The real estate market in Seattle is hot—home prices are breaking records left and right all around the region.
Whether you live in the city, on the outskirts of King County or in the general area, you'll find that the real estate market has never been hotter. Investing might be hard right now but if you're selling, there's never been a better time for you to get rid of your home in the Seattle real estate market.
Here is a breakdown of everything you need to know about the market before you make any moves:
The Stock is Low
In Seattle, the number of homes for sale is dropping rapidly. There just aren't enough to go around. The number of houses available for sale right now in Seattle, WA is at a 20 year low.
Inventory is the best way to measure how hot a real estate market is.
Even though the population has grown precipitously, the number of houses that are empty or being built isn't keeping up. The population is breaking records almost every year and shows no signs of slowing down.
During an average month these days, there are about 2,000 single-family homes and condos that are for sale. Compare this to the over 7,500 homes that averaged per month over the last couple of decades and you'll find King County housing stock is hitting a serious low.
This would inspire more homeowners to cash out, at least in the average market conditions. However, it's just not happening. The average Seattle-area homeowner has been sitting on their property for a decade and looks to make a 64% profit.
This is one of the top 5 biggest returns in the entire country and yet no one seems to be selling.
It's a chicken-egg situation, however, as the people who currently have a home realize that if they wanted to stay in the area, they'd have few options. When the stock is low, it's low for everyone. Even if you're sitting on a home that needs repairs, you're better off sitting still and doing the renovations than striking out on your own.
People Are Craving Seattle
With the supply being what it is, a balanced market would say that demand wouldn't also be spiking. However, that's simply not the case in Seattle.
The Seattle real estate market is so hot precisely because people want to move to King County. With lots of job opportunities and a growing population to match, the need for housing is rising. People who are coming to Seattle aren't just post-grads from UW looking for some random opportunity.
They're coming from all over the country because of high paying jobs and they have the money to buy a house thanks to those very jobs. Where places like New York are seeing quickly rising housing costs, not everyone there has the means to buy a house. In fact, most of the new jobs created in New York are average wage jobs that don't meet the needs to buy a house in any of the boroughs.
That's not the case in Seattle.
With the tech industry rising quickly, people want to move to Seattle. There's so much opportunity for recent grads and with the average computer or mathematics job paying over $100,000, Seattle is the place to be.
People are making more money than ever and fighting for a piece of a shrinking housing market and looking for mortgages.
Seattle Needs Talent
With tech talent in high demand, Seattle is drawing those high-earners that are needed to keep a housing market moving. If you've been near Microsoft's campus in Redmond or Amazon in South Lake Union, you know that tech is taking over.
With the number of King County's tech jobs projected to continue growing, as tech demands expand to every sector, Seattle will continue to be the honeypot for job hunters.
There are tech workers needed in just about every kind of office in every industry. There are new tech positions that didn't exist 5 years ago and soon to be more as automated services via Blockchain expand into the service industry.
Opportunities in computing and mathematics are showing annual growth and will be adding thousands of jobs every single year. Even in nearby counties, hundreds of tech jobs are being added annually.
Companies are looking to add staff in every specialty, from cyber security to cloud computing to cryptocurrency R&D. As cyber security becomes a necessity for more companies, the need for experienced staff will grow. People working in DevOps are also seeing more growth than they were anticipating just a few years ago.
The tech industry is simultaneously competitive while having enough room for everyone who is coming. With job growth outpacing the number of positions filled, Seattle has a need for talent. Those talented people need a place to live and that's how you end up with a housing market that's been on fire for almost two years straight.
The Supply-Demand Balance is Shifting
It used to be easy enough to find a few options when looking for a home. You used to be able to whittle your choices down to a couple of options then start to negotiate. But in today's market, if you're currently sitting on a house, you don't have to negotiate with anyone.
You could sell for an inflated price and still not sit on the market for very long while waiting for your down payment.
Previously, some sellers would go for a lower price just to get the deal over with, but now it's now a seller's market. With people fighting over the few homes that are for sale, people start bidding up from one another. Because of this desperation, it's hard to even tell what a home is worth.
This cycle ends well for the seller but can be a struggle for prospective buyers who keep loosing their dream home.
With rent prices also through the roof, people are looking to buy. High rents are one of the most powerful factors to inspire people to buy a home. Paying rent is a loss when compared to a mortgage which is an investment.
Foreign investors have picked up a lot of properties that were intended to be for sale and ultimately turned them into rentals. During the recession, this was a common practice for wall street firms. Buying a property and renting it out when no one is buying is a great way to make some money back.
Doing that when the market demand is high takes homes that should be for sale out of the market and replacing them with apartments which are also high cost. Pair this with a low number of for-sale homes being built and you've got rapidly rising prices on your hands.
Closing in on 24 Months In A Row
Month after month the real estate market is showing hot numbers. Every month, people predict that the prices could drop and they continue to rise. The same goes for the price of rents.
A typical single-family home price rose 13% over what they were just last year. This is what has helped contribute to this rising price streak that's lasted since late 2016.
The only metro area that can compare is San Francisco in the late 90s and early 2000s.
Seattle is currently outpacing New York, Las Vegas, Los Angeles, and San Francisco with prices compared to last year. You're going to need a skilled realtor to make a purchase in Seattle right now.
With starter home costs rising, the rest of the market is going up as well. Month over month, prices grow by nearly a full percentage. Even during the winter, the Seattle market has been growing.
The Median Price is Rising
The rising prices aren't just being measured at the fringes of the market. It's not just new luxury homes that are driving the rise in prices. Single-family homes are rising right in the median. Inside the city, prices are over $775,000 on average with the Eastside pushing toward $1 million.
Prices are surging all around the area as the inventory drops. Following the spring homebuying season, the area saw continued growth. First-time buyers came out of the woodwork, pushed prices up a little more, and continued the overall growth.
Thankfully for buyers, mortgage rates are under control. The rates have started leveling off but had been trending upward for months. With the average 30-year fixed rate over 4.00%, it seems to be at a point of stasis now.
Even still, as the median prices continue to grow, the market will stay hot for a long time to come.
The Seattle Real Estate Market is Red Hot
If you're going to make a move in the Seattle real estate market, you might want to strike now. If you are looking to down size or a lateral transition, now is the time to sell. If you're looking for a new place, you might find that you'll be struggling to find a good price without a few clever moves, ask your loan officer to construct the best plan.
If you're going to need a loan for your new place, check out what we have to offer Seattle home buyers.