How strong is the Seattle, WA real estate market now?
The Emerald City is infamous for its high housing costs and sizzling demand for properties. Is that reputation holding up in 2020? Has the big shakeup of COVID-19 changed this? What’s in store for the market? Is there relief from high homes prices and rents on the horizon? Or is the Seattle housing market unstoppable?
The Pre-COVID-19 Seattle Housing Market
Even among rumors of a coming recession and the data suggesting there was already a housing correction in play in other major cities like San Francisco and New York City, experts vowed that Seattle would stay strong.
Seattle has had a lot going for it. Its strong economy and notable businesses are one big part of that. It is also a trendy and desirable place to live. Many seem willing to pay whatever it costs to live here. Even despite the weather.
As we rolled from 2019 into 2020, the Seattle real estate market was still hot. Even for those happy to pay them, and able to thanks to great local employment and pay, the competition for properties has been tough. Rents may be even comparatively high when weighing whether it is better to rent or buy a home in Seattle, WA.
When we published our 2020 Seattle Housing Market Update in January, there appeared to be some softening in home prices. They had fallen 3% in the final quarter of 2019, to an average home price of just $718,500. Homes were selling for an average of over $500 per square foot. At that time properties still seemed to be selling swiftly, with an average marketing time of under 60 days. A very brisk pace. However, sellers were also in the process of cutting their asking prices, suggesting there was finally more of a meeting between what buyers thought was a fair price and what owners had believed they could sell for.
Rents stood at an average of $2,639 per month.
As the coronavirus arrived and infected the country with lockdowns, fear and restrictions, the real estate market also stumbled.
Whether limited by shutdowns, uncertainty and deals falling apart, or real estate agents and closing companies readjusting to the new norm, there seemed to be a brief stalling in the market nationally.
While the coronavirus may still be with us, and there is no guarantee it or our new rules for living will go away, home buyers, sellers, and industry professionals seem to be getting back to business.
Adjustments have been made to do all business online, including applying for mortgage loans and completing real estate closings. No matter what happens in the future, we should hope to enjoy fewer interruptions.
The Current State Of The Seattle Real Estate Market
Where are we now in this post COVID-19 world and housing market?
You might be surprised at how strong it is. Or perhaps not, given the other factors in play.
The Seattle housing market was believed to have peaked in mid 2018, with an average home price of $750,000, and rents around $3,000 per month.
However, as of April 2020, home asking prices had risen 2.2% year over year to a new high of $767,906. Median rents were back at $2,600 according to Zillow. Average marketing time was down even further to just 44 days.
On May 26th, 2020 the Seattle Times reported that local home prices were growing at a pace only second to Phoenix, AZ. Prices were roaring up at an average of 6.9%, with lower end home prices growing as fast as 10%.
With millions reportedly unemployed and a potential new recession here, what’s driving all of the demand and buying activity now?
Previous home buying activity may have been motivated by escaping the alternative of high rents, speculation of rising costs and equity to be gained, and investment. Those moves may have proven to pay off.
Now much of the demand may be due to motivations such as:
- Downsizing to protect finances
- Desire for healthier and greener homes
- Finding a safe haven from the stock market and banks
- Moving away from crowded downtown areas
Needing bigger spaces to quarantine with kids homeschooling, parents working from home, and grandparents wary of nursing homes
Add record low interest rates to all of this, and buyers may be more motivated than ever.
Seattle is known for being a strong business hub. Consider how many of them are doing even better in the new world of coronavirus.
Amazon, F5 Networks, Moz, Costco, Microsoft, T-Mobile, multiple biotech companies, and the Center for Infectious Disease Research as just some of them.
Even these employers along could keep things going just fine.
Seattle King County Realtors also report that over 46 percent home sales were to young millennials. Over half were married, they took out smaller than average loans, with an average down payment of 17%, and had average FICO scores of 740. These buyers may be quite happy riding out any storm in housing, and may have the cushion to do so.
The COVID-19 Hangover
While demand is up and could easily absorb new inventory coming onto the market, it may be ignorant to dismiss the chance of a significant amount of evictions and foreclosures as a part of the fallout of recent lockdowns and business interruptions.
So far renters and borrowers have enjoyed many protections and breaks. When those moratoriums and forbearance agreements end, and residents find grocery bills and prices of essentials high, their savings burned up on emergency supplies and filing income gaps, then many could default.
Low interest rates, tougher mortgage underwriting standards, and more negotiability could all impact the market. Both creating more demand for buying, but limiting who qualifies.
If you are in the market, check out our blog for some of our guides on the least expensive and best Seattle neighborhoods and suburbs to buy a home in 2020.