The new housing forecast for Seattle is in, and indicates there are going to be fewer housing opportunities for home buyers, but there is also going to be less competition for those opportunities.
According to John L. Scott Real Estate CEO, J. Lennox Scott: “…there are fewer listings than what buyers find during peak summer months, there is also less competition,” for the homes that are available. Scott noted that while sales activity is characteristically lower in terms of new listings during the fall and winter months, he also expects the number of listings remaining unsold to drop once the winter inventory “clean up” begins in earnest.
Midwest Multiple Listing Service brokers reported an 18% reduction in their total active listings from the same time a year ago with only three of the 23 counties served by NWMLS reporting gains in inventory, while 18 other counties boasted double digit drops in the same time period. Thurston county reported the sharpest decline in home inventory at 35%.
President OB Jacobi, president of Windemere Real Estate remarked that September 2019’s housing market felt like a roller coaster, up in certain areas and down in others. For example, Pierce County in the Puget Sound region Jacobi’s firm services, saw prices climb more than 10% thanks to high demand and inventory. He noted that buyers have been drawn to the more affordable housing costs there, but the influx is driving up prices.
Data shows that the median price for last month’s home sales in Pierce County was almost $215,000 less than the median price in King County. In King County prices were down nearly 3% while pending sales rose almost 10%. This is an indication that there is a good supply of home buyers in the Greater Seattle area, according to Jacobi.
Thanks to new jobs, and fairly low interest rates, we can expect home prices to remain fairly stable through winter, which is good for buyers. “Federal Housing Administration mortgages with 3.5% down payment are very popular with first-time home buyers,” says owner of Village Homes & Properties, Dean Rebuhn.
Single family home purchases is clearly outperforming condominium sales in the I-5 corridor between the Puget Sound and Portland. James Young, the director of the Washington Center for Real Estate Research at the University of Washington. He believes the logic first step on the “housing ladder” lies outside of the vigorous activity laden King and Snohomish Counties. Even though it translates to fairly long commutes for most homeowners, first time home buyers in the area would be wise to get on that ladder now, when interest rates are historically low, and employment is at historic highs.
Simply put, the Seattle housing market for real estate investors is one of the strongest in the nation, and has been for a while. Homes have been making double digit increases in value, not just in Seattle but across the entirety of the Washington state real estate market.
But what about rentals? Zillow analysis suggests a slight dip in median rents in the metropolitan Seattle area from the same time period last year. The one caveat appears to be that the decrease was concentrated in the niche market of high end, luxury rentals, which are already expensive, so the decrease is less dramatic. Ironically, at least to people seeking affordable rental properties, is that the high vacancy, and low demand at the top end of the scale is being contrasted by the high demand and rising prices on the lower rungs.
So what exactly is driving this boom in the luxury market?
If anyone has spent any time in the metro Seattle area, they’ve noticed a lot of apartment building construction sites and most of those new apartments aimed at wealthy clientele.
According to Jay Board, content manager at Realpage, Seattle is a nationally ranked red hot market for apartment construction, and most of that activity is centered on luxury, urban units. In turn, occupancy for that very specific niche is preventing rents from rising to the same degree that those older properties are.
As tough to find as affordable apartments in Seattle are, even tougher are apartments built to accommodate larger families, or shared living environments. Three bedroom apartments are mostly a feature associated with those high end, high rise, luxury rentals with rents that can reach nearly $17,000 per month. The lower floors of those buildings can include what are known as “open” or “urban” one-bedroom apartments, which are essentially studio apartments with a “sleeping nook.”
This dearth of affordable, family sized housing units in Seattle is really nothing new. As far back as 2011, difficulties finding suitable three or more bedroom housing units were being reported by low and middle income families.
Archived 2019 Updates Below
The Seattle housing market may not be the hottest in the country since it underwent a bit of cooling off this year, but it is still a pretty hot market. Home prices continued to rise, although at a less frenzied state. Median rent prices, meanwhile, showed a shallow dip over the course of 2018 but not that much.
Median home prices in 2018 based on Zillow’s data averaged at $739,600 and is forecasted to rise by 1.1% to $792,000 in 2019. As for the median monthly rental prices, it averaged at $2,554 so far this 2018, which is actually 2% less compared to 2017 rent prices.
|2018 Rates||2019 Predictions|
|Home Prices||Up 4.5%||Up 1.1%|
|Median Monthly Rent Prices||Averaged at $2,554
(Down 2% from 2017)
|Most likely to continue on this level|
More concrete prediction data of what the median rental prices will look like in 2019 are not yet out. However, this dip is expected to continue on through 2019 and might rise again for a small percentage.
Seattle Home Appreciation Rates and Real Estate Market Health
According to NeighborhoodScout, the average annual home appreciation in the area is 4.30%. This effectively makes Seattle part of the top 10% locations in the country with soaring home appreciation rates.
The top 5 highest appreciating neighborhoods are Boren Ave./Madison St., 12th Ave. S/S King St., Mars Hill Graduate School/Elliott Ave., Cornish College of the Arts/Stewart St., and James St./Boren Ave.
|Type of Listing||# for Sale||% of Listings|
|Condo / Townhome||
|Mobile / Manufactured||
Most of the homes for sale in Seattle’s real estate market are single-family homes, which make up 63.63% of the inventory. A close second, at 26.74% of the inventory, is condos and townhomes. There are multi-family and mobile homes for sale as well, but they only make up around 3% of the properties available on the market. The remainder of the 7.12% listings are not technically homes, instead they represent land for sale.
As a whole, Zillow.com considers the Seattle market less healthy with a score of 4.2 out of 10. There were 3.9% of homes with negative equity as of June 2018. However, based on the housing forecast released by Matthew Gardner (Windermere Chief Economist), this does not mean that Seattle’s on a housing bubble.
This is just the market correcting itself and finding a more stable balance after all of the frenzy that followed the housing crash. Gardner further elaborates that there is nothing to be afraid of in the numbers.
He doesn’t see the key factors that led to the crash, such as lack of demand, unqualified home buyers, and overbuilding. At the moment, most buyers are even overqualified and paying above-minimum down payments. Zillow’s data corroborate this as they showed only a measly 0.2% are being delinquent on their mortgage as of mid-2018.
More Property Choices for Seattle Home Buyers in 2019
The continuous increase in housing prices in Seattle is nothing new because it has been increasing steadily for the past decade. The price hike was even faster in the most recent years due to the demand outpacing the supply. But forecasts show that 2019 will be different. As mentioned above, the price increase will happen at a slower rate.
This is mainly due to the increase of the home-for-sale inventory in the region. The Northwest Multiple Listing Service (MLS) published a report in October 2018 that stated, “there will double-digit increases in inventory”. MLS has property listings in 23 counties; they basically cover the whole of Seattle metro.
What this means then for homebuyers is that there will be more property choices available in the market moving forward. Since the supply will now more or less meet the expected demand, the rise of housing median prices won’t be as pronounced.
In fact, MLS reported that “In King County, supply exceeded two months for the first time since January 2015”. If you are looking to settle in Seattle, it couldn’t hurt to start your search for a new home in King County. Consider investing in pre-construction condos as well. See some tips here on how to do that.
Buy Sooner Than Later But Be Aware of Market Stress Points
Now that home price increases are slowing down, it is a great time to invest in a Seattle home. But just like in previous years, expect for properties to get snatched up pretty quickly and be ready for bidding wars as they happen often. So, you would still need to exercise quick decision-making skills in dealing with this particular housing market.
That does not mean, however, that you do not employ caution. Local policies might be implemented that will drastically upset the market’s current steady pace. For example, Seattle’s real estate industry experienced quite a scare in May 2018.
The Seattle City Council said yes for a head tax to be implemented in companies, which amounted to $275 per employee. Businesses with more than $20million revenues were affected. The idea was to raise money (about $47million every year) in order to help curb homelessness in the metro.
Amazon, who has established a large operation in the city, did not take this kindly. They threatened to stop all of their developments in the area, particularly their employment of locals. This could have led to people tightening their belts as job security was put into question. As a result, the Seattle City Council repealed the head tax less than a month after their initial decision.
As you hunt for your new home in the city, be aware of things like these that can heavily affect the real estate market. Keep an ear open for news of policies and other regulations that might make the situation more difficult or those that will open doors of opportunities for you. Bear in mind as well that the fast-paced Seattle market can cause stress to both sellers and buyers.
Buyers often find themselves running after constantly increasing home price changes. Sellers, meanwhile, have to compete with so many other sellers that the ability to receive a fair price for their property might become an issue. There is a lot of pressure points, so tread carefully but move with purpose.
A Bright Outlook for the Future of 2019
All in all, the outlook for the Seattle real estate market is that it is still tight but it is improving and the forecast is sunny. It will continue to be highly competitive moving forward but there will be more property options for you.
The following is an archived article originally published February 1 2018 about the 2018 real estate trends. Archived Article: “Seattle Housing Market in 2018: Still Warm but not Red Hot”
Seattle Housing Market Forecast 2018?
Seattle’s housing market has been red hot for years, with home prices and rents soaring in recent years. While that will slow somewhat in 2018, the market shows few signs of actually cooling off.
According to Zillow, housing prices are going to continue to rise in 2018, though not as steeply as they have risen in recent years. In 2017, Seattle home prices hit a record high of $700,000 within the city limits in April and the median rent in the same area hit $2,000 per month.
For 2018, Zillow predicts home prices and rents will continue to rise, just more slowly. Where in 2017 home values grew by 12.7 percent, more than twice the national average of 6.21 percent, in 2018 Zillow expects home values to go up a comparatively slower 5.4 percent.
When it comes to rents in the city, prices increased by 5.4 percent in 2017, but should cool off to around 3.5 percent in 2018.
All of this means a still very hot housing market in Seattle, but not nearly as blisteringly hot as last year. It could be a sign that the housing market in Seattle is reaching a peak,
|2017 Rates||2018 Predictions|
|Home Prices||Up 12.7 percent||Up 5.4 percent|
|Rent Prices||Up 5.4 percent||Up 3.5 percent|
Seattle’s housing market won’t be especially unusual in 2018 compared to other major metropolitan areas. Most major markets are experiencing higher home prices and steady increases. However, the West Coast has been particularly hot and will continue to be the center of the action.
Two of the hottest markets for 2018 are predicted to be Seattle and Las Vegas. These two cities in particular are continuing to experience extremely hot housing markets and will see little cooling off in 2018. San Francisco, which has experienced tremendous spikes in housing prices, should also see continued increases in 2018.
Throughout the entire country, housing prices have risen 6.2 percent, far outpacing the rate of inflation. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index found that Seattle, Las Vegas and San Francisco had the largest year over year gains in housing prices among the top 20 cities in the country. And the Index further predicts that home prices will continue to rise faster than inflation, particularly in places like Seattle.
Why are Seattle Apartment Rents Rising Slower and What Does it Mean for Housing?
One outstanding quirk in all this data is that rents in Seattle are actually dropping very slightly. In December 2017, rents in King and Snohomish counties dropped by 2.9 percent, according to The Seattle Times. That hasn’t translated to a huge drop in prices for renters, who have seen an average savings of only about $50 a month. And rent still increased by 4.5 percent throughout the region compared to a year ago. That is the slowest increase in recent years, but still matches the continuing rise in housing prices generally.
Part of the reason for this slight dip has been the number of empty apartments around the region. As the housing market boomed in Seattle, housing prices spiked and construction flourished. But now many of those newly built apartments are sitting vacant, some in the most popular neighborhoods in the city. This has meant more negotiating power for renters, as landlords can’t necessarily count on immediately filling empty units any longer. With more options and more leverage, some renters have found opportunities to bring down their rental costs.
So what does this mean for home purchase pricing? Likely a similar slow down. The two markets are cooling off together and the trend in rents may be a sign of what’s to come for homes. While both rental prices and housing prices continue to rise, the signs point to a slowdown in that rise and perhaps an impending cool down.
How to Capitalize on the Forecast
With all this news and data about the housing market cooling off somewhat, what’s the right plan for people looking to buy?
Fortune recommends buying sooner rather than later. Prices are still continuing to rise and don’t look like they’re going to stop anytime soon. In order to get into the market at the right time, a time when it’ll be possible to make the best investment possible, buyers will need to pull the trigger pretty soon. All the signs point to the West Coast and Seattle continuing to be the place to buy.
Of course, this is easier said than done. Especially in markets like Seattle, buying a home can be quite an adventure. Houses get snatched up quickly and bidding wars are common. CNN called Seattle one of the hardest places to try to buy a house in May 2017. Not only are home prices rising, but a flood of new residents are moving to Seattle, making competition extremely high.
If you are planning to try to buy in the current Seattle market, go in prepared to make quick decisions. Don’t get discouraged by getting out-bid. Buying a home in Seattle is bound to be a long process. Buyers should give themselves as many options as possible and go in to a negotiation with all their paperwork prepared.
Will the Trend Continue in Seattle?
Every indication points toward the trend in housing prices in Seattle continuing. This means a slight cool-down but overall very hot market. Corresponding trends in population and incomes support the idea that Seattle will continue to have high housing prices and lots of competition.
So the short answer is: Yes, the trend in housing is definitely going to continue. However, there’s a rather large caveat in that housing prices shouldn’t rise nearly as precipitously as in recent years. This opens the door a crack for home buying, but buyers will need to act quickly to get the best deals and return on their investment.