Seattle Real Estate Market
The low inventory and high competition in the Seattle housing market continue to make it difficult for homebuyers to find a place to call home. Increasing single-family home prices have resulted from a widespread housing boom fueled by historically low interest rates and a scarcity of available properties, making homeownership out of reach for more people. As more millennials enter the market, the demand crunch will intensify. From the standpoint of supply and demand, Seattle's housing market is currently one of the most inequitably balanced in the United States. Many homes get multiple offers, some with waived contingencies.
There’s just not enough supply to keep up. Growing demand is expected to continue as a result of a lack of new construction entering the market in suburban areas following years of underdevelopment. With interest rates remaining at historically low levels and a supply of homes available for sale in the region of less than one month, the perfect storm for rising house prices will continue, albeit perhaps not quite as ferociously as previously.
What you get to see are record-breaking housing prices and record-breaking low inventory. Seattle's housing market is driven by employees of local tech businesses like Amazon and Microsoft, as well as corporations with big operations in the vicinity like Google and Facebook. Many of them didn't want to work remotely in small apartments during the epidemic, so they sought spacious homes with office areas. Most of them have the financial means to compete with other buyers and raise home selling prices.
According to Realtor.com, Seattle is a seller's market. In July 2021, the median asking price for a home in Seattle was approximately $772,000, up 5.8 percent year over year. At $805K, the median sale price was even higher. Low interest rates and continued job growth continue to drive the market. If the Median Listing Price is increasing, the market is likely “hot,” and homes will sell more quickly. When prices increase, sellers will benefit. In July 2021, homes in Seattle, WA sold for approximately the asking price.
On average, homes in Seattle sell after 35 days on the market and everyone knows it’s going to sell above the seller's asking price. Alki Point has a median listing price of $1.2M, making it the most expensive neighborhood in Seattle. Lower Queen Anne is the most affordable neighborhood, with a median listing price of $514K.
According to a new Redfin analysis, over 4,500 Seattle-area homes sold for more than $100,000 above the asking price in 2021, a significant increase over the previous year, when only 400 homes sold for more than $100,000 above the asking price. Over 6,300 homes in Seattle have sold for between $25,000 and $99,999 more than the asking price, an increase of nearly 2,000 over the same period last year. Thus far in 2021, the average Seattle-area home has sold for $47,878 more than the asking price. In comparison, in 2020, $3,025 was spent during the same time period.
Seattle, despite years of rising home prices, is nowhere near the top of Redfin's list of cities with the highest share of cash buyers. In July 2021, Seattle's median home sale price reached a new high of $795,000, up 7.5 percent year over year, in part due to the high number of homes being bid up above the asking price. 47.4 percent of Seattle properties sold for more than their asking price, an increase of 20.9 percent year over year. In Seattle, the average sale price per square foot is $535, up 14.3 percent from last year. In Seattle, homes sell after an average of seven days on the market, down from eight days last year. In July, 1,455 homes were sold, up from 1,232 last year.
According to NWMLS, new listings volume is starting to rise above 2019 levels. NWMLS statistics (areawide) show there were fewer pending sales last month (11,567), than during both June (12,328) and May (11,969). July's volume was down about 8.8% from the year-ago total of 12,682 pending sales. Notably, 14 of the 26 counties in the Northwest MLS report showed year-over-year (YOY) gains in new listings in July. Three of the four counties in the Puget Sound region, the tri-county area encompassing King, Pierce, and Snohomish counties had YOY improvement in new listings.
It was led by Kitsap County with a jump of 29.3%. The volume of new listings in King County dropped about 5.4% from a year ago. System-wide there was a 3.2% gain in new listings versus twelve months ago. However, it will likely take between four to six months for the Puget Sound housing market to shift to a more balanced market. There are far more buyers than there are available homes for sale in the entire Puget Sound region's housing market.
Homes are selling fast and buyers are bidding up prices. The median price for closed sales of single-family homes and condominiums (combined) in King County grew by 17.76% year-over-year to $789,000 in July 2021, with similar increases in Snohomish (23.52%), Pierce (19.4%), and Kitsap (19.41%) counties. That’s incredibly strong double-digit appreciation. In this peak home-buying season, it's likely the strong buyer demand, low-interest rates, and tight inventory (less than a one-month supply throughout the region) will continue to be key factors in the Seattle-Area housing market.
We believe prices will continue to rise, which is good news for sellers, but at the same time, it raises concerns about affordability. However, our main focus would be on King County and Seattle housing market trends for July 2021. High demand kept supply depleted. July 2021 housing report from “Northwest Multiple Listings Service” found that King County had 2,679 active listings (SFH+condo), a -30.90% decline from the same time last year when there were 3,877 active listings.
An active status means that the home is currently available for sale. It may have received offers, but none have yet been accepted, which means that the opportunity is wide open for you to propose. If you look at the housing supply in the King County area, it has declined drastically and is now at 0.55 months for single-family homes and 1.09 months for condos. It means that at the current pace of sales, all single-family homes would dwindle in less than 3 weeks if no new listings come on the market.
According to NWMLS, the condos are more reasonably priced (median price < $500K) and there are more months of inventory than with single-family homes. So those who are renting should consider condos as an ownership opportunity and a way to build equity in the future. In King County, which accounted for nearly six of every 10 condo sales during July, the year-over-year increase was just under 7%. The median-priced condo in King County sold for $460,000, while overall the median sale price was $428,000. Single-family homes (excluding condos) in King County had a median sales price of $871,000. That is $411,000 more than condos (nearly 89% higher).
Only in the city of Seattle is the extreme inventory shortage subsiding, providing some relief to homebuyers, particularly those looking for condos. In Seattle, pending condo sales increased 18.45 percent last month. while condo active listings decreased by -22.27 percent year over year. The housing supply, measured in months of inventory, is 0.66 months for single-family homes (still quite tight) and 1.84 months for condominiums. The median price of single-family homes increased by 11.37 percent to $896,500, while condos decreased by 1% to $492,500.
To summarise the last month's statistics we can say that All King County & Seattle remains a seller's real estate market with only 0.55 months of inventory — still well below what is required to meet the volume of buyers right now. In the current market environment, home buyers are trying to take advantage of low-interest rates, and the local real estate agents are struggling to meet the demand. According to local realtors, as buyers seek to cash in on record-low interest rates the market is predicted to remain this way until at least April of next year.
If interest rates weren’t historically low, buyers would be unable to afford the escalating cost of housing. The ongoing combination of very low mortgage rates and escalating prices has both buyers and sellers taking advantage of the market. Buyers are finding well-priced homes in good condition, and sellers are seeing many multiple offer situations. With the virus and increased flexible work-from-home options, people can move to suburbs and outer areas in search of value and lower population density.
Therefore, buyers are also starting to find homes in the suburbs. Seattle-based Zillow Group predicts a ‘suburban boom' in the US housing market as remote work becomes more common. Inventory stays tight in the Seattle metro area as well (King, Snohomish, and Pierce counties), even with an increase in listings. It suggests continued price growth into the summers as demand remains high and interest rates remain low.