Seattle’s real estate year: historic, record-breaking and disturbing
This year has been a record breaking, historic, and at times rather worrying year for Seattle real estate. But what were the most noticeable trends of 2021, and how do they help us predict 2022?
As the year ends as strangely as the previous one, properties across the country have again broken records. The pandemic continues and in America the concept of home work has shifted from a temporary measure to a permanent one for many workers. This trend has changed where, how – and perhaps above all why – people in this country buy houses.
The combination of virus-induced home buying habits, a volatile stock market, low interest rates, a lack of (and inflated prices for) building materials, rising home prices, general inflation, and growing inequality in wealth distribution added up to a crazy, unprecedented year for real estate – and at it also includes the Seattle market.
Prices
According to a study published by Seattle’s own Redfin, the typical US home sold for nearly $ 400,000, up 24.4% from 2020. In Seattle, the typical home sold for $ 725,000, just under 3% more than last year.
That may not seem like much, but keep in mind that 2020 was the first year of the pandemic and the behavior of the property market changed drastically back then. To see the impact of the pandemic, which is apparently still affecting the market, comparing the Seattle markets in 2019 and earlier is more revealing – like this one published in the Seattle Times, based on the Case-Shiller Index.
Based on the Case-Shiller Index, this chart better shows the remarkable surge in property values since the pandemic.
Seattle Times
The price increase since 2019 has been pretty dramatic.
Incidentally, this year saw double-digit growth in some areas of Seattle: The year-end Norada Real Estate Investments blog tells us that “in the map areas of Eastside and Southeast King County, prices are up more than 26% year-on-year”.
What is driving prices up? And will they fall in 2022? To answer this we need to consider other market indicators.
inventory
Redfin reported that “Housing supply has plummeted to its lowest level in history – only 1.38 million homes were for sale in June, 23% fewer than last year.” Supply is outstripping demand across the country.
Keep in mind that Seattle’s population has increased by nearly 19% since 2010, making it the fastest growing city among the 50 largest cities in the country, according to the US census.
The main coastal port of Seattle.
Soltan Frédéric / Getty Images, Getty Images
Add to that influx the factors of a technology market paying the second highest salaries in the country. Seattle’s market performance has kept pace with its growing connection with big tech:
“In the past 10 years, Amazon has grown more than tenfold in the city of Seattle, from around 4,000 employees in its hometown to over 45,000,” writes Norada Real Estate Investments. “At the same time, the average home price in town rose from $ 420,000 to $ 720,000, according to Northwest MLS.”
Big tech is a lot of money, and Seattle has risen to second place as the tech city behind Silicon Valley.
Kmatta / Getty Images, Getty Images
Days in the market
Redfin reported that the typical US home sold in just 15 days, “the lowest average days on the market in history and less than 39 days in June 2020”. Over 60% of American homes were taken off the market within two weeks. In Seattle, that number was cut in half: the typical Seattle home was sold in just seven days.
Bidding skirmishes
The low number of days on the market correlates with a record number of overbid offers this year. Why leave a home on the MLS when someone offers you 20%, 30% or 50% more than the first day your home was put up for sale? In fact, Redfin data shows that more than half of homes sold above list price nationwide: “56.5% of homes sold above list price” in 2021, up 29.6% from 2020.
But what about Seattle? After the initial freeze the virus put on real estate in 2020, bidding wars intensified and overbids on home sales were common by the end of that year. This year the bidding wars intensified. In Seattle, 55.7% of homes sold above list price in 2021.
The luxury market
Luxury homes obviously come at a higher price, but the pandemic has increased that existing premium. Because such homes include features such as large rooms, offices, gyms, living on land / property, large lots with outdoor facilities such as pools and sports fields, and are often on or near the waterfront and / or open land, they can be a Offer refuge. And lockdown can be very comfortable in a sanctuary.
Redfin data shows that “the average US luxury home sales price increased 25.8% year over year to $ 1,025,000.” In Seattle, the typical luxury home sold 12.58% more than the year before, and in that market the highest price of all was for waterfront properties. King County’s luxury single-family homes have increased up to 50% in sales since 2019, and the most expensive condo sales of 2021 have either been facing the water or the water.
17 story Great Wheel at Pier 57, Seattle Waterfront, Seattle, WA, USA
Stuart Westmorland / Getty Images, Getty Images
What’s up for 2022?
We forecast more of these in 2022. Unless the Feds hike mortgage rates drastically, supply doesn’t suddenly exceed demand, and of course subject to (further) unforeseen catastrophe, the market in Seattle is unlikely to cool down in the coming year.
Anna Marie Erwert writes from both a tenant and a new buyer perspective and has (finally) achieved both statuses. She focuses on national property trends and specializes in the San Francisco Bay Area and the Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.