Where are Seattle home prices headed now?
What should you expect from Seattle housing prices in 2020? How have they already changed? What factors are impacting the market? Do trends suggest this is a good time to buy or refinance and keep your home?
How Expensive Are Seattle Housing Prices Now?
As we rolled into the new year Zillow reported that the average Seattle home value was just around $700,000. The average of properties actually sold was just around $680,000. For a start, this suggests more popularity and action at the lower end of the market. It may also indicate the direction the market has been heading in.
Obviously, all real estate is local. All Seattle neighborhoods and suburbs have their own pricing. Downtown Seattle housing prices now seem to represent the middle of the pack. Or you can go to East Queen Anne and expect to spend closer to $900,000 for the average home. If that is a little over your budget, then Uptown and First Hill offer average values in the low $400k range.
The Surge in Seattle House Prices
Seattle has enjoyed many bursts in housing prices over the years.
The most recent bull run following the Great Recession saw local property prices rocket by over 50%. In January 2012, the average Seattle home value was just $346,000. The peaked at $750,000 in May 2018.
This hot market also pushed up average monthly rental rates to almost $3,000. That’s almost double the national average. This extreme price growth has caused an outcry over lack of affordability. Homlessness has spiraled out of control. Many millennials have given up on ever buying a home. Those who would still like to buy often fear they don’t have enough of a down payment.
Even though they might need a lot less than they think.
New Seattle Housing Market Trends
Seattle house prices have been sliding since mid-2018. Down an average of almost $35,000 by November 2019.
Having fallen almost 3% in the past year, the hope is that trend slows, with only another 0.9% drop by the end of 2020. Home are still selling fast. Sellers have been slashing listing prices. So, well priced homes can draw a lot of competition. Others may sit on the market for an extended period of time.
Still, Seattle seems to be in much better condition than higher priced cities like San Francisco and New York. In NYC, hot neighborhoods like Tribeca have seen prices fall by at least 30% to 45% this year alone. Even Manhattan’s Saks Fifth Avenue had to recently take a 60% write down on the value of its iconic store. Resulting in a loss of $2B on one property.
The Forecast for the First Half of 2020
Real estate data is typically notorious for lagging. By the end of the first quarter we’ll likely see some lackluster numbers some the often slow end of year holiday season. It is important to remember that real estate is very seasonal. However, this can throw off some buyers and homeowners. This can present a great opportunity to buy while others are overly fearful.
The Forecast for the Second Half of 2020
Late spring and summer are typically the peak season for home buyers. Realtors pile up the listings in anticipation of more buyers actively looking in between school years. This can mean more competition among home buyers and temporarily inflated prices and bidding wars.
Fall once again brings leaner times for Realtors, and cuts in asking prices.
However, there is one big difference to contend with this year. The 2020 presidential election is bound to bring a lot of media mayhem. Probably more than most election years. This isn’t going to help fears of a recession, or confidence in many markets. This paralysis and uncertainty may be at its worst before the fourth quarter when it becomes clearer who the next leader of the dcountry will be. Once the vote is counted investors and businesses will at least be able to begin calibrating and making adjustments. Even though it may not be until the first quarter of 2021 when we actually see what the new president is able to deliver on, or not.
Do not wait it out with the herd. By then it will be too late to be the best and most profitable real estate choices.
The Long Term Outlook
According to the historic data on King County house prices from SeattleBubble.com the dips have been much shorter and less deep than the positive surges.
While we are bound to almost inevitably experience future turns in the housing cycle, history shows us that over the long term property values will only increase. Consider that the average house price in 1963 in the United States was only $17,800.
Why Buy Now?
Even though Seattle house prices may have recently gone through a fresh correction, we can only logically expect values to increase dramatically over the long term.
Homes are still selling reasonably briskly. Though there clearly seems to be more room to negotiate prices and terms. Owning still definitely beats renting for most residents. Being a landlord may become increasingly profitable. Though you may not want to count on quick house flips until after the
The most important thing for home buyers to realize is that interest rates are far more impactful than modest fluctuations in house prices. Even getting another $10,000 off on a home is going to pale in comparison to what you will gain or lose on interest rate changes. They are low right now, but even a couple percentage point rise may mean paying $100,000 extra for the same home over the life of your loan.
The bottom line is that while many may be fearful this year, it is a smart time to refinance a mortgage or buy a home. Many will regret dragging their feet and missing out.