Freddie Mac’s September 24 survey put the average 30-year fixed mortgage rate at 7.03%, up from 6.95% the previous week and 6.30% one year ago, crossing 7% for the first time since January 2025. The 15-year fixed rate rose to 6.42%. It is the fifth consecutive weekly increase, driven primarily by the 10-year Treasury yield surging to roughly 5.15%, its highest level since 2007.
For the broader housing market, that creates another affordability story. For rental property investors across Greater Seattle and the Eastside, the question is different.
What does a 7% borrowing environment do to the return profile of the property you already own, or the property you are considering buying?
For existing owners, today’s combination of higher borrowing costs, increased inventory, and slower sales raises the hurdle for selling. But that does not automatically mean every investor should hold.
The right decision comes from comparing three things: the return you expect from continuing to own the property, the after-tax proceeds you could receive from selling it, and the return you could reasonably earn by redeploying that capital elsewhere. That is the investor calculation.
The Greater Seattle Market Right Now
The latest Seattle housing data, tracked by The Madrona Group, shows a market that has shifted meaningfully toward buyers. As of September:
- 3,178 homes were for sale, up 30% year over year
- Average days on market reached 36 days, up 9%
- Pending sales fell 10.7% to 631
- Closed sales declined 19.5% to 626
- Showings per listing fell 20.9%
- The average sale price was $1,001,406, down 8.8%
- August brought 1,329 new listings, up 34.1% year over year
These figures do not tell us what every individual property is worth. Greater Seattle and the Eastside are collections of submarkets, and property type, condition, neighborhood, and price point all matter. What the numbers do tell us is that buyers currently have more inventory to choose from while transaction volume and showing activity have declined. That matters whether you are buying, selling, or holding.
Why 7% Matters to an Investor
Consider an $875,000 property purchased with 20% down. That creates a $700,000 mortgage.
- At 6.30% a year ago: principal and interest approximately $4,334 per month
- At 7.03% today: approximately $4,673 per month
- That is roughly $339 more every month, or about $4,070 per year, before taxes, insurance, maintenance, or any other ownership costs
Do Not Confuse Cash Flow With Investment Performance
This is the distinction most general real estate coverage misses.
Imagine two investors who each own a rental producing $20,000 per year after operating expenses and debt service. Investor A has $250,000 of equity tied up in the property. Investor B has $800,000 of equity tied up in the same cash flow. They are receiving identical annual cash flow, but they are not receiving the same return on their invested equity.
That does not automatically mean Investor B should sell. Appreciation potential, loan amortization, taxes, transaction costs, and the owner’s objectives all matter. But it does mean that “the property cash flows” is not enough information to decide whether it is still a good investment.
Existing owners should periodically ask: If I had my equity in cash today, would I invest it back into this property at its current value? That is a much better hold/sell question than the monthly P&L.
For the full breakdown of how appreciation, loan paydown, tax benefits, and forced appreciation work alongside cash flow in Greater Seattle and Eastside properties, see our guide on the 5 ways rental property investors make money in Seattle.
Want to know what your Greater Seattle or Eastside rental is actually earning across all return streams?
SJA provides free rental estimates and free consultations for Seattle and Eastside property owners. Understanding the full return picture is the starting point for any informed hold or sell decision.
If You Are Thinking About Selling
Higher mortgage rates do not automatically mean you should not sell. They mean the financial hurdle for selling is higher.
Greater Seattle and the Eastside currently have more inventory, fewer pending and closed sales, fewer showings, and longer marketing times than a year ago. Those conditions give buyers more negotiating leverage. One report from The Briefs described a Seattle seller who put $10,000 into repairs, cut a $1.6 million list price by $465,000 to find a buyer, then watched the deal collapse on the morning of closing when the buyers decided higher rates meant prices had further to fall.
An investor considering a sale should therefore start with net proceeds, not the property’s headline value. Take the expected sale price and subtract selling expenses, outstanding debt, necessary property preparation, applicable taxes, and other transaction costs.
The specific numbers in today’s market:
- Average Seattle sale price fell 8.8% in August to $1,001,406. On a $1.2M property, that is approximately $105,600 below where the same property would have transacted at peak pricing.
- Properties above $800K are accepting 5 to 8 percent below initial list price before closing. On a $1.5M property, that is $75,000 to $120,000 in realized discount.
- Seattle closing costs for sellers typically run 7 to 10 percent of sale price, including Washington’s real estate excise tax, commissions, and fees.
Then ask the more important question: What would I do with the equity after I sell?
That is where return on equity becomes critical. Selling a low-return asset makes sense only if the risk-adjusted alternative is more attractive after accounting for transaction costs and taxes.
We covered this question in detail earlier this month. See our full analysis: Don’t Sell Your Seattle Rental Property Yet. Here’s Why.
Taxes Can Change the Answer
Taxes can materially affect the economics of selling and are frequently underestimated in the initial analysis.
For properties that were previously a primary residence, the IRS Section 121 exclusion may allow qualifying owners to exclude up to $250,000 of gain for an individual or $500,000 for certain married couples filing jointly. Eligibility depends on the owner’s specific circumstances, including the ownership-and-use requirements, and depreciation attributable to rental use may receive different tax treatment.
An investor approaching the end of an eligibility window may reach a completely different conclusion than an investor planning to hold indefinitely. This is an area where owners should run their specific situation by a qualified tax professional before making a transaction decision.
Q: Is Greater Seattle officially a buyer’s market in September 2026?
A: The September data shows clear buyer’s market characteristics: inventory up 30% year-over-year, pending sales down 10.7%, closed sales down 19.5%, showings per listing down 20.9%, and average days on market extended to 36 days. The average Seattle sale price fell 8.8% in August to $1,001,406. Well-priced, well-prepared properties in strong locations are still selling, but the era of automatic multiple offers and above-list pricing is not the current reality across most of the market.
If You Are Thinking About Buying
Buying at 7% is difficult if your primary objective is immediate cash flow. A $700,000 mortgage at approximately 7% carries principal and interest of roughly $4,600 to $4,700 per month. If the property produces only $3,000 in monthly rent, the acquisition does not work as a traditional cash-flow investment before accounting for property taxes, insurance, maintenance, vacancy, and management.
That does not necessarily make the property a bad investment. It means something else has to make the investment work:
- Purchasing below intrinsic value
- Putting substantially more equity into the deal to reduce debt service
- Increasing net operating income through legitimate operational improvements
- Improving or repositioning the property through renovation
- Creating additional rentable space where legally feasible, such as an ADU
- Accepting lower current income in exchange for a long-term appreciation thesis
Q: Is now a good time to buy rental property in Greater Seattle with rates at 7%?
A: It depends on which return you are buying. Cash flow is difficult at current prices and rates across Greater Seattle and the Eastside. But appreciation, loan paydown, tax benefits, and forced appreciation continue to generate returns independent of monthly cash flow. For investors with a longer time horizon and a clear forced appreciation or appreciation play, the current buyer’s market may offer better entry prices than the past few years. For investors who need positive cash flow from day one, the current environment is genuinely difficult and patience is reasonable.
If You Are Already Holding a Greater Seattle or Eastside Rental
For many existing owners, this may be where the current market is most relevant.
If you already have favorable financing, a stable tenant, adequate reserves, and a property producing an acceptable total return, today’s mortgage rate does not directly increase the payment on your existing fixed-rate loan. It does, however, affect the alternatives available to you.
Higher borrowing costs make purchasing more expensive for renters considering homeownership. They also make replacement investments more expensive for owners considering selling one property and buying another.
Higher rates also widen the affordability gap between renting and buying in a high-cost market. The principal-and-interest payment alone on a $700,000 mortgage at 7.03% is approximately $4,670 per month. Property taxes, insurance, maintenance, and the opportunity cost of the down payment increase the actual cost of ownership further, making a well-priced rental significantly more financially accessible than purchasing. That dynamic supports tenant retention in well-managed properties.
At the same time, holding should be evaluated against the alternatives rather than treated as the automatic answer.
One specific item worth checking: Washington’s rent stabilization law limits rent increases during an existing tenancy to 9.683% annually in 2026 under HB 1217. Being substantially below market affects future property economics in a compounding way.
For more, see our Washington 2026 rent cap guide.
What Happens Next With Mortgage Rates
Nobody knows. And an investment strategy should not depend on accurately predicting where mortgage rates will be six months from now.
What the data does show is the mechanism. The entire 0.97 percentage point rise in mortgage rates from late February to mid-September was driven by an identical 0.97 point rise in the 10-year Treasury yield. The mortgage-to-Treasury spread stayed flat at 1.96 points. This means the rate move is a pure bond-market event, not a housing-specific phenomenon. What brings rates back down is bond market stabilization and, eventually, Fed policy easing.
An investor buying today should ask: does this investment still work if rates do not fall?
If refinancing at a lower rate eventually improves the investment, that is upside. It should not be the only thing making the acquisition viable. Similarly, an existing owner should not hold solely because they expect a dramatically better selling environment next year. Model several outcomes. That is investing rather than forecasting.
The September 2026 Investor Checklist
If You Are Holding
- Know your actual return on equity. Do not stop at monthly cash flow. Calculate how much equity you have tied up and what that capital is producing.
- Check your rent against today’s market. Washington’s rent stabilization law limits many rent increases during an existing tenancy, subject to statutory rules and exemptions. Being substantially below market affects future property economics.
- Keep the property compliant and well maintained. Deferred maintenance and regulatory issues create both financial and operational risk.
- Maintain reserves. Roofs, sewer lines, appliances, and vacancies do not care what your spreadsheet predicted.
- Model the next 3 to 5 years. Include realistic rent growth, maintenance, capital expenditures, vacancy, appreciation scenarios, and debt reduction.
If You Are Considering Selling
- Calculate realistic net proceeds. Do not base the decision on an old Zestimate, a neighbor’s 2022 sale, or what you wish the property were worth.
- Calculate your return on equity if you continue holding. Compare that honestly against what you could earn elsewhere after transaction costs and taxes.
- Understand the tax consequences before listing. Section 121 eligibility, capital gains, and depreciation recapture treatment can materially change the result.
- Identify where the money goes next. Selling a 5% ROE asset makes sense only if the risk-adjusted alternative is more attractive after accounting for transaction costs and taxes.
If You Are Considering Buying
- Underwrite the property at today’s interest rate. Do not rely on refinancing.
- Stress-test appreciation. Run 0%, positive, and negative scenarios.
- Budget realistic operating expenses and capital expenditures.
- Maintain enough reserves to survive negative cash flow or unexpected repairs.
- Use buyer leverage where it exists. Longer marketing times and increased inventory create negotiating opportunities, but every property still needs to stand on its own economics.
Navigating a hold, sell, or buy decision on a Greater Seattle or Eastside rental in this market?
SJA has managed rental properties across Greater Seattle, Bellevue, Redmond, Kirkland, and the Eastside through multiple market cycles for 17 years. A free consultation gives you current rental market data for your specific property and an honest assessment of your options. No sales pressure. Just real numbers.
SJA's View
A 7% mortgage rate is significant. It is not an investment strategy.
For existing Greater Seattle and Eastside rental owners, today’s higher borrowing costs and softer resale conditions increase the hurdle for selling. Owners with favorable financing, strong properties, and acceptable returns may find that continuing to hold makes financial sense. Others may discover that substantial equity is producing a return that no longer justifies keeping the property. The answer depends on the specific numbers, not the headline.
For buyers, today’s financing environment makes cash flow harder to achieve. But greater negotiating leverage may create opportunities for investors with adequate capital, reserves, and a clear investment thesis.
The decision should not start with buy, sell, or hold. It should start with the numbers. What is the property worth today? What is your equity? What is that equity earning? What are the realistic forward returns? What would you net from selling? And what could that capital earn elsewhere?
Those answers tell you whether the investment still deserves a place in your portfolio.
Own a Greater Seattle or Eastside rental and want to understand your real options in this market?
SJA serves 1,000+ property owners across Greater Seattle, Bellevue, Redmond, Kirkland, and the Eastside. 800+ five-star reviews. 17 years in the market. Start with a free rental estimate, no obligation.
