We’ve seen the headlines over the last 12 months—local experts claiming Seattle is experiencing a pause in the market. Yet, we remain the fastest-growing large city in the U.S. and have seen a growth in population by 89 percent since 2010. So how can this be?
President and CEO of Realogics Sotheby’s International Realty (RSIR) Dean Jones said, “With rising resale supply and new construction offerings, there was less urgency, and the headlines, in part, helped create a self-fulfilling prophecy about a slowing market. The market trajectory has since turned more positive—both pending and closed sales have grown each month in 2019 and both are now trending higher year-over-year. I think we’re witnessing an inflection point, and sales are rebounding.”
According to data from the Northwest Multiple Listing Services (NWMLS), resale and condominium values are recovering—resale by an increase of 39 percent. In addition to an increase in sales volume, the median home price in July 2018 was $650,000 compared to $617,500 in July 2019. While the values remained relatively level year-over-year, we are seeing an increase in sales at slightly lower price points.
After years of double-digit median home price increases, it’s unsurprising that in the context of 2018 prices and demand slowed. What we’ve seen in 2019, is the continued decrease of interest rates (at a two-year low), a booming stock market and increased consumer confidence which has led to an increase in sales.
Tech continues to invest in Seattle and the Eastside with companies such as Amazon, Facebook, Google, Apple and Expedia all occupying new campuses with tens of thousands of jobs waiting to be filled. This job growth will continue to spur housing demand—both rent and for sale. Matt Van Damm, Vice President of New Developments for RSIR, said,” More than 1,000 people a week are moving to the area and while most new residents will initially rent, thousand of recently delivered apartments act like incubators for future condominium buyers.”
Seattle currently has less than four months of resale supply technically making the market neutral; however, buyers are continually encouraged by sharp prices, low interest rates and more choices. The problem, is that new construction is not always well-represented in market data. More than 600 new condos have presold since September 2018 and only a fraction of the new units are listed on the NWMLS. “There’s a lot more going on than meets the eye, both domestically and internationally,” added Jones. “Seattle is viewed globally as the new West Coast gateway with a long runway for investments, especially when considering the 20 percent foreign buyer home taxes in Vancouver, BC and higher housing costs and state income taxes of California.”
Seattle continues to hold the title of having the most tower cranes than any other US city and experts don’t expect this to change anytime soon. By the end of 2018, $4.8 billion in construction projects were in progress with an additional 15 million square feet in the queue. “Looking ahead, new high-rise condominiums will need to fetch more than $1,200 per sq. ft. on average—easily 10-15 percent more than the current crop of units being built today,” said Brian O’Connor, Principal of O’Connor Consulting Group – a leading appraiser that specializes in urban development. “If the presales aren’t there, then the project will defer or won’t get built. If we don’t add more supply, then the market will be unbalanced and prices will rise until they do pencil.”
Coined by the Brookings Institution as one of four “superstar cities” in the US, Seattle displays some of the nation’s greatest job density and growth rates. With job opportunities and a relatively lower overall cost of living, in comparison to other major West Coast cities, Seattle has positioned itself as a valuable city that attracts new residents who will ultimately fuel the upward trajectory of homes and values into the next decade.