Who can save the condo market? The Seattle Condo Market Update, August 2025

Welcome to the latest edition of the Seattle Housing Market Update. As always, to skip the fun stuff and go right to the latest monthly stats, click here. To learn more about what's going on in our local condo market, continue below!

As the title suggests, everybody in the real estate industry from local realtors to head economists at Fortune 500 companies are asking the same question: Where are the buyers? This Seattle Times article breaks down the declining percentage of married homeowners between the ages of 25-34 since the 1960's. To be fair, there are many variables that have contributed to declining levels in both homeownership and marriage between this age group. Still, for home sellers, particularly homeowners of riskier assets like condos, a buyer population delaying home purchasing is not the most encouraging news. 

Going a step further, I'm curious if there's a potential demographic of buyers who might be able to save the condo market? 

So who could potentially represent the savior(s) for the condo market? My theory; perhaps it's time condo associations start appealing to buyers seeking government financing, specifically VA and FHA mortgages.

Let's take a step back. There are primarily 3 types of mortgages buyers can obtain (4 if counting jumbo loans, but we'll exclude them for the purposes of this email). By far, the most popular is the standard conventional mortgage. These are the loans that are underwritten and guaranteed by Fannie Mae and Freddie Mac. 

FHA financing is a government sponsored loan that often gets the moniker of being a first time home buyer loan. These loans don't only apply to first time home buyers, however the looser restrictions around down payment (3.5% minimum), credit score, and debt-to-income ratios (allowing over 50%) often make it more ideal for some first time buyers.

VA (Veterans Affairs) financing is a very special lending option open to active and past servicemen and women. This is also government sponsored and does not require any down payment in addition to requiring the seller to pay for certain fees normally absorbed by the buyer/vet. 

Back to my point...

Year to date, I've had a few challenging condo listings that were ultimately saved by buyers seeking VA or FHA financing. One instance was a condo in Belltown that was on the market over 400 days. We actually sold the unit twice, both times to a VA buyer, but the first buyer backed out 10 days before closing and lost their earnest money. I maintain that the only reason we sold this condo was because we were the only condo project in Belltown that was VA approved. We needed a miracle and that prayer was answered thanks to a VA buyer.

In another listing, this particular building was not FHA or VA approved, however after almost 2 months on the market we received an offer from a buyer seeking FHA financing. Note, just because the building is not FHA approved doesn't necessarily mean that a buyer can't purchase a unit securing FHA financing. This is called a spot approval. Long story short, but after the first lender failed to secure the approval in the 11th hour, another lender jumped in and saved the day. Because this buyer could only be approved for FHA financing, and due to no other condos in this area (Ballard) being approved for FHA financing, we really had no competition for our buyer.

I know this is all anecdotal, but maybe my experiences might be a microcosm for the greater condo market? 

I created the graph above charting the number of condos bought/sold in Seattle dating back to 2010 and the total number of FHA and VA buyers. Note the massive drop off after 2010 and ask yourself, why were buyers for Seattle condos seeking government loans in such great numbers 10+ years ago?

The answer is simple. The housing market was still bottoming out from the Great Financial Crisis and condo associations knew that in order to maximize their chances of selling units most quickly and for as high a sale price as possible, they needed to appeal to every buyer possible. That included jumping through every administrative and financial hoop necessary to become FHA and VA approved. However, as the years went on, and the market rebounded and strengthened into the behemoth we know it to be now, associations became a little...lazy? Picky? Elitist? Probably a little of each.

To be fair, the percentage of buyers seeking FHA or VA financing is pretty slim these days. 

Loan Type 2019 2023 2024

Conventional 89.7% 90.7% 90.6%

FHA 5.5% 5.9% 5.5%

VA 4.8% 3.4% 3.9%

We can see that last year, within King County, less than 10% of home buyers utilized FHA or VA financing. If there were a way to break this down into condos, I'm sure the percentage would be even smaller.

If I were a condo owner, regardless if I had any intention of selling anytime soon, I'd strongly encourage the governing body of the association to look into becoming FHA and/or VA approved. Not only does it allow your realtor the ability to market the unit to a wider range of buyers, but meeting FHA and VA approval standards ensures the financial strength of the association will not be an issue for any financing type, whether that be conventional, or either of these government backed programs. 

Onto the stats: In July of 2025, the median sale price of a Seattle condo was $550,000. That is down 1.6% YoY and down from $589,000 MoM. Inventory is up 29.3% YoY and the months of inventory statistic jumped to 5.10 months from 4.63 the month prior. Note, the downtown and Belltown areas are currently experiencing 10.3 months of inventory!

Enjoy the final stretch of summer! Onward!