2025 Seattle Real Estate Market Recap

Christian: [0:00] Hello, hello, and welcome to another episode of the Awesome in Seattle podcast. This is your host, Christian Nossum, with the Awesome Nossum Group at Wilson Realty Exchange, Inc. And today, we are doing our 2025 year in review. So what the heck happened in the Seattle and the national real estate markets in 2025? And there is a lot to go over. Some of the highlights of what we will cover, we will go over what happened nationally, what happened locally in Seattle. We're gonna have Dan Keller of New American Funding go over what happened with interest rates, mortgage rates, which was a lot. We're gonna talk about some investor lessons that we learned, and we're gonna talk about some of the buyer behavior shifts, and then we're gonna say which neighborhoods actually performed the best, and a couple that didn't perform so well. So stay to the end for that. So let's start nationally. So 2025 will nationally be remembered as a year where nothing broke, but nothing really moved either. Existing home sales stayed near multi-decade lows, hovering around four million transactions for the year. Prices didn't collapse. They also didn't surge. They just kinda stalled. They went up about 1 to 2%, depending on which data source you are choosing to go with. Inventory improved a little bit, uh, compared to 2023 and 2024, but still not enough to become a true buyer's market. So what did we actually experience? Well, buyers wanted affordability, sellers wanted yesterday's prices, and rates kept both sides frozen. So that's why a lot of economists stated that 2025 is really a stalled market. Key takeaways, if the deal made sense, it happened, but if it didn't, it just sat. So let me introduce my co-hosts with me today, and then we'll go into a little bit more. So

Dan: [1:52] who is this?

Joanna: [1:53] Hi, I'm Joanna Beecher, and I am an agent on the Awesome Nossum team.

Varun: [1:57] Hi, I'm Varun Jain. I am an agent on Awesome Nossum team as well.

Christian: [2:02] All right, so let's go over what happened with mortgage rates. Dan, fill us in.

Dan: [2:08] Hey, Christian and team. Thanks for having me back. I think this is, like, our 15th year doing a year-end review, and, uh, next year, 2026, for example, projection. So I'm really excited to give you a review, a 2025 review. So in 2025, what we saw was the markets finally start to stabilize in the lower sixes. So you gotta look at the last three years where we saw high rates in the eights and then high rates in the sevens, and now we had rates go from the upper sixes, low sevens, all the way down to the low sixes, and we've been pretty stable there now for about three or four months. So let's look at what 2025 actually looked like. So January 2025- We saw mortgage rates in the 6.9 to 7.1 range, okay? Then we got into the spring and mortgage rates started to drop into the 6.6, 6.8, 7.5 range. And then this is key to understand this. In the fall, mortgage rates finally dropped down to the 6.5, 6.6, and they stayed there and started to slowly decline down into the 6.1 to 6.2 range in November, December. Now, why did they do that? You g- you need to look back and see what happened during the second half, if you will, or the last quarter of 2025. The Fed dropped the fed rate consistently in September, in October, and in December. They're gonna meet again in January 2026, here in a couple weeks. And what that's gonna show is whether or not they go four consecutive rate drops. We don't know quite yet. So number one, you have to realize that the fed rate is not mortgage rates. Number one. Number two, the fed rate and mortgage rates are not directly connected. They work indirectly of each other. So if you go back to the 1970s to current, you'll see that as the Fed drops the fed rate, shortly thereafter, typically, 30-year fixed rates drop as well. Same thing when they raise the fed rate. 30-year fixed rates tend to go up. So key word right now, Q4 and present, is stability. Stability is a good, good place to be in real estate and mortgage. So that's my 2025 review. Thanks again, you guys, for letting me come in and drop some nuggets with you today.

Christian: [4:21] All right. So let's talk about investor updates and kind of some of the news. So Varun, let's go over kind of what happened. There was a little bit of whiplash in 2025 for some investors. What stood out to you?

Varun: [4:35] Yeah. So, uh, we saw that the market, especially on the investor side, turn a lot in the second half of 2025. Yep. It did expose a lot of bad assumptions and, uh, optimistic or over-optimistic underwriting. Um- Some of the good things that did kinda happen in 2025 was One Seattle plan is finally here. Yes. We've been talking about it for 18 months now. Yeah. And it's finally here, so that was great. We have yet to see the implementation of it, but we now have the framework. That also means more density, so neighborhoods are gonna start looking differently. Underwriting is gonna be different, and we're gonna see more of, like, cottage-style homes or row homes with spread between single-family homes. And then we saw three-pack townhomes, uh, or three-pack, which is where you have an- Double ups, yeah SFR, ADU, and DADU. That kind of starting to tail out. Um- Yeah … so couple of kind of big learnings here were if you… Just because you can build something doesn't mean you have to. Like, more density doesn't really maximize value. Sometime less is more. So that was one of the big lessons for investors is you don't have to cram the site with, with as many units as you can build. Mm-hmm. Leave a little bit more room. Add some yard space. Leave some room between your units. Because what happened was a lot of these three unit players where you have an SFR, ADU, and DADU, started becoming difficult to sell. DA- DADUs would sell easily because it is detached, but the SFR and ADUs took a hit in value because they are pretty much like a townhome. They have shared walls- Mm-hmm … and so they acted like townhomes. Yep. And-

Christian: [6:19] Even though one was bigger, maybe 1,800 or 2,000 square feet, you still had an attached wall with 1,000 square foot unit next to you. That's

Varun: [6:26] right. That's right, and then that just was-

Christian: [6:28] And neither of them had yards.

Varun: [6:30] No. Generally. None of them had yards. Yeah. Yeah, and so that kind of created more issues with the buyer pool.

Christian: [6:35] Yep.

Varun: [6:37] The other kind of big issue was DADU lots started selling for a lot more dollars than we've seen in the past.

Christian: [6:46] Yeah.

Varun: [6:47] This was partly because we saw, at least in Seattle, an influx of a lot of newbie investors.

Christian: [6:53] Mm-hmm.

Varun: [6:54] These first time investors who were willing to pay a little bit more to just get their foot in the door, that drove prices up. Agents became smarter and started pricing the land value into the, uh- Listing … in listing price. Yep. And so that drove prices up. And investors a lot of times could not afford those values, but if you're a primary home buyer and still looking to build in your backyard, yes, you could still justify that price because you're buying the home hopefully with 5% down, so your holding costs are lower- Yeah and cash and, and the deal is lower. So it worked in those kind of edge cases, but a lot of the DADU lots were just too high priced for it to actually pencil out for investors.

Christian: [7:35] And I think what we saw too is that some investors actually lost money doing DADU deals. Right. Right. Which is insane if you think about it 'cause that's a lot of work to do to lose money.

Varun: [7:45] Yeah. It's a 12-month cycle from acquisition to dispo for a- any DADU deal in Seattle, and it-

Christian: [7:51] Or maybe nine months if you're lucky, if you can somehow get it- … so fast, but generally you have to-

Varun: [7:55] Yeah, nine to 12 months, but that's a long time. Mm-hmm. Uh, and then for it to not actually materialize and the numbers not work out, that really kills the deal.

Christian: [8:04] Yep.

Varun: [8:06] So those were kind of the big learnings. The big takeaway f- from 2025 was investors need to be really good about their buy box. You need to have a very clear buy box and have very strong underwriting when you're buying deals as we look into 2026, because 2025 taught us one thing: assumptions and your underwriting is what will make sure you are protected against the downside of the deal. Look at, uh, utility costs. As you look at the One Seattle plan, think about utility upgrades that might come into play. An example that I ha- ran into, um, I was thinking of demolishing one of my rentals and building a SFR, and the city came back, uh, asking me to extend the eight-inch water main.

Christian: [8:54] Mm-hmm.

Varun: [8:55] That cost roughly $1,500 every linear foot. And the ask from the city was to extend it about 200 square feet. I was not going to … Uh, that project was not feasible. 200

Christian: [9:07] feet times- That's insane … 1,500 a square foot.

Varun: [9:09] Yeah, it was just a no-go.

Christian: [9:11] Linear foot. Yeah.

Varun: [9:11] Uh, that, that pretty much squashed the deal, but because it's a rental and th- that was one of the exit strategies, I'm still gonna pivot to something else, but a- at least it was good to know upfront what the cost is gonna be. That is the same thing you need to account for in every deal. Leave enough room, leave enough margin to, um, absorb these utility costs, electrical upgrades, transformer upgrades, going underground for electricity, sewer, water, stormwater extensions or upgrades, right-of-way upgrades. These are all expenses that the city can Stack onto your projects, and that's where you need to kind of, uh, leave enough margin.

Christian: [9:49] Yeah. And I think the big takeaway too, just because you can doesn't mean you should. Should,

Varun: [9:54] yes.

Christian: [9:55] This is the thing we repeated numerous times, and especially with the Seattle I plan. Just 'cause you can theoretically build six units on a 4,000 square foot lot, or even four units, doesn't mean you should. Yeah. So.

Varun: [10:07] Leave some yard space. There are more dogs in the city than kids.

Christian: [10:11] Yeah. Yep. Exactly. Oh, yeah. Joanna points that out all the time.

Joanna: [10:13] I sure do. All right. I have those dogs.

Christian: [10:16] Yeah, you do. So Joanna, let's talk about buyers. You were deep in a lot of home buyer, like a standard home buyer conversations in 2025. What kinda change throughout the year?

Joanna: [10:27] Um, I think this past year, um, is when I, I feel like buyers have gone real deep on the internet- Mm-hmm … and started doing some research, which can be good and bad. There was a lot of good, though. I feel like they're saying, "Okay, so this is how buying works now, as far as price points and availability and rates," right? Another thing that we have noticed- Mm-hmm … is that buyer brokerage services agreements are definitely normalized at this point.

Christian: [10:55] Yeah, it's not that- Um- … scary unknown- No … of s- having to sign a contract with an agent, which became law in January 2024. So- So

Joanna: [11:04] everyone's can be protected,

Christian: [11:05] right? Yeah. Everyone has to sign it. It used to be kind of like a big, like, "No, I'm not signing that. I don't wanna do that." And I was like, "Well, everyone has to."

Joanna: [11:11] Mm-hmm.

Christian: [11:12] It's more normalized now.

Joanna: [11:12] It is definitely more normalized. Some people have been doing it for a long time, and now everyone just has to do it. Mm-hmm. So there you go. Another thing that I think buyers are becoming just okay with, or accepting it because they have to, is the density stuff, is understanding that, you know, in a city like Seattle where there is no land available, we're trying to increase density in a thoughtful way. Most people are doing it in a thoughtful way or trying to, and that does include things like DADUs, the detached additional dwelling unit, and the ADUs, things like that. I think that's super important for buyers to understand, and I think they're starting to- Become okay with it.

Christian: [11:57] Yeah.

Joanna: [11:57] I wouldn't say that they're 100% on board entirely, 'cause everybody wants a single family home for $500,000 in this city- with a yard, and that's just not gonna happen. Definitely. Yeah. But I think people are coming around to it. Anyway, so and some homes got multiple offers in the first weekend, right? Yep. Because they look great. And this is just the difference in a market when there's just not a lot of inventory, because then on the flip side of things, you have homes that come on the market, and then they sit- Mm-hmm for weeks and months and months. And it's like trying to figure out the difference there. I think that does confuse buyers, but that's where they have to really rely on their agents and getting out to tour and things like that. Mm-hmm. And I think that's becoming more clear to buyers as to not every house is gonna sell in under five days. Yeah. But they also can't depend on a house sitting for weeks and weeks.

Christian: [12:49] Yep. And a lot of times, like you said, you have to actually go see it in person. Online, you're like, "How is this not sold? This looks amazing, and it's priced great- Mm-hmm … in an awesome location." And then you get to the house, and you're like, "Oh, that's why."

Joanna: [13:01] Oh, yes. That just, even in 2026, it's still happening.

Christian: [13:05] That's always gonna happen, by the way. Uh, it's

Joanna: [13:05] always gonna happen. But yeah.

Christian: [13:07] And we

Joanna: [13:07] definitely talk about this in our class that we teach as well, but going to tour and getting in a house is super important, so that you can understand just by being there, you know, okay, this house is probably gonna sell really fast. Mm-hmm. Or, all right, this is not gonna sell that fast- Yeah … 'cause it smells like mothballs, which you can't see in a picture.

Christian: [13:27] No. Smells are

Joanna: [13:29] not visible. You can't get the smell. Um, but I think one of the biggest things for our team, which I'm gonna brag on a little bit, okay? So we helped a lot of first-time home buyers in 2025. Mm-hmm. And many of them came through our home buyer class, Beers & Home Buying. Mm-hmm. And for us, I think we sold about 50 homes- Yeah … between the three of us, and that's, you know, pretty standard. But also, in 2025, when not a lot of people were doing that- I think pats on the back all around, guys. Good job. And we were in the top 3% of Seattle brokers.

Varun: [14:04] That's awesome. Yeah, that is great.

Joanna: [14:06] So bragging kind of done, but- … also, I love it. But yeah, so for our home buyer class alone, we had around 350 people for only 10 classes- Mm-hmm.

Christian: [14:18] Yeah … Joanna: that we did, so that's also pretty great. Yeah. Yeah, and that's beersandhomebuying.com (opens in a new tab). Yeah, if you ever wanna come to one of these classes, they're totally free. This is our shameful plug. beersandhomebuying.com (opens in a new tab), beers with an S, beer like the drink, totally free. We do them in different neighborhoods throughout the entire year. Every single month, we have at least one, if not two, classes, and, uh, other than December. So yeah, check out beersandhomebuying.com (opens in a new tab) for our upcoming classes. They're totally free. They only last about an hour, then we do some Q&A after. So in total, you'll be there for about an hour and 20-ish minutes, give or take. So yeah, free beer.

Joanna: [14:57] And

Christian: [14:57] I mean- Some venues have food- … honestly- … Speaker: some don't … Joanna: we want you to work with us. That's, you know, one of the main reasons with that we do it. Of course, yeah. But it's also, there is no, you don't sign anything at that time. There's no pressure. Yeah. There's no pressure. It's not a timeshare presentation.

Joanna: [15:09] No.

Christian: [15:09] This is super laid

Joanna: [15:10] back- It's educational … Speaker: educational. In, like, a fun, beer-drinking kind of educational way.

Christian: [15:15] Yeah, and we have a ton of Google reviews talking about this, so you can look up the Awesome Nossum group on Google. You'll see no one ever says or complains about it being salesy or anything like that. It's just educational.

Joanna: [15:27] It's fun.

Christian: [15:27] It is.

Joanna: [15:28] And honestly, like in 2025, the people that really succeeded were the ones who came to the class- Yes … followed our steps-

Christian: [15:36] Mm-hmm … Joanna: and just, you know, kind of did what we talked about in our Beers and Home Buying class. Yeah. Which is how that even came about, is because Christian, who started the class and was seeing how home buying was being done didn't work. Well, yeah. The way that- … every other agent s- tells people to buy a house didn't make any sense. It does not. There was no common sense involved with it. So basically reinvented the steps, made it make common sense so that it's just easy and it just works. So if you follow our system, which is very different than everybody else, and we'll teach you this at the class, you'll have a much clearer idea. Every step of the process will make sense, and it's not hard. Yeah. Like, we just demystify the process.

Joanna: [16:20] And also following the steps, but I think understanding in the Seattle market specifically, you're not going to find perfection. Mm-hmm. Look at how your lifestyle is and what your price point is, and look for that and how you can make that home fit you and what you can do to that home to add value. I think when you're looking for perfect, that's where disappointment comes. That's where rushing comes. Mm-hmm. That's where things just could fall apart very easily. But that's also part of our working with us. I think that when you're a first-time home buyer- Just getting your foot in the door is really smart, and I think people are starting to understand that a little bit more. Yep. And understanding where things like ADUs, DADUs, and condos, townhomes can be a great start. Um-

Christian: [17:12] Or even house hacking.

Joanna: [17:13] Or house hacking. Um- Yeah, yeah. But that, once you understand Your buy box, even as a first-time home buyer- Mm-hmm … it's gonna help you make your decisions in a more timely, decided manner. Yeah. Yeah. And, um, I think that's really important. Another thing I wanna bring up is we saw a lot of unmarried couples- Mm-hmm coming through and buying homes, and just nationally, by the way, a lot of women, single women, were buying more homes than ever before. Mm-hmm. And I think that's phenomenal- That's great … and I'm really proud to, you know, know that and hear that, and keep going, girls. Uh, and, um-

Christian: [17:50] We actually have a podcast episode all about-

Joanna: [17:52] That's true

Christian: [17:53] unmarried couples buying together- Yes … as well as friends buying together. It is episode 153, so definitely check that out.

Joanna: [18:00] How cool would that be to buy with a friend, though? Yeah. I mean, especially if it's your first time buying a home. Mm-hmm. Yeah. Yeah, phenomenal. Then you could both, like, increase your own personal wealth by so much- Exactly. Exactly … and live with each other. Mm-hmm.

Varun: [18:13] Which is awesome. Yeah, and again, like, w- a good example of that is you don't have to even live with each other.

Joanna: [18:17] No.

Varun: [18:18] Let's say both of your budgets is 450. You can't find anything at 450, but let's say a duplex side by side sh- opens up at 900. You're both in the door in a different unit- Yep but now you can buy it as, together- Yeah … and still live in there in the neighborhood you want to, and combine your budgets.

Christian: [18:36] Yeah.

Joanna: [18:36] Yeah.

Christian: [18:37] Yeah.

Joanna: [18:37] It's

Christian: [18:37] awesome. Probably live in a better neighborhood, actually- Probably … than 450.

Joanna: [18:39] Absolutely, yeah. Yeah. For sure.

Christian: [18:42] Yeah. Okay. Varun, you actually helped one of your clients- Yes do this exact same thing that we just talked about. He bought a house hack. He was featured on the front page above the fold on The Seattle Times. Seattle Times. Woo-hoo. Yeah. Um, and, uh, and it was a house hack, and the title of the article was, like, How Gen Z Buyers Are Buying Homes, or something similar to

Varun: [19:02] that. In 2025, yes. In 2025, yeah. Um, and so this, uh, my client's name was Edwin, and he did not come to the class, but he found us through a networking event.

Christian: [19:11] Mm-hmm.

Varun: [19:11] And again, this is what we talk about, right? Like, take action. Yes. And he was really good right out of the gate. He knew exactly what he wanted to do, and we found this awesome opportunity off-market, a ready-to-go triplex in North Seattle. Um, it was a one bedroom, one bath in the basement, two bedroom, one bath on the main floor, and then there was a studio apartment in, uh, in the attic/the second floor. We saw it off-market. When we got there, that's when I found out that this is the only time they will allow any sort of inspection. The seller was, uh, kind of unhappy about the situation, because he had a offer on the table when he'd listed the property a few months ago. The offer fell through. He didn't wanna go down that route again, and so he was providing very limited access. And so that's when I had to, like, really make sure the plumbing and the electrical and all of that was good, so got into the crawl space area a little bit to check those things out for, uh, my client. Luckily, the seller was there, and I was able to ask him about- Sewer line and did he replace it? Because there were indicators where some work was done, and he was more than happy to share about all the work he had done. I was able to look at all the permit history for that property to make sure everything was done on the up and up. Everything checked out, and we were able to get Edwin in there. He bought the property 5% down. He lives, after all costs, like renting the basement unit, renting the second floor studio, he has a girlfriend who chips in as well. All said and done, he lives in that two bedroom, one bath unit, which actually has views of the water, for $2,100.

Christian: [20:50] Little under $2,100 a month.

Varun: [20:52] Yeah, and, uh- Which is

Christian: [20:53] cheaper than rent.

Varun: [20:54] That same unit would probably rent for 2,500 or 2,750. So he's living in that unit in his own home, building equity and paying below market rent. And so that's a great win for him. I already met with him again, and he's thinking about his next strategy and next investments. Again- Yeah … he's taking action. He's keeping an eye on kind of what's going on in the market. And again, it's a great story. I'm so happy for him.

Christian: [21:18] Yeah, that was awesome. Such a good success story. Great. Okay, let's recap what neighborhoods were the hottest in 2025. So we'll go kind of neighborhood by neighborhood. So first, let's start big picture. So overall, in Seattle, the median sales price for single family homes increased 4.3%. Condos increased 3.4%, but there's a little bit of a caveat there. DADUs and ADUs are technically called condos, and so when you remove those from the data, condos actually only went up 0.8%. So condos didn't do as great as even the, some of the headlines out there say they did because, again, technically ADUs and DADUs are condos.

Varun: [22:07] Yeah.

Christian: [22:07] Which probably means that single family home prices probably went up more than- More … 4.3%. Yeah. I don't know exactly how much, we didn't do that math, but-

Varun: [22:14] Right.

Joanna: [22:15] Mm-hmm

Varun: [22:16] And that's where the data gets a little muddy, but again, it's an indicator of where the market was moving towards.

Christian: [22:22] Mm-hmm. Nice thing is supply, meaning the number of homes, increased 23 and a half percent year over year. Price per square foot increased 1.3% year over year, and the median days on market was about the same. It was eight days in 2025. It was seven days in 2024, so really not much change. The certain neighborhoods that really stood out, Northeast Seattle was number one in price appreciation. It went up 8%. Magnolia, Queen Anne, that was second. That came in at six and a half percent. Uh, Beacon Hill, Columbia City, southeast Seattle, that area, that went up 5.4%. Meanwhile, the east side was hit pretty dang hard. It went down slightly, 0.6%, so a little under half percent, or a little over a half percent. And supply went up a ton, went up 79% year over year. So it was, like, a huge market shift over there.

Varun: [23:18] Yeah.

Christian: [23:19] The overall pattern I think that we can all agree on was if it was a quality house that was priced well, it sold very quick.

Varun: [23:27] Agreed.

Christian: [23:28] Yes. If it wasn't, it sat. Mm-hmm. And that's what we saw over and over again. I think we had more expired listings, meaning homes that didn't sell and just came off market, than we've had in years. So it was definitely a, a learning market for- Yeah … a lot of people.

Varun: [23:43] Yeah. Absolutely. It was

Joanna: [23:44] very

Varun: [23:44] interesting. Yeah.

Joanna: [23:45] Pricing.

Christian: [23:45] Pricing matters. Mm-hmm.

Varun: [23:47] Location and pricing.

Christian: [23:48] Yep. Yep. Exactly. So that is our 2025 real estate market upca- update or recap. Again, nationally, everything just kind of stalled. Seattle was a little more balanced overall. You had to be a little more selective. Some neighborhoods went up quite a bit. Other neighborhoods, like the east side, went down a little bit. But overall, the market in our area, in the Seattle metro area, is definitely still on the up and up.

Joanna: [24:15] Yes.

Christian: [24:15] Um, our economy is still overall very, very strong, and that is why we keep seeing home price appreciation. It is not surging. It is not crazy. 4.3% is not nothing, but it's also not a ton. But when you're in the proper- this is why I love real estate. You could be leveraged. You put 5% down on a million dollar house, and it goes up 4.3%, you get 4.3%- Mm … value increase on the entire- Mm-hmm … purchase price, not your 5% down payment. Right. This is why real estate is so powerful, um, and why we like to own real estate, all of us.

Joanna: [24:53] Make your money work harder for you.

Christian: [24:54] Yeah, exactly. Right. Exactly. Okay. So if you have any questions at all about this info, feel free to reach out. We're happy to chat with you. We can dive deeper into some of these, too, if you really want to. Next week, we are going to release our 2026 predictions episode, which is always fun. We will also review how well we each did in our 2025 predictions.

Joanna: [25:17] Hm.

Christian: [25:18] So that's gonna be entertaining. And then we will, uh… It, it's always a fun episode, so we'll bring Dan Keller back on as well to talk about what the predictions are for the 2026 mortgage market, in addition to what is gonna happen by all the experts, quote-unquote experts, on what they're thinking is gonna happen in 2026 as well. So that's it for this episode of the Awesome in Seattle podcast. I hope you enjoyed it, and we'll see you next week. See ya.

Dan: [25:44] Bye.

Christian: [25:44] Bye.