The Seattle Housing Market is 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 but things are changing now. Home prices in the Seattle area remain well above where they were a year ago but the market is cooling off. Seattle has the fastest cooling housing market in the U.S., according to Redfin.
According to the S&P/Case-Shiller Index, Seattle, WA is at a current level of 378.47, down from 393.73 last month and up from 344.47 one year ago. This is a change of -3.87% from last month and +9.87% from one year ago. The index follows the prices of single-family homes in King, Pierce, and Snohomish counties with a two-month lag.
According to NWMLS's latest report, there were 6,435 pending transactions in October and roughly the same number of closed purchases (6,464). Both figures decreased from the previous year, with pending sales falling approximately 39% and closings falling approximately 35%. The region is expanding into a more conventional market. With the assistance of seasoned brokers, buyers have more time to make well-informed decisions as they are actively searching for properties and monitoring the market.
With less competition, now is the time for buyers to enter the market. In the majority of the report's 26 counties, the median sales price increased annually. The region-wide median price for completed sales of single-family homes and condominiums last month was $595,000. This was a 3.5% gain from twelve months earlier, but a 9% decrease from May when prices peaked at $660,000.
The median price of all homes (Single Family Homes + Condos) sold in King County was $811,000 in October, up more than 8% from the year-ago figure of $750,000. Even though rising interest rates make it more difficult for some buyers, pent-up demand continues in King County. The median price in Pierce County was $525,000, in Snohomish County was $700,000, and in Kitsap County was $510,000.
Despite this, market conditions do not conform to industry norms. Using a metric known as months of inventory, it would take approximately 2.13 months to sell all the houses for sale in King County at the current rate of demand. The balanced market has four to six months, a level not seen in at least six years. According to brokers, the inventory continues to grow but the market in Kitsap County remains strong and competitive.
<<<Read: Hottest Areas in Seattle in 2022>>>
King County has more than 2 months of supply, but the other counties in the Puget Sound region have less than that. There are 1.98 months of supply in Kitsap County, 1.83 months in Snohomish County, and 1.99 months in Pierce County. At month end, NWMLS brokers added 14,214 active listings of single-family homes and condos system-wide. The uptick in supply boosted the months of inventory figure to 2.2. That is the highest level, based on this metric, since January 2019.
NWMLS brokers reported 7,504 closed sales during September, down 27% from a year ago when they notched 10,289 completed transactions. The median price on last month’s sales across the 26 counties in the report rose about 5.1% from a year ago, increasing from $570,000 to $599,000. Prices are down slightly from the August median of $600,000 and from the year’s peak of $660,000 that was reported in May.
<<<Read: Washington State Housing Market Forecast>>>
Seattle Housing Market Report – October 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).
Here are the numbers (RESIDENTIAL+CONDO) for October 2022 compared with October 2021.
ACTIVE LISTINGS FOR SALE
- Total active listings in Seattle were 1,664.
- This represents an increase of 55.37% as compared to October 2021.
- Total active listings in All King County were 4,355.
- This represents a rise of 123.10% as compared to October 2021.
CLOSED SALES
- 673 closed sales were registered by brokers in Seattle.
- This represents a year-over-year decrease of -41.88%.
- 2,047 closed sales were registered in All King County.
- This represents a year-over-year decrease of -40.42%.
PENDING SALES
- 702 pending sales were registered by brokers in Seattle.
- This represents a decrease of -41.89% from the same month a year ago.
- 2,140 pending sales were registered in All King County.
- This represents a decrease of -38.86% from the same month a year ago.
MEDIAN SALES PRICE
- Seattle's median sales price increased by 7.59% to $850,000.
- Last year, at this time, the median price in Seattle was $790,000.
- King County's median price increased by 8.13% to $811,000.
- Last year, at this time, the median price in King County was $750,000.
MONTHS OF INVENTORY (MOI)
- 2.47 months represents the number in Seattle.
- Months of supply in All King County is 2.13.
- 6 months of supply is when you have a balanced real estate market.
- This shows that this region continues to be a seller’s housing market.
Why is the Seattle Housing Market So 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 2 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.
It is a Seller's Real Estate Market
The following housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only. King County, WA is still a seller's real estate market. The median asking price is still rising in double digits.
The median asking price for a home in King County was $875K in October 2022, which is an increase of 16.7 percent year over year. The median sale price was 835K. 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 September, homes in King County sold for approximately the asking price. The Sale-to-List Price Ratio was 99.57%.
- There are 63 cities in King County, where Realtor.com has active listings.
- Beaux-Arts has a median listing price of $2.3M, and it remains the most expensive city in King County.
- Federal Way is the most affordable city in King County, with a median listing price of $588.8K.
- The median listing price of homes in the city of Seattle is $848,000, trending up 13.1% year-over-year.
- The median sale price is $850K.
- Seattle is also a seller's market, having a total sales-to-total listings ratio above 0.2 tend, which favors sellers.
- East Queen Anne has a median listing price of $1.2M, making it the most expensive neighborhood in Seattle.
- Belltown has become the most affordable neighborhood, with a median listing price of homes being around $559.9K.
Seattle Housing Market Forecast 2022 & 2023
Seattle housing prices are going to rise in 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.
- According to NeighborhoodScout.com, Seattle's real estate appreciated 137.11% over the last ten years.
- It is an average annual home appreciation rate of 9.02%,
- It puts Seattle in the top 10% nationally for real estate appreciation.
- As of now, Seattle prices are up across the board.
- During the twelve months, from 2021 Q2 – 2022 Q2, the Seattle appreciation rate has been 12.16%.
- In the quarter, from 2022 Q1 – 2022 Q2, the appreciation rate has been at 4.35%, which annualizes to a rate of 18.58%.
- However, the housing market in Seattle is cooling quickly since the third quarter of 2022.
The current typical home value of homes in Seattle is $927,525. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. In August 2021, the typical value of homes in Seattle was around $865,932. Home values have gone up 7.1% since then.
- Typical Home Value: $927,525
- 1-year Value Change: +7.1%
- (Data through October 31, 2022)
Here is the housing forecast for Seattle-Tacoma-Bellevue Metro.
- Seattle-Tacoma-Bellevue Metro home values have gone up 10% from last year.
- The Seattle metro housing market forecast ending with October 2033 is somewhat positive.
- Zillow predicts that Seattle metro home values may grow by 0.5% between October 2022 to October 2023.
- If this forecast is correct, Seattle metro home prices will be slightly higher in the 3rd Quarter of 2023 than they were in the 3rd Quarter of 2022.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? 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 unlikely to happen at least over the next twelve months.
The bottom line: The current inventory (months of supply for SFH+condos) in this region remains tight — 2.47 months in Seattle and 2.13 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
