Yep … Speaker: having that change that much, a percentage point in one year, that's a huge change. That is, in my opinion, if that does happen, home prices are gonna continue to skyrocket, um, in the Seattle area. And m- Again, if you are thinking of buying over the next year, I would probably do it sooner than later. Yeah. Because once they drop, it's gonna be even more competitive, and when it gets even more competitive, that's when you're gonna pay even more for the house. You can always buy a house at a higher interest rate and then refinance that loan- Yeah … into a lower interest rate down the road. All the while, you're keeping the purchase price that you paid for it up front. Yeah. So if I buy a house today in January of 2025 at $900,000 at a 7% interest rate, in six months or nine months or a year, if interest rates go down to 6.2%, I can just refinance my loan and get that lower rate. My purchase price always stays the same. I'm not changing that. Yeah. So the smart money would say buy sooner than later if interest rates are going to- Yeah go down.

Dan: [44:03] Yeah, lock in that value. Lock in that value. You can always go… It, it, it, Warren Buffett said this a while ago. He goes, "If you try to do what we do with mortgage rates with a stock, it's called insider trading, shorting a, a stock, and that's illegal, right? Yeah. With a mortgage, you can go back to the lender or pick a different lender- Mm-hmm and you can say, "Hey, I wanna lower my rate in which I owe you that money."

Christian: [44:25] Yeah. " Dan: And oh, by the way, the savings, my equity, I'm not gonna give you any of that." Mm-mm.

Dan: [44:31] That's crazy.

Christian: [44:32] It is crazy.

Dan: [44:32] And so, yeah, you can, you buy now, you lock in that value. And I was talking with a client the other day, 'cause a lot of the objections and the concerns that I get as a mortgage professional is I'm gonna wait, number one, until rates drop- Mm-hmm which that's not a good strategy. Nope. And I have data, and I have reports that I share with people- Mm-hmm … uh, to show that there's a better way to look at that. Or I'm gonna wait until the market, until there's more inventory, or I'm gonna wait until the spring. If you were to wait, so I do a cost of waiting analysis, you're gonna pay more because you just did a market prediction report for 2025. Yep. 2024 was what? About 8% in King County? Yeah,

Christian: [45:09] yeah.

Dan: [45:09] So let's just

Christian: [45:11] say- Yeah, 8.6% in Seattle.

Dan: [45:12] So let's say 8 to 10%, which I used with this client. Mm-hmm. That $800,000 house is gonna be worth $80,000-ish more- Mm-hmm … but that's not what you need to focus on. You just said it a minute ago. What you need to focus on, what nobody's talking about, is when rates do drop a point, the National Association of Realtors recently said a 1% drop in rates will bring four million new home buyers into the marketplace that now qualify.

Christian: [45:36] Yes.

Dan: [45:36] What does that do to the home that you're making an offer on? You're no longer one or, well, have two or three. You're now three, four, or five offers. Mm-hmm. So home values went up 80 grand, but now you're gonna have to pay more for that house. That's what people aren't considering. 'Cause you're competing

Christian: [45:49] with- Yeah four, five, 10, 20 different offer- That's it … or buyers for that same exact house.

Dan: [45:54] That's it. That's it.

Christian: [45:55] Yeah. Yeah. Sooner than later in a market that is expected to increase, which the Seattle area is- Yeah … is going to be a good guide. Now, again, do not buy just because we're saying- Correct … to buy. Yeah. You need to go through the correct steps to make sure that you can actually afford this house. We lay out all these steps in a very sequential step-by-step- Yeah … plan for you. Come to the Beers and Home Buying class first, beersandhomebuying.com (opens in a new tab). Attend that, go through the steps, educate yourself on the process, educate yourself on where you can afford to buy what you want, which is important, 'cause you don't wanna buy where you don't wanna live. That doesn't make any sense. Yeah. So understand where you can buy or what you can buy in the areas you wanna be in. And then from there, make the decision. Do I actually even wanna buy? Does this make sense for me? So do it step-by-step. Don't just jump into it 'cause we said to do it. Yeah. Be smart about it. We're not gonna pressure you. We just want you to have the correct information so that you can make that informed decision. Yeah.

Dan: [46:56] Amen.

Christian: [46:57] So that's it for this episode. I hope this was super helpful. I hope all of the info that we gathered and shared with you is going to help you make an informed decision in 2025. It'll be fun in 2026, like every year, to look back and see what the heck we learned, and what we said, and what actually happened. Yeah. See

Dan: [47:15] how accurate we were.

Christian: [47:17] Generally pretty accurate. Yeah. Yeah.

Dan: [47:18] Yeah.

Christian: [47:19] Generally pretty accurate tracker.

Dan: [47:20] We're both pretty conservative- Yeah … when we talk numbers.

Christian: [47:22] Yeah. Yeah. Yeah. So that's it for this episode. Again, if you are interested in attending our Beers and Home Buying class, just go to beersandhomebuying.com (opens in a new tab), sign up. We have new ones every single month, other than December, 'cause no one shows up 'cause of the holidays. So please attend that as your first step, or just reach out to us. We're happy to chat with you. Even if this is not your first time buying, we're happy to chat with you. We help lots of buyers, lots of sellers, lots of investors like ourself become successful in this market. And the whole point is to make some money in the whole thing. That's what we're trying to help you do, and that's why we gather all this info, so that you can make that informed decision, and hopefully build some wealth for yourself. So that's it for this episode. We'll see you again in a couple weeks. See ya.