What’s happening in the Seattle real estate market right now?
2020 is going to unquestionably go down as one of the most eventful in modern history. Maybe even the history of our state and country. How is this all affecting real estate trends in Seattle?
What if anything is changing? What can we expect next? How is this all impacting the dynamics of buying, selling, renting, investing in and financing homes?
Factors Influencing Real Estate Trends In Seattle
There are now many factors adding to the chaos in the US, and even around the world and right here in Washington State.
Among the most notable factors influencing local real estate market trends are…
The COVID-19 Pandemic
Whether you believe in the virus or not, the resulting restrictions, disruptions and changes are definitely real and undeniable.
From fear of infection to new rules for just about everything in daily life, the virus is having an impact on where we live, where we want to live, the types of housing which are attractive, investment returns, daily finances and housing costs and lots more.
The latest information being fed to us through the media is that the virus is still going to get a lot worse before it gets better. Recent death numbers in the second half of 2020 are far higher than they were when things began to be locked down in the first quarter of the year.
Some of the most obvious real estate trends this is triggering in Seattle include moving out of downtown areas to the suburbs, seeking larger homes and apartments with more space to survive family members and get work done during lockdowns, prioritizing sanitization and health, and even looking for properties which can provide more self-sufficiency.
Potential Economic Recession
There may still be some debate over whether we are in a recession or not. Some pointed to data that we fell into a recession after the COVID-19 pandemic first hit. Others suggested we were already seeing some recessionary activity prior to that. What we do know is that by many standards and according to many analysts, we’ve been ripe for a recession for a long time.
Recently stocks and businesses seem to have been artificially propped up by trillions of dollars in stimulus and lots of hope. If the bottom falls out of that then it appears we could fall a lot deeper than in 2008.
Riots, surging violent crime rates, and reducing law enforcement funding is all stoking fears of greater unrest. Even if things have settled down by the time you read this, it has been a huge wake up call to the fragility of our personal safety and the safety of our families. It is changing where people want to live and the priorities and criteria they have when choosing a home to buy.
The 2020 Presidential Election
All of the other distractions have certainly taken the attention off of the 2020 election. That could still prove to be one of the most controversial in our history as well. The media and new policies are sure to have an impact leading up to the vote and into 2021 as well.
The New World Of Work
Everything many thought they knew and could rely on about the world of work, careers and business has changed in just a few months. In many ways the virus has just amplified and accelerated trends in business, work and commercial real estate which were already in play. For years we’ve been warned that 80% of jobs will be replaced by technology. For over 10 years it has been possible for both tiny and the largest businesses to operate 100% virtually with all remote employees. Many have resisted that. Now they may have no choice but to adapt.
The Seattle Times reports that with Amazon sending workers home for the rest of the year, many other local businesses that have been built to serve the giant population of Amazon workers in Amazon are struggling hard.
Now workers have to work remotely. They are also finding they can live in cheaper Seattle suburbs and neighborhoods without sacrificing pay. As businesses struggle to pay rent and realize they no longer need brick and mortar storefronts or traditional office space, that could certainly change demand for rental apartments and homes and their values, shifting them from some dense urban areas to other locations.
Interest rates are still incredibly low. This is helping homeowners and tenants to keep their properties, and may be the one big difference from the 2008 financial and housing crisis. Most may never see an opportunity to lock in low long term interest rates like this again in their lifetimes. This is certainly driving a lot of action in the Seattle housing market now. If the government and lenders make the mistake of hiking interest rates steeply as they did in the run up to 2008 it could definitely cool the market.
Seattle Home Sales
According to the Northwest MLS and Seattle Real Estate News, even though pending home sales surged 15% in June 2020 month over month, closed sales were down 12.3% year over year. That’s not to be unexpected with everything else going on.
In fact, experts say there still isn’t enough inventory for sale. Or there would be more sales. Seattle homes have been selling quickly. Often in less than 30 days and with multiple offers.
Seattle Home Prices
According to Zillow, the average Seattle home price is now $767,906. That’s up 2.2% year over year. Zillow also predicts they will fall by 1.7% over the next 12 months. Though that may be very unlikely if buyers continue to compete so furiously over new listings. If anything, prices seem to be rising, at least for right now.
Access To Mortgage Loans
Home buyers still seem to be flush with money for down payments and eager to buy homes, regardless of the price. Their ability to do so, and for sellers to sell will always be tied to the ability of buyers to get a mortgage loan. Major banks seem to have significantly pulled back and have made their qualifications much tougher this year. Fortunately, there are still a wide variety of more flexible home loan programs, including those with low down payments available from Seattle mortgage brokers.