It’s no surprise that Seattle and King County have problems with expensive housing prices and inventory shortages, Seattle was ranked 2nd on Forbes’ list of fastest growing cities for 2018. Recent data shows that the region is making improvements, however, and best practices include continuing to build a variety of different homes to help ease the pressure on available homes.
The Seattle Times reports that house prices in King County have declined nearly 1.6 percent from May to June, the first time there’s been that month-to-month decrease since the recession. Compared to June 2017, last month saw a 43-percent inventory increase in single-family homes on the market and a 73-percent increase in available condominiums. The median price for a King County home is now $715,000.
Roger Valdez, Director of Seattle for Growth, told Lens that this change across the county might be reflective of a cooling off in the economy. The supply is beginning to catch up with demand a bit and prices are leveling up, though it remains to be seen if this trend will continue.
Valdez said that starting around 2011 Seattle experienced a large volume of people moving into the city who needed housing. The housing industry experienced an uptick in the building of single-family homes, microhousing and apartment buildings.
In 2013, prices started to climb because there were more people moving into the region and city than houses were being built. Valdez said that many people might have been put off by ever-climbing house prices and looked elsewhere to avoid the anxiety of the construction changes.
Elected officials then responded to that anxiety and impose more rules and taxes, he added, which was the wrong time to do that as demand is still pouring in.
In 2014, the Seattle City Council limited where you could build congregate microhousing, restricting it to only neighborhood commercial zones, and it also made the rules more difficult to build.
“It essentially ended up eliminating most congregate housing where you have a shared kitchen. It became impossible to build in the low-rise zone and more difficult to build in mixed-use commercial zones. That took a lot of housing off the table.”
Following the decision, the number of microunits being built and brought online dropped, and construction focused on efficient dwelling units which were bigger and typically more expensive.
Valdez said that constructing more microhousing was one effective method to absorb the tech workers moving into the region who typically wanted to live close to where they worked and didn’t require much space.
He added that a large number of people want to buy a house, but they are living in apartments right now and can’t afford a house. The best solution would be building smaller, less expensive single-family homes, that way a student or young person could move into the apartment that a family moving into a house once occupied.
Seattle for Growth is pushing for creating more housing opportunities including small lot housing, backyard cottages and corner lots, and putting more density in single-family homes.
“More housing is always good for the consumer…people trying to find a house,” said Valdez. “For the sellers, it’s a little of downside because you won’t have a bidding war for your house.”
Mike Pattison, Snohomish County Manager for the Master Builders Association of King and Snohomish Counties (MBAKS), told Lens: “The recent price drop is welcome news for families looking for homes, but it’s far too soon to draw any conclusion if there is a trend at play. As an industry we will be watching it very closely.”
Pattison added that newcomers have continued to move farther and farther out from the city, and those outlying areas are facing growth pressures like they haven’t faced before.
“While King County was unable to absorb the influx of new families, other areas have picked up the slack.”
Pattison added that the most effective home for addressing growth has been townhomes. There is a proliferation of apartment options, but that has been slowing.
Taylor Marr, Senior Economist for Redfin, said that even though the region has been booming economically, the housing inventory has not kept pace to meet that demand.
The last few years, inventory has declined an average of 20 percent a year, according to Marr. The last six months, however, has seen a flip where inventory has grown 4 percent after an initial 30-percent decline in January.
Marr said he first speculated the change was brought on by new houses finishing construction, however the number of inventory compared to all listings was still relatively low. The main reason for the flip has been existing homes, which make up about 80 percent of total inventory.
When breaking down home inventory by price, the middle and lowest price tiers containing starter homes are still experiencing declines. Most of the growth is in the category of homes valued at over $500,000.
“The growth in inventory allows for a bit of ease for new buyers to cash in on all the equity they’ve gained. This might be why you’re seeing more listings in general.”
Less housing competition in Seattle has started causing houses to sit on the market longer than normal which contributes to more inventory; homes that may have sat on the market for 10 days are now sitting for 15 days.
“The more houses, the better,” he added, and affordable housing options are great unless the process ends up slowing down the addition of new housing. Even adding luxury condos will have a beneficial effect on supply, which will ease overall supply pressure for everyone else.