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. If you are planning to buy another home in the next few years or your lease is coming up, it seems far better to buy a home now rather than later.
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 the Seattle, WA area is hitting a new low.
Inventory is the best way to measure how hot a real estate market is. A normal, healthily balanced market for both buyers and sellers maintains about 6 months of inventory for sale. The most recent data from the Puget Sound Business Journal reports there is only 2 weeks of supply.
Across all 25 counties in the region inventory was down 44% at the beginning of January 2021. Even despite a recent 62% spike in new listings in King County, virtually all of those properties have already been sold.
Of the surrounding counties which are a part of the NWMLS, sales prices responded by rising as much as 38% year over year. Some buyers are even reportedly paying 18% over asking prices to win bidding wars.
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.
According to Wikipedia and data from the US Census Bureau the local population has only not increased at two census counts since 1860. At the last count the population had grown almost 24%.
RisMedia reports we are facing a ‘cyclone’ of frenzied buying activity going into 2021, with the market virtually sold out. This may not change until later in the spring when more buyers and sellers typically get active in the warmer months.
According to the Home Buying Institute, Seattle is projected to be the second fastest growing housing market through 2021. Only being second to San Jose, CA.
Housing Wire says the majority of home listings in Seattle are selling in just 10 days.
This presents several choices. Homeowners can stay and cash out some of their equity with a refinance or take advantage of low rates and move up, with a large down payment by selling their old place. Renters of course may find it challenging to land a house deal, but it is better than waiting for prices to go higher and being priced out of the market altogether.
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.
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 years straight.
Areas companies like Amazon, F5 Networks, Moz, Costco, Microsoft, T-Mobile, multiple biotech companies, and the Center for Infectious Disease Research aren’t going anywhere. It is these types of jobs that are the most sustainable and fast growing today, and that isn’t going to change anytime soon.
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 losing 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 8 Years 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.
Average home prices rose to over $804,500 in late 2020 according to Zillow. Up over 10% for the year. Forecasts call for another rise of over 11% by November, to $894,000 for the average home in Seattle.
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, suggesting it could really be the wild west by peak summer buying season.
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 at all levels of the market are rising. There are plenty of neighborhoods where average prices are now over $1M.
Prices are surging all around the area as the inventory drops.
Thankfully for buyers, mortgage rates are under control. With the average 30-year fixed rate mortgages are now under 3%.
Seattle Real Estate Market Trends
Some of the factors to watch ahead are:
- Rising mortgage interest rates
- Availability of mortgage credit
- More buyers choosing to move out to the suburbs and even as far as Tacoma, WA
The Seattle Real Estate Market is Red Hot
If you're going to make a move in the Seattle real estate market, you want to strike now. If you are looking to downsize 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.
You're going to want a loan for your new place, check out what we have to offer Seattle home buyers.