Is the Seattle Housing Market Cooling Down?
This article will talk about how the housing market in the Seattle area is right now and its forecast for next year. The Seattle real estate market has been hot since the pandemic. Despite record-low inventory levels, home sales broke records last year. No month had a greater housing supply than one month. Generally speaking, industry watchers define a balanced market as one with a four- to six-month inventory supply. This region has far less than that due to which home prices in the Seattle area continue to grow beyond the means of many buyers.
The Seattle housing market is cooling down. According to NWMLS's latest report, the housing market in the Seattle area is trending toward a more balanced condition. In July 2022, the residential inventory was almost two months of supply. In the 26 counties represented by Northwest MLS, the inventory of single-family houses and condominiums has not surpassed two months since January 2019, when there were 2.3 months of supply.
Active listings have nearly quadrupled in the past year, increasing from 7,948 single-family houses and condominiums to 15,381 (up 93.5 percent ). The rise was caused by the inclusion of 11,805 new listings throughout the month. Compared to June, the number of listings increased by 1,976. (up 14.7 percent ). Indicators of slowed activity are seen in the sales numbers.
From a year ago, pending transactions decreased by around 24 percent, falling from 11,567 to 8,775 mutually accepted offers. The NWMLS data reveals a roughly 30 percent decline in closed transactions year-over-year (declining from 10,919 closings to 7,645).
Will House Prices Drop in Seattle in 2022?
Prices increased despite fewer sales, but at a slower rate. The relief for buyers is that the steep price increases that we have seen so far this year continued to slow down in June. The surge of listings has begun to decrease the rate at which prices have been rising. The houisng stock is increasing whiles sales are decreasing as compared to the last year.
Buyers in Seattle are pulling back right now because mortgage rates are much higher than last year due to which they have to pay more on that monthly mortgage payment. The median price of single-family houses and condominiums sold last month grew by 6.1% from a year earlier, from $589,000 to $625,000. For single-family houses solely (excluding condominiums), prices increased by almost 6.6%, while condo prices increased by more than 8.6%.
Price adjustments in the four-county Puget Sound area varied from a 2.7 percent increase in King County (from $789,000 to $810,000) to a roughly 12.7 percent increase in Pierce County (from $501,500 to $565,000). Kitsap County prices jumped by 5.4 percent, while Snohomish County prices increased by 9.3 percent. Kitsap County remains a strong market, with numerous offers on houses in the $400,000-to-$700,000 price range.
Buyers from the wider Puget Sound region and from out of state are flocking to Kitsap County to take advantage of the high quality of life and diversified workforce. A “seller's market” is defined by industry analysts as having fewer than four months of inventory. In July 2022, all four counties in the Puget Sound area had less than 1.9 months of supplies.
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. In 2022, the rate of appreciation will slow significantly from current levels due to mortgage rate increases combined with more sellers entering the market.
Is the Seattle Housing Market Still Hot?
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.
The housing market in the four-county Puget Sound region has the tightest inventory. Even with the healthy uptick in inventory, there is still less than 1.9 months of supply. To summarise the last month's statistics we can say that the Puget Sound region remains a seller's real estate market with less than 2 months of inventory — still well below what is required to meet the volume of buyers right now.
Seattle Housing Market Report – August 2022
Below is the most recent Seattle Housing Market Report released by “Northwest MLS.” The report compares the key housing metrics of the City of Seattle (which is part of King County). For buyers in Seattle, the historic drop in the mortgage rates has been a significant advantage to move forward and scoop up some properties from the market.
Here are the numbers (RESIDENTIAL+CONDO) for July 2022 compared with July 2021.
ACTIVE LISTINGS FOR SALE
- Total active listings in Seattle were 1,590.
- This represents an increase of 22.69% as compared to July 2021.
- Total active listings in All King County were 4,718.
- This represents a rise of 76.11% as compared to July 2021.
NEW LISTINGS FOR SALE
- 1,335 new listings were added to the market by brokers in Seattle.
- This represents a decrease of 12% as compared to July 2021.
- 4,009 new listings were added to the market in All King County.
- This represents a decrease of 9.5% as compared to July 2021.
CLOSED SALES
- 886 closed sales were registered by brokers in Seattle.
- This represents a year-over-year decrease of -36.58%.
- 2,535 closed sales were registered in All King County.
- This represents a year-over-year decrease of -37.38%.
PENDING SALES
- 876 pending sales were registered by brokers in Seattle.
- This represents a decrease of -34.14% from the same month a year ago.
- 2,705 pending sales were registered in All King County.
- This represents a decrease of -29.92% from the same month a year ago.
MEDIAN SALES PRICE
- Seattle's median sales price increased by 6.74% to $855,000.
- Last year, at this time, the median price in Seattle was $801,000.
- King County's median price increased by 2.66% to $810,000.
- Last year, at this time, the median price in King County was $789,000.
MONTHS OF INVENTORY (MOI)
- 1.79 months represents the number in Seattle.
- Months of supply in All King County is 1.86.
- 6 months of supply is when you have a balanced real estate market.
- This shows that this region continues to be a strong seller’s housing market.
Will Housing Prices Go Down in King County?
According to Realtor.com, King County, WA is still an expensive seller's real estate market. The median asking price for a home in King County was $900K in June 2022, which is an increase of 20 percent year over year. The median sale price was 865K. 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 June, homes in King County, WA sold for approximately the asking price. The Sale-to-List Price Ratio was almost 100.9%.
- There are 64 cities in King County, where Realtor.com has active listings.
- Beaux-Arts has a median listing price of $2.3M, making it the most expensive city in King County.
- Des Moines is the most affordable city in King County, with a median listing price of $590,000.
- The median list price of homes in Seattle is $850,000, trending up 13.3% year-over-year.
- The median sale price is $880,000.
- Seattle is also a seller's market, having a total sales to total listings ratio above 0.2 tend, which favors sellers.
- North Queen Anne has a median listing price of $1.4M, making it the most expensive neighborhood in Seattle.
- Belltown has become the most affordable neighborhood, with a median listing price of homes being around $574,500.
Seattle Housing Market Forecast 2022 & 2023
Seattle housing prices are going to rise in 2022 and 2023 albeit at a slower rate. Let us look at the price trends recorded by Zillow over the past few years. For the past 6 to 7 years an extreme drop in inventory led to an astronomical rise in Seattle home prices, as buyers competed over a dwindling number of properties on the market. Seattle has a track record of being one of the best long-term real estate investments in the U.S.
Since the last decade (Aug 2012), the home values in the city of Seattle have appreciated by nearly 154% — Zillow Home Value Index. As you can see in the graph given below, the home values increased consistently, starting in late 2012 and continuing through 2018. After that, it marked the beginning of a sustained downturn in prices which lasted for over a year. In 2018, prices took a steep drop. From July 2018 onward the home values started declining and they continued so until November of 2019. The trajectory has shifted from last Oct 2019 to an upward trend.
The current typical home value of homes in Seattle is $982,604. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. It indicates that 50 percent of all housing stock in the area is worth more than $982,604 and 50 percent is worth less (adjusting for seasonal fluctuations). In June 2021, the typical value of homes in Seattle was around $857,000. Home values have gone up 14.5% since then.
Similar growth has been recorded by NeighborhoodScout.com. Their data also shows that Seattle's real estate appreciated 124.93% over the last ten years, which is an average annual home appreciation rate of 8.44%, putting Seattle in the top 10% nationally for real estate appreciation.
As of now, Seattle prices are up across the board. Condos are still below their peak price, but this is the highest the condo price has been since the peak of 2018. Houses have surpassed the peak breaking records month over month. During the latest twelve months alone, the Seattle appreciation rate has been 11.58%, and in the latest quarter, the appreciation rate has been at 1.69%, which annualizes to a rate of 6.92%.
This figure also corroborates Zillow's positive forecast, so the home prices in this region are expected to increase by a single digit in the next twelve months. It means that there is a situation in which demand exceeds supply, giving sellers an advantage over buyers in price negotiations. That's how the housing prices increase in a region.
Here is the housing forecast for Seattle, King County, and Seattle MSA. The home appreciation has been incredibly strong over the past year.
- Seattle-Tacoma-Bellevue Metro home values have gone up 21.1% (current = $793,263) over the past year.
- The Seattle metro housing market forecast ending with June 2033 is positive.
- Zillow predicts that Seattle metro home values may grow by 6.6% by June 2023.
- If this forecast is correct, Seattle metro home prices will be higher in the 2nd Quarter of 2023 than they were in the 2nd Quarter of 2022.
- Seattle (City) home values have gone up 14.5% over the past year.
- King County home values have gone up 20.7% ($933,537 as of June 2022).
- Pierce County home values have gone up 17.8% over the past year.
- Pierce county is comparatively affordable with a typical home value being $571,129.
- The typical home value of homes in Snohomish County is $783,516, up by almost 24.5% over the past year.
The chart below, created by Zillow, shows the growth of median home values since 2012.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? The increase in the number of new and total listings indicates that sellers are now willing to put their homes on the market. People continue to buy and sell their homes, whether they're growing their family and need a bigger place, relocating for a job, or retiring. Opportunities abound for both buyers and sellers if they’re willing to act quickly.
Seattle and the entire metro area market is so hot that it cannot shift to a complete buyer’s real estate market, for the long term. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Seattle can become a buyer’s real estate market if the supply increases to more than five months of inventory.
And that’s not going to happen. The pandemic caused some sellers to take a pause which resulted in the Seattle housing market facing even more of a decline in inventory. At the same time, buyer demand remained as before.
The bottom line: The current inventory (months of supply for SFH+condos) in this region remains tight — 1.79 months in Seattle and 1.86 months in All of King County. Therefore, in the long term, the Seattle real estate market remains as strong as always. This housing market is skewed to sellers due to a persistent imbalance in supply and demand.
Some of the information in this article was obtained from referenced websites. Norada Real Estate Investments provides no explicit or implied claims, warranties, or guarantees that the material is accurate, trustworthy, or current. All information should be validated using the below references. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
REFERENCES
- https://www.nwmls.com/
- https://www.zillow.com/seattle-wa/home-values
- https://www.redfin.com/news/seattle-homes-sold-above-list-price/
- https://www.realtor.com/realestateandhomes-search/Seattle_WA/overview
- https://www.rentcafe.com/average-rent-market-trends/us/wa/seattle
- https://www.neighborhoodscout.com/wa/seattle/real-estate
- https://www.littlebighomes.com/real-estate-seattle.html
- https://seattlerealestatenews.com/category/info/seattle-monthly-housing-news
- https://www.seattlepi.com/coronavirus/article/best-time-to-buy-or-sell-a-house-during-pandemic-15287608.php
