Seattle housing market stalls as capital gains tax, tech layoffs push wealthy buyers out
Washington’s housing market is flashing warning signs that go well beyond mortgage rates and seasonal shifts, with new data suggesting the state’s tax environment and a cooling tech sector may be pushing high-end buyers out of the market for good.
The Northwest Multiple Listing Service (NMLS) released its March 2026 Market Snapshot on Thursday, showing active listings surged 29.3% year over year to 15,049 homes while closed sales barely budged, rising just 0.2% from a year ago. The median sales price fell 1.5% year over year to $640,000. More homes are sitting on the market, prices are softening, and the buyers who once kept Washington’s housing engine running are increasingly hard to find.
The gap between supply and demand is widening rather than narrowing, and it has experts worried.
Mortgage rates back above 6% are crushing King County buyers
Steven Bourassa, director of the Washington Center for Real Estate Research, explained the concerns in the NWMLS report: “In a nutshell, sellers have decided that they need to get on with their lives in spite of the fact that many would be giving up low-interest-rate mortgages. However, potential purchasers cannot afford to buy.”
Mortgage rates climbed back to 6.38% by the end of March after briefly dipping below 6% in February, driven in part by rising global uncertainty including the recent conflict with Iran, according to Bourassa. That rate spike has compounded an affordability crisis that was already severe in King County, where the median sales price reached $859,618 in March.
Snohomish and San Juan counties are drowning in listings no one can afford
The upper end of the market tells an even sharper story. Snohomish County, home to significant Boeing and tech-adjacent employment, saw inventory spike 51.8% year over year. San Juan County, where the median sales price hit $1,075,000, is stacked with listings that a shrinking pool of wealthy buyers appears far less eager to absorb.
Capital gains tax and tech sector cuts are emptying Washington of its best buyers
Washington’s capital gains tax, passed in 2021 and upheld by the state Supreme Court, already hits high earners on investment income above $250,000. State legislators keep pushing for a broader income tax even as the Seattle-area tech sector sheds jobs and high earners look for the exit. That combination matters for housing. The buyers who could actually afford a $859,000 King County home or a $1 million San Juan County property are the same people getting squeezed by capital gains taxes, watching their stock-heavy compensation shrink, or packing up for Texas and Florida. Fewer of them are here, and the listings reflect it.
Consumer activity did tick up heading into spring, with showings rising 19% and keybox accesses up 24.5% from February. Both figures, however, still lagged behind March 2025 levels, suggesting the seasonal bounce is not translating into actual sales. The inventory is there. The buyers are not.
Listen to The Jason Rantz Show on weekday afternoons from 3 p.m. – 7 p.m. on Seattle Red on 770 AM (HD Radio 97.3 FM HD-Channel 3). Subscribe to the podcast here. Follow Jason Rantz on X, Instagram, YouTube, and Facebook.
Follow @https://twitter.com/jasonrantz
