The low inventory and high competition in the Seattle housing market continue to make it difficult for homebuyers to find a place to call home. Increasing single-family home prices have resulted from a widespread housing boom fueled by historically low interest rates and a scarcity of available properties, making homeownership out of reach for more people. As more millennials enter the market, the demand crunch will intensify. From the standpoint of supply and demand, Seattle’s housing market is currently one of the most inequitably balanced in the United States. Many homes get multiple offers, some with waived contingencies.
There’s just not enough supply to keep up. Growing demand is expected to continue as a result of a lack of new construction entering the market in suburban areas following years of underdevelopment. With interest rates remaining at historically low levels and a supply of homes available for sale in the region of less than one month, the perfect storm for rising house prices will continue, albeit perhaps not quite as ferociously as previously.
What you get to see are record-breaking housing prices and record-breaking low inventory. 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.
According to Realtor.com, Seattle is a seller’s market. In August 2022, the median asking price for a home in Seattle was approximately $755,000, up 2.8 percent year over year. At $800K, the median sale price was even higher. Low interest rates and continued job growth continue to drive the market. 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 August 2022, homes in Seattle, WA sold for approximately the asking price.
On average, homes in Seattle sell after 39 days on the market and everyone knows it’s going to sell above the seller’s asking price. Alki Point has a median listing price of $1.2M, making it the most expensive neighborhood. Lower Queen Anne is the most affordable neighborhood, with a median listing price of $532K.
According to NWMLS, August is traditionally a slow month for home sales, and this year was no exception. Month-to-month drops in new listings, total inventory, pending sales, close sales, and median prices are shown in figures comparing July to August. According to their statistics, the number of new listings added during August, which include single family homes and condominiums, decreased from both July (down 11.5 percent) and twelve months ago (down 4.2 percent ).
Additionally, total inventory for the 26 counties included in the report dropped by approximately 6.6 percent from July and by nearly 22.6 percent from a year ago. At the end of the month, there were 7,425 active listings, a decrease from the previous year’s total of 9,591. NWMLS predicts that the continued scarcity of available inventory will result in properties selling quickly if they are priced reasonably.
During the month of August, there were signs that prices were beginning to level off. The median price (system-wide) on the 10,571 sales that closed last month was $579,000, representing a decrease of $10,000 from the previous month’s median price of $600,000. Prices did rise when compared to a year ago, rising from $490,000 to $520,000, representing an increase of approximately 18.2 percent. That year-over-year (YOY) percentage change was the smallest since February when there was a bump-up of about 15%.
Homes are selling fast and buyers are bidding up prices. The median price for closed sales of single-family homes and condominiums (combined) in King County grew by 13.49% year-over-year to $771,750 in August 2022, with similar increases in Snohomish (17.52%), Pierce (18.82%), and Kitsap (14.7%) counties. That’s incredibly strong double-digit appreciation. In the fall home-buying season, it’s likely the strong buyer demand, low-interest rates, and tight inventory (less than a one-month supply throughout the region) will continue to be key factors in the Seattle-Area housing market.
August continued the Puget Sound area’s extreme real estate market, with strong buyer demand fueled by historically low interest rates and a backlog of buyers still looking for a home. Three of the four counties in the Puget Sound region, the tri-county area encompassing King, Pierce, and Snohomish counties had YOY improvement in new listings.
Northwest MLS figures indicate there was around three weeks of inventory (0.70 months) at the end of August. Clark, King, Kitsap, Lewis, Mason, Pierce, Snohomish, and Thurston counties had only about three weeks of inventory, with Snohomish reporting the smallest supply (0.49 months), about two weeks. It will likely take between four to six months for the Puget Sound housing market to shift to a more balanced market. There are far more buyers than there are available homes for sale in the entire Puget Sound region’s 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. However, our main focus would be on King County and Seattle housing market trends for August 2022. High demand kept supply depleted. August 2022 housing report from “Northwest Multiple Listings Service” found that King County had 2,268 active listings (SFH+condo), a -43.44% decline from the same time last year when there were 4,628 active listings.
An active status means that the home is currently available for sale. It may have received offers, but none have yet been accepted, which means that the opportunity is wide open for you to propose. If you look at the housing supply in the King County area, it has declined drastically and is now at 0.52 months for single-family homes and 0.97 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 < $500K) 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. In King County, which accounted for nearly six of every 10 condo sales during August, the year-over-year increase was 10.4%. The median-priced condo in King County sold for $458,000. Single-family homes (excluding condos) in King County had a median sales price of $850,000. That is $392000 more than condos (nearly 85% higher).
Only in the city of Seattle is the extreme inventory shortage subsiding, providing some relief to homebuyers, particularly those looking for condos. In Seattle, pending condo sales increased 12.09 percent last month. while condo active listings decreased by -43.61 percent year over year. The housing supply, measured in months of inventory, is 0.67 months for single-family homes (still quite tight) and 1.58 months for condominiums. The median price of single-family homes increased by 6.06 percent to $875,000, while condos decreased by 4.95% to $480,000.
To summarise the last month’s statistics we can say that All King County & Seattle remains a seller’s real estate market with only 0.62 months of inventory — still well below what is required to meet the volume of buyers right now. In the current market environment, home buyers are trying to take advantage of low-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 summers as demand remains high and interest rates remain low.