Seattle housing market continues to see low inventory and high competition in 2021 making things hard for homebuyers. Even before the virus hit the region in 2020, it was quite evident that if the inventory crunches further, housing affordability will become a bigger issue in the Seattle real estate market, especially with homes in the lower tier.
Since then we've seen significantly lower numbers of active listings when compared on an annual basis. In fact, Seattle is currently one of the most imbalanced housing markets in the country, from a supply and demand perspective. There’s just not enough supply to keep up. In February, Seattle's months of supply for condos and single-family homes was 1.26.
Pending sales are outpacing new listings and inventory continues to shrink. According to NWMLS, for the tri-county area encompassing King, Pierce, and Snohomish counties, there were 4,896 pending sales in January and 5,232 sales in February for a month-to-month gain of 6.9%. There are far more buyers than there are available homes for sale in the entire Puget Sound region's housing market. 6 months of supply is considered the benchmark for a balanced market. Less than 6 months of supply favors the sellers because there are fewer choices for the buyers.
In 2021, it's likely the strong buyer demand, low-interest rates, and tight inventory 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. Our main focus, however, would be on King County and Seattle housing market trends for January 2021.
February 2021 housing report from “Northwest Multiple Listings Service” found that King County had 1,828 active listings (SFH+condo), a -17.69% decline from the same time last year when there were 2,221 active listings. If you look at the housing supply in the King County area, it has declined drastically and is now at 0.63 months for single-family homes and 1.5 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 < $550K) 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. The median price of condos sold in February was 475,000, which is actually a decline of -1.29% from a year ago.
In King County, where 76% of the available condo inventory is located, NWMLS data shows that nearly six of every 10 pending sales of condos took place in King County last month. Pending activity nearly matches the year-ago totals for that county (716 versus 720). Pending sales (mutually accepted offers) were up sharply in several Seattle neighborhoods, including Queen Anne (48.8%), West Seattle (42.1%), and Ballard/Green Lake (32.5%). Even the Downtown/Belltown area registered an uptick (4.8%).
The median price for condos that sold in All King County last month was $439,000. Single-family homes (excluding condos) had an area-wide median sales price of $750,000. That is $311,000 more than condos (nearly 71% higher).
Only in the city of Seattle, the extreme inventory crunch is decreasing to give a little relief to homebuyers, especially with regards to condos. More supply of new resale listings is adding to the unsold inventory. Here, the total listings for condos increased by 84.19% as compared to last year. Measured by months of inventory, the housing supply is 0.76 months for single-family homes (still quite tight) and 2.75 months for condos.
The median price of single-family homes increased by 9.24% to $798,000. That's $2,000 less than September’s all-time high to $800,000. The median price of condos decreased by 1.29% to $475,000.
To summarise the last month's statistics we can say that All King County & Seattle remains a seller's real estate market with only 0.92 months of inventory — still well below what is required to meet the volume of buyers right now. While we may see some improvements in the overall inventory in the coming months but things could be extraordinary hot in the spring and summer of 2021.
Right now the homebuyers are trying to take advantage of lower 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 spring as demand remains high and interest rates remain low. Kitsap County, where the inventory of condos and single-family homes is down -55.12% from a year ago, is experiencing pent-up demand from buyers that want to move there or convert from being a renter.
The most affordable homes continue to be the hottest commodities on the market, which are concentrated in Pierce and Snohomish counties. The median sales price of (SFH+Condos) in Pierce County is $455,000, up 18.18% YoY while the current months of supply is 0.54. The median sales price of (SFH+Condos) in Snohomish county is $576,050, up 16.55% YoY while the current months of supply is 0.42.
Seattle Housing Market Trends 2021
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 (that is part of King County). For buyers in Seattle, the historic drop in the mortgage rates is a significant advantage to move forward and scoop up some properties from the market. If you are buying the interest rates have never been lower and this is typically the time of year when more listings start coming on the market. Therefore, it is an apt time to make a move.
Here are the numbers (RES+CONDO) for February 2021 compared with February 2020.
- Total active listings in Seattle were 1,045.
- This represents an increase of 27.44% as compared to February 2020.
- Total active listings in All King County were 1,828.
- This represents a drop of nearly -17.69% as compared to February 2020.
- 1,070 new listings were added to the market within Seattle's boundaries.
- This represents an increase of 7.6% as compared to February 2020.
- 2,893 new listings were added to the market in All King County.
- This represents an of nearly -2.6% as compared to February 2020.
- 831 closed sales were registered in Seattle.
- This represents a year-over-year increase of 29.24%.
- 2,146 closed sales were registered in All King County.
- This represents a year-over-year increase of 13.48%.
- 1,079 pending sales were registered in Seattle.
- This represents an increase of 19.62% from the same month a year ago.
- 2,865 pending sales were registered in All King County.
- This represents a decrease of -1.04% from the same month a year ago.
CLOSE PRICE — MEDIAN
- Seattle's median price increased by 5.19% to $710,000.
- Last year, at this time, the median price in Seattle was $675,000.
- King County's median price increased by 10.42% to $679,075.
- Last year, at this time, the median price in King County was $615,000.
MONTHS OF INVENTORY (MOI)
- 1.26 months represents the number in Seattle.
- Months of supply in All King County is 0.85.
- 6 months of supply is when you have a balanced real estate market.
- This shows that this region is a strong seller’s real estate market.
Seattle Real Estate Market Forecast 2021-2022 (Latest Projections)
What are the Seattle real estate market predictions for 2021? 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.
Since 2012, the median home price in Seattle has increased from $368,000 to $816,718 (Zillow Home Value Index) — an appreciation of nearly 122%. These values are seasonally adjusted and only include the middle price tier of homes. 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 December to an upward trend. For the first time since 2014, homes in this area were selling below their listing prices.
Similar growth has been recorded by NeighborhoodScout.com. Their data also shows that Seattle real estate appreciated 88.05% over the last ten years, which is an average annual home appreciation rate of 6.52%, 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 low but on a positive side (3.79%), and in the latest quarter, the appreciation rate has been at 2.17%, which annualizes to a rate of 8.95%. This figure also corroborates Zillow's positive forecast, so the home prices in this region are expected to increase by at least 7-9% 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. The strong price appreciation we saw in 2020 will continue in 2021 as the biggest price boost will occur during to peak buying season.
Realtor.com offered real estate predictions for 100 of the top metro areas in the U.S. Out of those 100 metros, the Seattle metro area was the #5 housing market for combined sales and price growth. They predict that home values within the Seattle-Tacoma-Bellevue metropolitan area would rise by 9.7% during 2021. Their sales forecast is 8.9%. Boise was at #4 with a price growth forecast of 9.1%.
Here is the housing forecast for Seattle, King County, and Seattle MSA.
- Seattle-Tacoma-Bellevue Metro home values have gone up 13.1% over the past year and Zillow predicts they will rise 11.7% over the next 12-months.
- Seattle home values have gone up 8.2% over the past year and will continue to rise at a similar pace over the next 12-months.
- King County home values have gone up 10.6% over the past year and will continue to rise at a similar pace over the next 12-months.
- Pierce County home values have gone up 16.4% over the past year.
- Snohomish County home values have gone up 14.5% over the past year.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until Feb 2022. We will update it when the new data is available.
Seattle-Bellevue-Everett, WA Appreciation Forecast
Here is a short and crisp Seattle housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Seattle is 85% and it is predicting a positive trend. LittleBigHomes.com estimates that the probability of rising home prices in Seattle is 85% during this period. If this price forecast is correct, the Seattle-Bellevue-Everett, WA home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The historical change in home prices for Seattle-Bellevue-Everett, WA is shown below for the three-time period. The Home Price Index indicates that the Seattle market is up 48% over the last 10 years (data up to 3rd Quarter, 2018). Over the last thirty years, it is up 497%. The highest annual change in the value of houses in the Seattle Real Estate market was 33% in the twelve months ended with the 2nd Quarter of 1978.
The worst annual change in home values in the Seattle Market was -11% in the twelve months ended with the 3rd Quarter of 2009. The highest growth in home values in the Seattle Real Estate Market over a three-year period was 96% in the three years ended with the 4th Quarter of 1978. The worst performance over a three-year period in the Seattle Market was -24% in the three years ended with the 2nd Quarter of 2011. For the upcoming updates, you can visit LittleBigHomes.com.
|Time Period||Seattle Metropolitan Area Real Estate Appreciation|
|Last 5 Years||69%|
|Last 10 Years||48%|
|Last 20 Years||197%|
|Decline From All-Time High||0.02%|
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? While many have lost jobs, making them ineligible for a home mortgage, some sellers have taken their homes off the market. 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. And the real estate industry has quickly adapted to restrictions due to the novel coronavirus pandemic by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges.
Opportunities abound for both buyers and sellers if they’re willing to act quickly. Sellers, brokers, and homebuyers seem to be adjusting to restrictions imposed on the real estate industry because of the coronavirus pandemic. With the help of agents, buyers are touring properties virtually, on FaceTime, or WhatsApp calls.
The constraint on available inventory is making the Seattle real estate market heat up again. 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 very tight — 1.26 months in Seattle and 0.85 in the All 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.
For buyers in Seattle, the low-interest rates (below 3%) continue to be an incentive. We expect a high number of listings to hit the market in spring and summer. It’s a positive sign for homebuyers, especially for those to want to invest in Seattle real estate. More inventory leads to more options for buyers and it could potentially lead to more sales as well.
Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Seattle in 2021 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.
Impact of Pandemic on The Seattle Housing Market
We shall now do a quick recap of how the pandemic has affected the Seattle housing market since 2020. By late 2019, Seattle home prices had begun once again to rise. Prices rose faster in October 2019 than they have for a year. In October, Seattle house prices rose 3.3% from a year ago, to $775,000 — the largest percentage increase in 12 months.
According to a December 2019 report by The Seattle Times, home prices in the area had posted year-over-year gains for three months in a row. Right from January, we saw very high demand, low inventory, and it looked like that we'd see some appreciation this year.
The supply of properties on the market in King County was drastically decreasing, down 40.7% by the end of February, from a year ago. This is an advantage to sellers right since there aren't as many homes to sell compared to normal trends.
By January 2020, the Seattle housing market had posted the highest growth in the entire region. Before coronavirus hit, the market was really in good shape. Seattle's housing market was hotter than almost anywhere else in the country. The Seattle home price was up by 6% in February 2020, from a year ago. Also, there was an increase of 1.3% as compared to January 2020.
Data from Northwest Multiple Listing Service showed that inventory remained tight in March as well. At the end of March, there were 2813 active listings in King County. That was a 34.01% drop from the year ago when active listings were 4263. Brokers reported 2,450 closed sales for a YOY gain of more than 6.99%. The pending sales (mutually accepted offers) were 3,031, a year-over-year drop of 17.12%.
A total of 10,291 new listings were added (in all the 23 counties reported by NWMLS) during March. The total no. of active listings at the end of March was 9,418. That was a drop of 21.63% from the same month a year ago. Compared to February, March's inventory increased by 2,505 listings, still felling short of matching demand in the entire region.
Impact of COVID-19
The 2020 housing market offered a lot of surprises. It was remarkable for many reasons, not the least of which was its extraordinary resolve through the COVID-19 pandemic. Covid-19 pandemic slowed down the volume of sales and the pace of sales in the Seattle area. It caused some fraction of buyers to put off their planned home purchases and a portion of sellers to hold off on listing their homes. Residential real estate activity reflected expected declines during April with the impact of the coronavirus pandemic taking its toll.
Due to falling inventory, the sellers were facing a lot less competition from each other. Many of them decided not to list their homes in the spring season, which led to a heavy decline in listings but kept the prices steady and strong.
According to figures of Northwest MLS for May, in King County, prices rose 4% from a year ago, from $625,000 to $650,000. Snohomish County prices were up nearly 6% and Pierce County joined Kitsap with a double-digit gain; prices there increased from $355,000 to $397,750 for a 12% gain. Pierce County is where most of the metro area’s cheapest homes can be found.
In June, home prices in King County had a small increase of nearly 5.9% (rising from $637,675 to $675,000). Pierce County prices jumped nearly 8.2%, from $372,500 to $403,000. Prices were up nearly 6.7% in Snohomish County and more than 7.7% in Kitsap County. The median sales price in Seattle increased by 2.62% to $749,000, and months of inventory equaled 1.6.
The Seattle metropolitan area includes the three most populous counties in the state—King, Snohomish, and Pierce. In July, King County continues to have the highest median price for homes and condos at $670,000 (up 7.2% from a year ago). Prices surged across most King County markets, with the typical Seattle single-family home selling for $805,000 as prices rose 6.6% from a year ago.
Price growth was even stronger elsewhere—21.6% in North Seattle, 11.46% in SE King, and 7.95% in SW King. Homes in Pierce County saw a 13% price hike, to a record-busting $425,000. And in Snohomish County, prices rose a whopping 15% year-over-year, to reach an all-time high of $575,000.
In August, tight inventory and high demand pushed home prices to new highs. The region saw the second consecutive month of record-setting price growth with home prices experiencing double-digit increases as compared to a year ago. The median sales price in Seattle surged by 10.61% to reach $766,000 (source: NWLS). The Kind County also recorded a steep price rise of 10.57% year-over-year, and it is currently holding at $680,000. We also saw the lowest number of homes for sale in more than 20 years and the lowest mortgage rates on record.
In December, new listings, pending sales, closed sales, and prices all went up in the Puget Sound region when compared to the same time last year, according to the report from Northwest Multiple Listing Service. Every market serviced by NWMLS was trending below December 2019 for total active inventory.
Year over year, the median sales price in the four-county metro rose between 9.6% to $740,000 in King and 17.1% to $439,000 in Pierce. Prices in Snohomish and Kitsap counties both increased by about 12% to $573,495 and $426,000, respectively. Of the NWMLS's 22 counties where prices increased, only King did not see double-digit hikes. The largest increases were logged in outlying counties like Kittitas — up 30.4% to $452,500 — and Pacific, where prices jumped nearly 38% to $282,500.
Across the 25 counties in the MLS at the end of December, there were 4,732 active single-family and condominium listings. That's down 44% from a year ago. There were only about two weeks of supply (0.53 months) overall. Only five counties had more than a month of supply, well below the four-to-six months of supply used by housing analysts as a gauge of a balanced market.
In King County, despite a nearly 62% increase in new listings compared to a year ago, the insatiable buyer demand quickly absorbed available properties. In December, the county had 1,793 new listings, up from 1,107 in December 2019. But still, the number of total active listings continued to be about 14% lower than it was at the same time in 2019. The county saw 3,096 closed sales in December, up 28% over 2019. Home prices were also up nearly 10% year-over-year, at a median price of $676,000 in December.
Seattle Real Estate Foreclosure Trends 2021
Here are some foreclosure statistics of the Seattle real estate market for the previous year. Washington state, and Seattle in particular, actually have some of the lowest rates of mortgage delinquency in the country. Foreclosures are practically non-existent (which was the case even before the various mortgage forbearance programs went into place).
Just 1.62% of Washington households are delinquent on their home loans or in foreclosure, compared to 3.39% nationally. And overall, mortgage delinquencies remain near record lows. But the number grew more rapidly here than in the nation as a whole in 2020. In March, the number of Seattle-area households behind on their mortgages increased 11.4% month-over-month, nearly three times faster than the 3.3% average national rise, according to real estate data analytics company Black Knight. Historically, delinquency rates have fallen an average of 10% in March.
By end of August 2020, foreclosure notices in King County were down 72 percent from a year ago and Snohomish County foreclosure notices were down 83 percent from 2019. 2019's levels were already exceptionally low, but mortgage forbearance has pushed these numbers to as close to zero as they can go.
There were 44 properties in Seattle, WA that were in some stage of foreclosure (default, auction, or bank-owned) while the number of homes listed for sale on RealtyTrac was 343. In August, the number of properties that received a foreclosure filing in Seattle, WA was 0% higher than the previous month and 88% lower than the same time last year.
FORECLOSURE STATUS DISTRIBUTION FOR KING COUNTY, WA (RealtyTrac.com)
|Foreclosure Type||Prior Month||Prior Year|
|Pre Foreclosures||No Data||No Data|
|Auction||– 34.8%||– 83.1%|
|Bank Owned||+ 50%||– 75%|
Top 5 CITIES HAVING THE HIGHEST FORECLOSURE RATES FOR KING COUNTY, WA
In King County, WA 1 in every 10663 units is foreclosed.
- Snoqualmie – 1 in every 2583 housing units
- Duvall – 1 in every 4389 housing units
- Kent – 1 in every 10745 housing units
- Seattle – 1 in every 12512 housing units
- Renton – 1 in every 14273 housing units
Top 5 Zips HAVING THE HIGHEST FORECLOSURE RATES IN SEATTLE, WA
In Seattle, the zip code with the highest foreclosure rate is 98188, where 1 in every 5014 housing units is foreclosed.
- 98188 – 1 in every 5014 housing units
- 98144 – 1 in every 6902 housing units
- 98146 – 1 in every 10759 housing units
- 98119 – 1 in every 12961 housing units
- 98117 – 1 in every 14910 housing units
Seattle Real Estate Investment: Should You Buy Investment Properties?
Should you consider investing in Seattle real estate? Well, to answer that question we should take a look at its economy and jobs. Many real estate investors have asked themselves if buying a property in Seattle is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
Seattle is a fairly walkable city in King County of Washington. It has a mixture of owner-occupied and renter-occupied housing. According to Neighborhoodscout.com, a real estate data provider, three and four-bedroom large apartment complexes are the most common housing units in Seattle's real estate market.
Other types of housing that are prevalent in the market include single-family detached homes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 40% of housing units in Seattle. At the national level, single-family rental homes have grown up to 30% within the last three years.
The Seattle real estate market always looks nearly as expensive as an overheated market. We all know that Seattle is an expensive real estate market that gives many investors pause. However, there are many compelling reasons to invest in Seattle.
After a significant decline in the Seattle home prices in the past year, the prices have taken a good jump in the latest quarter of 2020. The shortage of homes for sale in the Seattle housing market is causing prices to rise. And so for all those reasons and more, rising property values are a positive development for homeowners and sellers in the Seattle area. The ongoing nationwide crisis has affected the real estate market of Seattle as well but not as much as we expected. As housing inventory in Seattle remains tight, it would make things very challenging for buyers.
Top Reasons To Invest In The Seattle Real Estate Market
Seattle Housing Demand is Strong
What does the state of Silicon Valley real estate have to do with the Seattle real estate market? Quite a bit, actually. Seattle has long been a second-tier technology hub, bolstered by companies like Boeing, Amazon, F5, and Real Networks. Seattle’s strong tech ecosystem has led to several startups choosing to start here, but more importantly, many tech giants are setting up “outposts” here.
They’re moving jobs to Seattle so they can afford to expand or simply afford to remain in business. The influx of new high-paying jobs plus relocating employees to Seattle is driving demand for homes in Seattle. Over the past 10 years, Amazon has grown more than tenfold in the city of Seattle, from about 4,000 employees in its hometown to over 45,000.
During the same time, the median home price in the city has shot up from $420,000 to $720,000 (according to the Northwest MLS) and home prices in the metro area as a whole have gone up 47 percent. Between 2008 and 2018, over 535,000 homes have sold in the entire Seattle metro area. For comparison, that’s 41 percent more than in the similarly-sized San Diego metro area.
Much of this growth in the local housing market can likely be attributed to growth at Amazon. The Seattle real estate market shares many of the constraints that drove up real estate prices in San Francisco. You can’t realistically build on water.
It is hard to build in the mountains. You can build up, but that takes time and is expensive. And all the while, everyone wants to live close to the city center and jobs. This helps keep property values in the Seattle housing market high.
Seattle Real Estate Investment Generates Excellent ROI In The Long Term
Seattle housing market has been one of the hottest in the country for years. In the past ten years, the annual real estate appreciation rate has amounted to nearly 6.5%. This puts Seattle in the top 10% nationally for real estate appreciation. Seattle has repeatedly hit lists as being among the top cities for real estate sellers to get the highest return on their investment. Property values have gone up consistently for years.
Rental rates are high and continue to rise, guaranteeing ROI for those who buy and hold properties for the long term. We’ve already addressed the fact that you can raise rents as necessary to match the market. This means you will certainly be able to profit from the large rental market in Seattle whether you buy and hold or buy and flip.
Seattle Has Friendly Business Climate
Businesses aren’t just relocated to Seattle to tap into a growing, skilled labor market. Others are simply relocating because they cannot stay in business in California. California has the highest income taxes in the United States. Incredibly intrusive and endlessly proliferating regulation only makes it harder for businesses to operate.
While many businesses are moving to Texas, Seattle is closer both in culture and geography. That they can find cheaper talent and real estate while gaining more freedom to operate their businesses only adds to the bottom line.
Seattle's Tech Landscape Is Rapidly Evolving
Seattle was the fastest-growing major city in the country in 2015. It has ranked among the top 5 fastest growing cities since 2010, hitting a 3.1% annual growth in 2016. Many young people move here because it is seen as an excellent place to live and get started, and that’s aside from the strong job market.
The exodus from California to Seattle is only part of the equation, since Seattle attracts people from all over the country, and in truth, around the world. Seattle's tech landscape and real estate market are rapidly evolving.
Google has upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond.
GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen 50% price growth in this market which has priced out many middle-class buyers.
Seattle Rental Market Is Very Strong
Around a third of people in the U.S. rent. However, in Seattle, the rate is over half. This is partially due to the cost of homes in the Seattle housing market. Another contributing factor is that Millennials are less willing to be tied down to a home and thus prefer to rent, while Seattle is one of the top cities for attracting these young adults.
They’re probably going to continue to rent instead of buying homes. Environmentalist protections for large swaths of land around Seattle limit how far the city could spread out.
This prevents the value of homes in the Seattle housing market from coming down as people relocate to distant suburbs, trading home values for commute time. Building up is increasingly an option, but you can’t do that here the way they’ve done it in Miami.
The financial district allows buildings to be as tall as FAA regulations allow, but that’s pretty much it. Nor does that designation matter much, since the area is mostly built-up. The rest of Seattle is zoned low, preventing demand from being met by building condo towers. That keeps Seattle rental property rates high.
Rental prices are declining in Seattle due to the ongoing pandemic which has caused high vacancies. As of April 3, 2021, the average rent for a 1-bedroom apartment in Seattle, WA is currently $1,495. This is a 17% decrease compared to the previous year.
- Two-bedroom apartments in Seattle rent for $1,995 a month on average (a 13% decrease from last year)
- Three-bedroom apartment rents average $2,700 (a 10% decrease from last year).
- Four-bedroom apartment rents average $3,295 (a 3% increase from last year).
- Studio apartment rents average $1,150 (an 18% decrease from last year).
Only 15% of the apartments can be rented for less than $1500, and more than 50% of the apartments are priced at more than $2,000 per month. This shows that overall rent prices are very high in Seattle and a huge drop in rent prices can help new renters to lock in a long-term lease.
These are some of the most affordable neighborhoods where the rent prices are below the Seattle average rent:
- Innis Arden
- Richmond Beach
- The Highlands
The Zumper Seattle Metro Area Report analyzed active listings in March 2021 across 24 metro cities to show the most and least expensive cities and cities with the fastest-growing rents. The Washington one-bedroom median rent was $1,303 last month. Redmond was the most expensive city with one-bedrooms priced at $1,910 while Port Angeles was the most affordable city with one-bedrooms priced at $910.
Here are the best areas to invest in a rental property in the Seattle Metro Area in 2021. This does not include Seattle and Bellevue because rents are declining in these cities. Seattle has the second-highest rent declining rate of 17.6% YoY while Bellevue rent dropped 14.9% since this time last year, making it third. Mercer Island rent experienced the largest year-over-year decline, down 27.0%.
The Fastest Growing Cities (Y/Y%)
- Tacoma had the fastest-growing rent, up 15.3% since this time last year.
- Olympia saw rent climb 13.9%, making it second.
- Oak Harbor was third with rent jumping 9.3%.
The Fastest Growing (M/M%)
- Olympia had the largest monthly rental growth rate, up 5.3%.
- Bellingham rent increased 5.2% last month, making it the second-fastest-growing.
- Oak Harbor ranked as third with rent climbing 5.0%.
Seattle's Large Student Market Is Great For Rental Property Investment
While we cannot say this just about the Seattle housing market, the fact remains that large cities with a strong network of educational institutions always create an opportunity for those who want to own rental properties. Students don’t buy houses – they rent. A college town with a single university sees property values rise and fall relative to the popularity of the university.
Seattle’s nearly two dozen four-year colleges provide a literally diverse market for landlords catering to students, while the strong local job market means you can rent the property out to locals if the students move out.
Seattle Is Friendly To Foreign Real Estate Buyers
The United States is pretty friendly to foreign real estate buyers. Canada has limited the ability of foreign buyers to buy up properties in Canada, a major reason why Vancouver became one of the most overvalued real estate markets in the world. This has led many Chinese investors to buy up Seattle real estate instead, making the city the third destination for foreign real estate investors.
Some hope to send kids to study in the U.S., while a few actually have children here. Others buy the properties as a way to park money overseas in a relatively low tax jurisdiction with likely returns if they choose to sell later. Since foreign buyers don’t always rent the properties out, this drives up prices in the Seattle real estate market while indirectly constricting supply.
The Seattle Housing Market Is Landlord Friendly
Many investors are reluctant to buy properties in liberal markets because they’re afraid they won’t be able to protect their investment. However, there are several points in favor of Seattle, especially in comparison to Oregon and California. Washington State outlawed rent control, so you can raise rents to keep up with inflation and demand.
If a tenant breaks the lease without the landlord’s consent, the tenant is liable for rent through the end of the lease. Landlords have significant freedom in their screening questions. If a tenant has a month-to-month lease, the landlord can only end it for one of 18 approved reasons, but they can end it with a written notice three weeks before the end of the month.
Where To Buy Seattle Investment Properties?
Are you looking for an investment property in the Seattle real estate market? Seattle has long been second to Silicon Valley, but its strong economy, diverse population, and better regulatory climate are bringing refugees from California and migrants from around the country and world to live here.
Regardless of the area’s weather, the Seattle housing market’s outlook can only be described as sunny. Good cash flow from Seattle investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Seattle in a growing neighborhood would be key to your success.
The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. You should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Seattle rental property and you should be able to get a good return on your investment over the long term.
The neighborhoods in Seattle must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Seattle might not be the best place to live in.
A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods. The inventory is low, but opportunities are there.
There are 75 neighborhoods in Seattle. Some of the other popular neighborhoods in Seattle where you can invest in Seattle investment properties are Maple Leaf, Central District, Phinney Ridge, Ballard, Columbia City, Belltown, Beacon Hill, Green Lake, West Seattle, Wallingford, Madison Park, Queen Anne, Magnolia, and Northgate.
Leschi has a median listing price of $1M (On Realtor.com), making it the most expensive neighborhood. Belltown is the most affordable neighborhood, with a median listing price of $550K.
Another popular neighborhood of Seattle for real estate investment is Queen Anne where the median home price is around $875,000. Broadway is a popular neighborhood for homebuyers who can afford to buy a home in the median price range of $649,000. The average rent for a studio apartment in Seattle, WA is $1,452. The average rent for a 1 bedroom apartment is $1,981 and the average rent for a 2 bedroom apartment is $2,054.
Here are some of the best neighborhoods in the Seattle metro area where you can buy a house or an investment property.
North Redmond is in King County and is one of the best places to live in Washington. According to Niche.com, living in North Redmond offers residents a sparse urban feel and most residents own their homes. In North Redmond, there are a lot of restaurants, coffee shops, and parks. Many families live in North Redmond and residents tend to lean liberal. The public schools in North Redmond are highly rated. The median home value in North Redmond is $866,702 and the median rent is $2,318.
North Delridge is quite an affordable neighborhood in Seattle. It lies in King County and is one of the best places to live in Washington. According to Niche.com, living in North Delridge offers residents an urban-suburban mix feel. The area is known for its lush natural beauty and abundant opportunities for outdoor recreation.
The public schools in North Delridge are highly rated. The median home value in North Delridge is $603,188. North Delridge home values have gone up 3.2% over the past year and Zillow predicts they will fall -1.7% within the next year. Therefore, it is probably the right time to start finding some good investment opportunities. About 48% of the residents like to rent a home.
Capitol Hill is a densely populated residential district in Seattle (Not be confused by Capitol Hill, Washington D.C.). It is located east of the city's Downtown on the other side of Interstate 5. Capitol Hill is the 9th most walkable neighborhood in Seattle with a Walk Score of 91 and is bikeable. It is one of the city's most popular nightlife and entertainment districts. Made up of a few smaller neighborhoods, rents in Capitol Hill average around $1,900 a month. The community is made up of young professionals, singles, and families with kids.
According to Redfin.com, the Capitol Hill housing market is very competitive. As we write this, the median sale price of a home in Capitol Hill is $679,950, up 22.0% year-over-year. Homes in Capitol Hill receive 1 offer on average and sell in around 8 days. The average sale price of a home in Capitol Hill was $680K last month, up 22.0% since last year. The average sale price per square foot in Capitol Hill is $618, up 0.24% since last year.
On Apartmenthomeliving.com, the pricing for Studio Apartments in Capitol Hill currently ranges from $700 to $10,000 with an average price of $1,840. As we write this, the rental pricing for One Bedroom Apartments in Capitol Hill ranges from $655 to $9,585 with an average monthly rent of $2,488. The current average rental price for two bedrooms is $3,264.
Highland Park is a neighborhood in King County. Living in Highland Park offers residents an urban-suburban mix feel and most residents rent their homes. The public schools in Highland Park are above average. The median home value in Highland Park is $550,022. Highland Park home values have gone up 3.5% over the past year.
According to RentCafe, the average rent in Highland Park, Seattle, WA is $1,842. About 50% of the apartments can found in the range of $1,501 – $2,000. The price range for a studio apartment in Highland Park, Seattle, WA is between $1,379 and $1,429. The price range for a 2-bedroom apartment in Highland Park, Seattle, WA is between $1,899 and $1,939.
South Hollywood Hill is in King County and is one of the best places to live in Washington. According to Niche.com, living in South Hollywood Hill offers residents a sparse urban feel and most residents own their homes. In South Hollywood Hill there are a lot of restaurants, coffee shops, and parks. The public schools in South Hollywood Hill are highly rated. The median home value in South Hollywood Hill is $817,547 and the median rent is $2,129.
Sammamish Plateau also lies in King County. It is an upscale, picturesque suburb situated between Lake Sammamish and the Snoqualmie Valley. The market in the Seattle suburb of Sammamish is currently very hot. Living here offers residents a sparse suburban feel. The median home value in South Hollywood Hill is $742,997.
Sammamish Plateau is consistently ranked among the best places to live in the state and the country. The public schools in Sammamish Plateau are highly rated. According to Apartments.com, as of November 2020, the average apartment rent in Sammamish, WA is $1,587 for a studio, $1,808 for a one-bedroom, $1,903 for two bedrooms, and $2,474 for three bedrooms. Apartment rent in Sammamish has decreased by -2.8% in the past year.
Here are the ten neighborhoods in Seattle having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Antioch U-Seattle / 4th Ave
- Mars Hill Graduate School / Elliott Ave
- James St / Boren Ave
- Cornish College of the Arts / Stewart St
- 12Th Ave S / S King St
- Boren Ave / Madison St
- Seattle Community College-Central Campus / Broadway
- E Jefferson St / 20th Ave
- U of Washington-Seattle Campus / NE 45th St
- North Park
Apart from the Seattle real estate market, you can also invest in another hot market in Spokane, WA. Spokane is a relatively cheap real estate market on the West Coast. It is already seeing increased demand and property valuations, while it remains a safe place to invest in real estate. Skip Seattle and Silicon Valley and invest in the future growth of Spokane. One reason why Spokane long lagged behind Seattle was its higher unemployment rate.
Seattle has a roughly 3% unemployment rate, significantly lower than the 5% unemployment rate seen in Spokane. Spokane’s economy, though, is seeing a surge of higher-wage jobs. Out of the tens of thousands of new jobs created since 2010, the majority of them pay more than the average county wage – which is in line with the national average. The promise of better pay will lure many people to Spokane to live, fueling demand for the Spokane housing market.
The next one is the Tacoma real estate market. It is the second-largest city in a state that is often a better choice for investors than the largest city since demand is strong but not so great that investors worry about being priced out of the market or being caught up in a bubble. Tacoma is actually the third-largest city in Washington state.
Rents and property values in the Tacoma area are rising due to increased demand and constrained supply. This is an ideal time to buy. Roughly speaking, the median house in the Tacoma area is now the same price as the typical house in King County was in 2012. Furthermore, there are many reasons to consider investing in Tacoma real estate over homes and condominiums in nearby housing markets.
Then comes the Walla housing market which includes two suburbs, encompassing more than fifty thousand people. The area has become the hub of Washington State’s wine country, though wheat remains a major contributor to the local agricultural economy. Walla Walla is one of the real estate markets in the state that doesn’t depend on Seattle’s growth for appreciation.
Walla Walla sits on the Washington-Oregon state line. The Walla Walla housing market is poised for steady price growth. The median home value in Walla Walla is $278,247 and home values have gone up 4.4% over the past year.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States.
We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Seattle. Consult with one of the investment counselors who can help build you a custom portfolio of Seattle turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Seattle.
Not just limited to Seattle or Washington but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Seattle turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
Is It The Right Time To Invest In Real Estate? – The national homeownership rate is on the decline for the first time since 2017. As demographics change and baby boomers retire, you’re seeing Millennials who may not be ready to buy houses. In 2018, Millennials made up about 22 percent of the population in the United States.
They’re choosing to rent over buying a single-family home or an apartment. Rising home prices and shortage of starter homes have not left Millennials many choices but to delay homeownership. Moreover, it's even harder to take out a mortgage for those who have student loan debt.
Let us know which real estate markets in the United States you consider best for real estate investing!
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
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