Seattle’s housing market cools

Seattle housing construction
Housing stakeholders say that Seattle’s housing market has experienced significant price decreases within the last six months, however they are still higher when comparing year-over-year figures. Photo: Joe Mabel.

Seattle’s housing prices have declined at one of the fastest rates in the country over the late summer into the fall months. Coupled with Amazon’s announcement to move its second and third headquarters to the eastern U.S., housing analysts predict that sellers will continue selling units at or near market prices into early 2019. Additionally, they believe housing inventory issues should be addressed.

As reported by the Seattle Times, a recent Case-Shiller home price index found that the Seattle metro area’s single-family home costs in recent months have fallen at the fastest rate in the nation. In August and September, home prices decreased by 2.9 percent, at 1.6 and 1.3 percent, respectively. San Diego, the metro with the next largest drop, experienced a dip of 0.8 percent across that two-month period.

“Buyers are seeing a broader shift from a seller’s market to more of a balanced housing market, and no longer feeling the same sense of urgency as they did even just six months ago,” Allison Butcher, Senior Policy Analyst at the Master Builders Association of King and Snohomish Counties (MBAKS) said.

“Rents are stabilizing, while interest rates are starting to rise, so first-time buyers are content to sit on the sidelines for now.  And would-be move-up buyers are taking their time entering the market as well.”

She added that although home price growth has slowed, the city’s job growth remains strong. In October, the Seattle metro area had an unemployment rate of 3.3 percent.

“The fact remains that home prices and rents are still high and out of reach for many. We are still experiencing a significant housing shortage,” said Butcher.

Lennox Scott, CEO of John L. Scott Real Estate, told Lens that Seattle’s housing market in May was in an “extreme frenzied” state, where home sellers received multiple offers and were selling homes at premium pricing levels. Now, six months later, units are being sold at market price.

“Heading into 2019, we anticipate the more affordable and mid-price ranges in all markets will go up…after January 1 to a ‘surge’ level of sales activity intensity, then transition back down to ‘strong’ for the remainder of the year,” wrote Scott in his 2019 Seattle-Puget Sound Housing Forecast.

From January to April 2019, the region’s housing market should experience a mild increase in median home prices, which is likely to diminish throughout the rest of the year, he added.

“Buyers in 2019 will have greater selection opportunities than they had in the last few years where we were virtually sold out of homes for sale,” said Scott. “In 2019, multiple-offer situations will not be as commonplace, giving buyers the opportunity to arrange inspection, finance or home-to-sell contingencies.”

According to recent Redfin data, 47 percent of Seattle-area home sellers dropped their prices by an average of $27,539. One year prior, 33 percent of home sellers lowered their housing price at an average drop of $30,242. October 2018’s price decrease were 3.6 percent less on average, compared to 3.8 percent one year prior.

Redfin Chief Economist Daryl Fairweather told Lens: “You’re seeing much more price drops than has been seen in Seattle in the past as nearly half of active listings in Seattle experience a price drop. Earlier this year, it was only 12 percent.

“Prices typically drop in fall and winter relative to spring, where there is the most demand. It’s not unusual to see a decline month after month, but this is more pronounced than what we normally see.”

Fairweather said that Amazon’s HQ2 announcement signals less migration to Seattle than in past years. Amazon will continue to hire in the city, however it will not be at the same rate. According to a Redfin report, the locations of the new headquarters could cause Seattleite workers to move, which could result in a significant increase of monthly housing listings.

Seattle’s housing market is currently selling homes for around 98 percent of their list price, she said, compared to selling as much as six percent over list price in past months, and she expects the trend to continue into early 2019.

“We’ve seen a decline in home sales in Seattle in the same theme of market cooling relative to earlier this year because fewer homes are selling, and we are seeing more inventory on the market,” she said.

“Buyers will have more options now than at the same point last year, so that trend will probably continue into next year,” she said, adding that rising interest rates might raise prices, but at least consumers will have more choices.

 

 

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