Favorable tax laws, a high quality of life, and diversified economies are providing a buffer against economic uncertainty in 2023. A lack of housing inventory, persistent supply-chain disruptions, and the increasing cost of materials are helping to maintain home prices, even in markets where sales activity is returning to pre-pandemic levels. This is creating a stable environment for buyers and sellers alike, allowing them to navigate the real estate market confidently.

As the pandemic took hold, Seattle, like many other U.S. markets, experienced a shift in population as buyers moved away from the city center. This redistribution of people has had a significant impact on the local economy, creating both opportunities and challenges for businesses and residents alike. View neighborhood reports here Market reports

“That ended up having an effect on pricing upward in just about all markets, except for our downtown condo market,” says Jay Kipp, global real estate advisor, Realogics Sotheby’s International Realty in Washington.

Prices have remained steady, but the volume of sales in the Seattle area began to decline in the latter half of 2022 after experiencing a surge in activity. “Our absorption rate is back to 2017 to 2019 levels, but we’re pretty consistent,” he says. Shortage of stock remains a challenge, he says.

Housing market stability is in part due to Seattle’s diversified economy and “very strong net positive immigration driven by employment,” he says. “We’re corporate headquarters for Amazon, Costco, Microsoft, T-Mobile, Boeing, Nordstrom—we've got some real leaders.” The lack of state income tax and a generally high quality of life are enduring draws for buyers from California and further afield.

Going into 2023, buyers’ perceptions are crucial, Kipp says. For high-net-worth cash buyers, the primary obstacle is “a perceived lack of wealth,” in light of stock-market volatility. Buyers in the $5 million–and–up range “are looking for something between a deal and a steal in order to make some moves.” Sellers and buyers should expect prices to level off in 2023, he says, but “Seattle as a market has typically been one of the last to decline and one of the first to recover.”

Seattle is a city that attracts people from all over the world, with its thriving economy, diverse culture, and stunning natural beauty. The city is also known for its high cost of living, which can make it challenging for people looking to buy a home or invest in real estate. However, several tax-friendly real estate options in Seattle can make the process more affordable.

One of the most popular tax-friendly real estate options in Seattle is the 1031 exchange. This option allows investors to defer capital gains taxes on the sale of a property by using the proceeds to purchase another property. This can be a great option for those looking to upgrade or diversify their real estate holdings.

Another tax-friendly option in Seattle is the Homestead Exemption, which allows homeowners to deduct a portion of their property's value from their taxable income. To be eligible for this exemption, the homeowner must have lived in the property for at least one year and use it as their primary residence.

Finally, Seattle has a program called the Multi-Family Tax Exemption, which provides a tax exemption for developers who build affordable housing units in the city. This can be a great option for those looking to invest in real estate while also making a positive impact on their community.

Overall, Seattle offers several tax-friendly real estate options that can make the process more accessible and affordable for investors and homeowners alike.

One of the most popular tax-friendly real estate options in Seattle is the 1031 exchange. This option allows investors to defer capital gains taxes on the sale of a property by using the proceeds to purchase another property. This can be a great option for those looking to upgrade or diversify their real estate holdings.

Another tax-friendly option in Seattle is the Homestead Exemption, which allows homeowners to deduct a portion of their property's value from their taxable income. To be eligible for this exemption, the homeowner must have lived in the property for at least one year and use it as their primary residence.

The Multi-Family Tax Exemption, which provides a tax exemption for developers who build affordable housing units in the city. This can be a great option for those looking to invest in real estate while also making a positive impact on their community.

Overall, Seattle offers several tax-friendly real estate options that can make the process more accessible and affordable for investors and homeowners alike. Consult your financial advisor.

Excerpts from Stability Is the Watchword in These Tax-Friendly Markets