Seattle's real estate market is unraveling for homeowners who bought near the top. About 5% of Seattle-area single-family homes sold in 2025 went for less than their owners paid — a small but growing share of sellers taking painful losses, according to ATTOM data cited by The Seattle Times. One couple in Fremont bought a four-bedroom townhome for $945,000 and were forced to drop their asking price $40,000 below what they paid after a job loss made carrying the mortgage untenable.

The Pacific Northwest market has been contracting since interest rates jumped from under 6% toward 7%, killing the momentum that defined Seattle real estate for years. What followed is a surge of inventory, a condo and townhome crush, and sellers who simply cannot afford to wait for conditions to improve. Foreclosure fear — not market optimism — is now driving listings.

Tech layoffs have deepened the damage. Companies that over-hired during the pandemic boom are cutting headcount and pointing at AI. Seattle's job market uncertainty is bleeding directly into its housing market, and the new millionaire's tax is giving longer-term sellers one more reason to exit before conditions deteriorate further. Rising months-of-inventory and a stalled absorption rate tell the same story: this market is not bouncing back on its own timetable.

The next real inflection point may not come until spring 2027. Until then, peak buyers are trapped, and the inventory pile keeps growing.