According to Redfin, Washington home prices were up 5.1% year-over-year in July. The number of homes sold fell 31.3% and the number of homes for sale rose 20.4% as compared to last year. The median price of homes in Washington was $608,700. There were 9,617 homes sold in July this year, down from 14,000 homes sold in July last year. The median days on the market was 12 days, up 3 days year over year.
The number of newly listed homes was 13,309 and down 14.3% year over year. The average month of supply is 2 months, up 1 year over year. 37.7% of homes in Washington sold below list price, down 24.8 points year over year. There were only 45.1% of homes that had price drops, up from 23.0% of homes in July last year. There was a 100.3% sale-to-list price, down 4.3 points year over year.
Washington State Housing Market Forecast
According to Zillow, the typical value of homes in Washington is $624,275. This value is seasonally adjusted and only includes the middle price tier of homes. Washington home prices have increased by 18.2% over the past year and 44.5% over the last two years. Here's Zillow's forecast for some of the metro areas in Washington.
None of these MSAs of Washington is predicted to see a home price decline in 2023. Rising home values and listing prices, combined with limited inventory, indicate that Washington's housing market is tilted toward sellers. This trend will likely continue for the foreseeable future unless inventory grows faster than demand or rising interest rates ultimately dampens the demand to that extent.
| Seattle, WA home values are forecasted to rise 3.1% between July 2022 to July 2023. |
| Spokane, WA home values are forecasted to rise 6.2% between July 2022 to July 2023. |
| Kennewick, WA home values are forecasted to rise 5.2% between July 2022 to July 2023. |
| Olympia, WA home values are forecasted to rise 7.2% between July 2022 to July 2023. |
| Bremerton, WA home values are forecasted to rise 3.3% between July 2022 to July 2023. |
| Yakima, WA home values are forecasted to rise 4.9% between July 2022 to July 2023. |
| Bellingham, WA home values are forecasted to rise 6.7% between July 2022 to July 2023. |
| Mount Vernon, WA home values are forecasted to rise 3.1% between July 2022 to July 2023. |
| Wenatchee, WA home values are forecasted to rise 5.1% between July 2022 to July 2023. |
| Longview, WA home values are forecasted to rise 5.7% between July 2022 to July 2023. |
Washington Real Estate Appreciation Rate
According to Neighborhoodscout, Washington's median home value is around $512,020. The real estate appreciation rate in Washington in the latest quarter (2021 Q4 – 2022 Q1) was 4.45%. In the last twelve months, it has been 22.81%. In the last two years, it has been around 34.77% while the cumulative appreciation rate in the last decade has been around 237.81%. Orondo, Hunters, Lummi Island, Waitsburg, and Bellingham are among the Top ten highest appreciating cities in Washington since 2000.
Will the Housing Market Crash in Washington?
There is undoubtedly a slowdown in the pace of home sales in the Washington housing market, but it is more of a return to normalcy. This is neither a crash nor a bubble; housing demand is still present. The slowdown is ideal for buyers who are weary of being outbid in a hot Washington real estate market or who are experiencing buyer fatigue.
All-Transactions FHFA House Price Index for Washington (Quarterly)
- Q2 2022: 824.10
- Q1 2022: 778.33
- Q4 2021: 753.47
- Q3 2021: 733.67
- Q2 2021: 691.43
Factors That May Influence the Washington Housing Market Outlook
A rise in job growth and a decrease in the unemployment rate are two factors that contribute to a housing market boom. Both of these factors interact to cause the boom. It is impossible to break the link that exists between the economy and the housing market. The purchasing power of those considering purchasing a home is affected by both the strength of the economy and the amount of job creation.
In 2021, the real Gross Domestic Product (GDP) of Washington increased by 6.7 percent compared to the previous year. The state's real GDP experienced the most growth in 2018 when the GDP grew by 6.8 percent when compared to the previous year. The information industry added 122.12 billion chained 2012 U.S. dollars of value to the state GDP. The leading publicly traded company with headquarters in Washington was a technology company, Amazon.com. That year, Amazon.com topped the list with a revenue of about 386.06 billion U.S. dollars.
Several notable billionaires, including Jeff Bezos, former Chairman & CEO of Amazon, and Bill Gates, technology advisor and former Chairman & CEO of Microsoft, live in the state. Significant amounts of trade with Asia pass through the ports of Puget Sound. Washington is the fourth largest exporting state in the United States, after New York, California, and Texas. The ports of Washington handle 8% of all American exports and receive 6% of the nation's imports.
The state's 39,500 farms produce, ship, and grow 300 different crops, ranking second in the country. Food and beverage production employs 164,000 people in Washington State, which is the nation's leading producer of apples, sweet cherries, pears, raspberries, and hops. Over the last 10 years, Washington’s tech sector employment has grown by nearly 34%. Tech workers make up 10.7% of the state’s total workforce. The state leads the nation in the net percentage of new tech positions, with a gain of 7.6% last year.
In Washington, housing growth has remained a strong predictor of population growth. Despite strong housing growth, most cities and towns had high occupancy rates. The state added 46,500 housing units this year, 100 more than the previous year. This year, 58% of new units built were multifamily. Over the last two years, one of the state's five largest metropolitan counties has received more than 71% of all new housing units. With 17,100 new housing units, King County leads all counties and accounts for 37% of the state's total housing growth this year.
Population growth, particularly household growth, leads to an increase in housing demand. In the long run, population decline may lead to a decrease in housing demand. Washington tops 7.8 million residents in 2022. Washington's population grew by 158,100 people since the 2020 decennial census on April 1, 2020, largely due to migration. This means Washington grew to an estimated 7,864,400 people as of April 1, according to annual estimates that the Office of Financial Management prepared.
Migration continues to be the primary driver behind Washington’s population growth. From 2021 to 2022, net migration (people moving in minus people moving out) to Washington totaled 83,300. This is up by 40,500 from last year. Net migration accounted for 86% of the state’s population growth.
Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Washington real estate agents predict that prices will level off or rise slightly this year. Some of this is most likely due to rising interest rates.
Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Washington's housing supply is still well short of a balanced real estate market.
Housing Inventory: Active Listing Count in Washington
Sources:
- https://fred.stlouisfed.org/series/WASTHPI#
- https://www.zillow.com/wa/home-values/
- https://www.neighborhoodscout.com/wa/real-estate
- https://fred.stlouisfed.org/series/ACTLISCOUWA#
- https://www.redfin.com/city/13296/NE/Washington/housing-market
- https://www.statista.com/statistics/306793/washington-gdp-growth/
- https://en.wikipedia.org/wiki/Economy_of_Washington_(state)
- http://choosewashingtonstate.com/why-washington/our-key-sectors/ict/
- https://ofm.wa.gov/about/news/2022/06/washington-tops-78-million-residents-2022
