THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE

 
THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
THE BUYER’S GUIDE
TO OVERCOMING
SEATTLE’S HOUSING
SHORTAGE
THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
Whether you’re a first-time buyer new to the region, or a lifelong resident
            and seasoned homeowner, Seattle’s bustling housing market can be a
            challenge to navigate. This guide gives potential buyers an overview of the
            Seattle-area market, including the current state of inventory, the forecast
            for 2019-2020, a rundown of the most and least affordable areas within the
            Seattle Metro, and tips for buyers in one of the nation’s most competitive
            housing markets.

TABLE OF
CONTENTS
Seattle Home Price Forecast Suggests Modest Decline Through 2020     1-4

Report: Seattle Housing Market Inventory Still Tight in 2019       5 -8

Seattle Real Estate Outlook for 2019 and Beyond                9 -11

Most Affordable Housing Markets in Seattle Metro Area          12-15
THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
SEATTLE HOME PRICE FORECAST SUGGESTS
    MODEST DECLINE THROUGH 2020

    A recent forecast for Seattle home prices suggests that house-value decreases could be in the
    low single digit range. One source predicts a decline of around 3.8% between now and May
    2020. Due to limited inventory, competition among buyers remains high.

    The Latest Home-Price Forecasts for Seattle
    Home prices in the Seattle metro area have risen steadily in recent years, usually outpacing the
    national average. House values in the city, and across much of Washington State, have risen
    by double digits a few years back. But a recent Seattle home price forecast offered a different
    picture, suggesting that house values could drop slightly over the course of the next 12 months.
    According to this same source, house values have declined by 4.5% over the most recent 12
    month period.

    This month, the economists at Zillow predicted that home prices in Seattle would drop by 3.8%
    between May 2019 and May 2020. That’s a big change from the double-digit annual gains seen
    in previous years. But it’s a phenomenon predicted by basic economics. If an area experiences
    larger than average gains, this tends to be counteracted by slow downs and declines.
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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
Zillow’s forecast for Seattle home prices is quite a
    bit lower than for the nation as a whole. The
    company’s research team expects house values
    nationwide to rise by 2.5% during the same 12-
    month period mentioned above.

    Of course, this is just one forecast. Other analysts
    have predicted slower rates of decline. But the
    general consensus appears to be that there will be
    a small depreciation in the coming months.

    There is evidence for this trend in other sources
    beyond Zillow. Earlier this month in July 2019, the
    Northwest Multiple Listing Service reported that
    King County has seen a dip in year-over-year
    prices, and that transactional activity was down.
    This is contrasted with the experience of recent
    previous years in which growth was phenomenal.

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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
One of the Most Competitive Housing Markets
    While the latest home price forecasts for Seattle suggest a
    small drop in median values, the market itself is still pretty
    hot. This is largely the result of limited inventory. There just
    aren’t enough homes listed for sale in the area to satisfy
    demand, and this continues to put upward pressure on
    house values.

    According to a recent news release from the real estate
    brokerage Redfin, Tacoma is actually the hottest market in
    the country right now, and this is mainly due to migration by
    priced-out buyers from the Seattle market. Seattle's small
    price declines are consistent with this southward search for
    lower prices. But, Seattle is still a fairly competitive market.

    To quote the Redfin report: “In Seattle, 13 percent of Redfin
    offers for the four weeks ending on May 12, 2019 were part
    of a bidding war, down from 71 percent a year ago.” So, the
    bidding war percentage is down, but it's still considerable.

    So buyers who are planning to enter the market in 2019
    should be prepared to act quickly when the right house
    comes along. Our Seattle home buying survival guide will
    help you get ready.
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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
DISCLAIMER:
    This article contains Seattle home price forecasts for 2019 and 2020.
    These predictions were offered by third parties not associated with our
     company. We have presented them here as part of our educational
             mission in support of homeowners and home buyers.

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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
REPORT: SEATTLE HOUSING MARKET
    INVENTORY STILL TIGHT IN 2019

    We’ve written before about the tight inventory conditions in Seattle’s housing market. As we
    noted, Seattle was one of the top three real estate trends we identified back in 2017. Now, a
    new report reveals that the Seattle area has experienced a bit of inventory growth from Q1
    2018 to Q1 2019. A report published In May 2019 by the real estate information company
    Trulia included Seattle in a list of cities which had experienced substantial inventory increases.
    Other cities which were also mentioned were Provo, Salt Lake City, and San Jose (CA), among
    others. The number of homes for sale in Seattle increased by 40.6% between the 12 month
    period referenced in the report (Q1 2018 to Q1 2019).

    Largest Year-Over-Year Listing Increases, Q1 2018 – Q1 2019
    Here are the five housing markets with the largest YOY increases in inventory from Q1 2018 to
    Q1 2019. The percentages shown by each city indicate how inventory (the number of homes
    for sale) has changed during this period.

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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
San Jose, CA: 55.4%         The report also noted that significant increases to
                                inventory did not necessarily translate into greater
                                affordability. Many of these inventory gains were
                                reported in the most expensive markets. And so these
                                inventory gains may have improved conditions to some
    Provo, UT: 53.3%
                                degree, but they didn't necessarily have an extremely
                                high impact.

                                According to the authors: “The 10 markets with the
    Seattle, WA: 40.6%          largest gains in inventory are also among the nation’s
                                most-expensive housing markets, including the San
                                Francisco Bay Area, Seattle, Los Angeles and San
                                Diego. But even in these markets, dramatic increases in
                                inventory – especially among starter homes – have yet
    Salt Lake City, UT: 37.3%   to stem the tide of declining affordability.”

                                Seattle’s real estate market inventory growth is notable,
                                but in some ways this is a counterbalance to reductions
                                in previous years. And the market will still be relatively
    Ogden, UT: 31.7%
                                tight when compared with other markets. Buyers should
                                still expect a reasonably high level of competition,
                                despite the sizable increases to inventory seen during
                                the YOY period referenced in the Trulia report.
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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
According to Trulia, Seattle has also seen     As the report states: "... a closer look at local
    an increase in its "starter home" inventory.   inventory trends reveals that the markets with
    The report states that the starter home        the greatest growth in inventory are also
    inventory increased by 14.4% during the        markets where prices have rapidly risen to
    YOY period from Q1 2018 to Q! 2019. The        notoriously high levels and supply has been
    median listing price for a starter home in     severely constrained over the past few years.
    Seattle was $309,000 (2019). This is good      This rapid appreciation has caused affordability
    news for first time home buyers in the         to deteriorate more quickly in these areas, and
    Seattle region who are looking for             the nascent rise in inventory may actually reflect
    something relatively more affordable.          an exhaustion of demand in these communities,
    However, the Trulia report cautions that       more than it reflects a greater number of sellers
    inventory gains don't necessarily mean a       listing their homes."
    less competitive market overall.

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THE BUYER'S GUIDE TO OVERCOMING SEATTLE'S HOUSING SHORTAGE
Tips for Buying a House in a Tight Market
Even with the gains seen recently, inventory is still tight in Seattle’s real
estate market, so home buyers need to bring their ‘A’ game.
Competition is high, especially for desirable properties in popular areas.
But there are things you can do to improve your chances for success.

    ●   For starters, check out our Seattle home buyer’s survival guide. It
        offers a wealth of tips for succeeding in this hot market.                   CONTACT US:

    ●   Getting pre-approved for a mortgage loan before house hunting            If you need a mortgage
        will give you a leg up in the market. Sellers will be more likely to      loan to buy a home in
        accept your offer if it comes with a pre-approval letter.                  Seattle, please let us
                                                                                 know. We can help you
    ●   Narrowing your home search will increase your efficiency, thereby           prepare for this hot
        improving your chances for finding a suitable property. Research        housing market by getting
        the market ahead of time, with an eye of recent sales prices. Limit      pre-approved for a loan.
        your search to the kinds of properties you can realistically afford,    Contact our staff with any
        based on your pre-approval and/or personal budget. Don’t waste               mortgage-related
        time shopping above your price range.                                       questions you have.

    ●   Quibbling with the seller over “nickels and dimes” or minor
        inspection issues could cause the home to slip through your
        fingers. You can bet there are other buyers waiting in the wings.
        So when you find a realistically priced property that meets most of
        your needs, seize the day!

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This is an update to the Seattle
                                                                        real estate outlook we published
SEATTLE REAL ESTATE OUTLOOK                                             back in 2017. It takes a fresh
FOR 2019 AND BEYOND                                                     look at housing market trends in
                                                                        the Seattle metro area, with an
                                                                        outlook through 2019 and
                                                                        beyond.

    A Real Estate Market to Watch in 2019
    In early 2019, Zillow came out with a report which listed the top 10 hottest markets in the country.
    Seattle was notably absent from the list. Zillow noted that Seattle's growth had slowed down
    considerably, while other cities have shown impressive growth in median values during the most
    recent 12 month period. Seattle is still a competitive market, but the recent drop in values is an
    expected counterbalance to the explosive gains seen in previous years.

    Seattle Growth Has Gone Flat According to Index
    According to the most recent S&P/Case-Shiller Home Price Index, published on June 25, 2019,
    Seattle experienced no growth whatsoever during the YOY period referenced in the publication,
    April 2018 to April 2019 (the latest data available at the time of publication. This was the slowest
    rate of growth among all metro areas included in the report; every other metro area reported at
    least some amount of positive gain.

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The June 2019 Case-Shiller report stated: “Las Vegas,
     Phoenix and Tampa reported the highest year-over-year
     gains among the 20 cities. In April, Las Vegas led the way
     with a 7.1% year-over-year price increase, followed by
     Phoenix with a 6.0% increase, and Tampa with a 5.6%
     increase. Nine of the 20 cities reported greater price
     increases in the year ending April 2019 versus the year
     ending March 2019.”

     Seattle's situation was pointed out specifically in the
     report. The report noted the contrast between Seattle's
     double digit gains in prior years to the current rate. As it
     stated: "Year-over-year price gains remain positive in
     most cities, though at diminishing rates of change. Seattle
     is a notable exception, where the YOY change has
     decreased from 13.1% in April 2018 to 0.0% in April
     2019."
     What to Expect
                      Electronic
     The real estateapplications
                      outlook for Seattle in 2019 and beyond can
     be summed with a single sentence: Home prices will
     most likely decline through the end of this year, but at a
     slower pace than what we saw during 2018.

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The economists at Zillow, for example, recently put forth a projection of deterioration for the Seattle
     real estate market. They expect house prices in the area to drop by around 3.8% between May 2019
     and May 2020. This rate of decline is a bit lower than what we saw last year, when prices dropped
     by 4.5%. Over the last couple of decades, home prices in the U.S. have risen by around 3% per year
     on average. So Zillow's outlook shows Seattle to be quite a bit down by comparison, but things must
     be viewed in context. Seattle showed huge gains in previous years, and so current trends are
     balancing out those abnormal gains of yesteryear.

     Population Growth Begins to Slow Down a Bit
     Population growth has a lot do with all of this. Seattle is a great city that attracts new residents from
     all over the country. This brings more home buyers into the real estate market, boosting demand and
     prices. Population growth contributed to the huge increases we saw before, but things are slowing
     down now to create a more balanced situation.

     What's more, population growth has actually slowed recently as well. According to a recent Seattle
     Times article published in April 2019, Seattle's recent population statistics show a slowing down of
     growth in the King County area. To quote the article: "Population data released Thursday by the
     Census Bureau shows that, for the first time this decade, more people left King County than moved
     here from within the U.S." Of course, international migration complicates this picture. But, in general,
     population growth has slowed, and this is in part a response to the housing situation in King County.

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MOST AFFORDABLE HOUSING MARKETS
IN SEATTLE METRO AREA

     There is still good news for first-time buyers who may be intimidated by Seattle’s rising median
     housing price: There are pockets of relative affordability in the area. A report from the chief
     economist at Zillow back in 2017 highlighted the five most affordable cities in the Seattle
     metropolitan area, relative to the median income. These data are from 2017, mind you, but this
     information will still be useful for buyers today. If you're needing to look beyond Seattle proper for
     price reasons, you should consider one of these other areas.

     Most Affordable Cities in the Seattle Area
     Though high demand and limited inventory have forced home buyers to compete fiercely, especially
     in the more sought-after areas, there are more affordable options for people who want to buy a
     home in the Seattle metro area. The key is to be willing to look just outside of the city itself.

     The chief economist for Zillow prepared a report in February 2017 for Seattle NBC affiliate King 5
     News. It listed five of the most affordable cities and housing markets in the Seattle area, based on
     the percentage of income that goes toward housing costs in each area.
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ZILLOW’S ECONOMIC RESEARCH
     team looked at the median income for various cities in the Puget
        Sound area, and compared that to median home values.

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In the city of Seattle, at the time of
                                          When this article was published, in February 2017, the
 this reesearch people were
                                          median home price in Marysville, Washington was
 spending about 25% of their income
                                          $308,000. In Seattle, it was $604,000 at the same time.
 on housing. Here are five more
                                          That goes to show how much more affordable housing
 affordable cities in the metro area,
                                          becomes when you drive a little further north (in this case).
 along with the percentage of
                                          With a median home price of around $244,000, Tacoma is
 income needed to cover mortgage
                                          another affordable option for those who want to live in the
 and housing costs:
                                          area but have concerns about the financial feasibility. The
                                          other three cities above came in somewhere between
            Marysville: 16.2%             $300,000 and $350,000.

                                          The Most Expensive Housing Markets
            Tacoma: 17.4%                 On the other end of the spectrum, the least affordable city in
                                          the Seattle area was Bellevue, Washington. People there
                                          spend nearly 30% of their income to cover their mortgage
                                          and housing-related expenses. In Bellevue, the median
            Auburn: 17.8%                 home price was $638,900. The median income in that city is
                                          $98,804.

                                          Other cities that were more expensive relative to income
            Kent: 19.5%                   included Seattle (of course), Everett, Renton, and Kirkland.
                                          “Seattle is certainly a very hot housing market right now,”
                                          said Dr. Svenja Gudell, Chief Economist for Zillow. “We’re
                                          seeing a lot of demand, a lot of newcomers to the area and
            Federal Way: 20.1%            as that continues, we’ll see even more of these outlying
                                          communities start to heat up a bit and get more expensive.”
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FINAL THOUGHTS
     FOR BUYERS
     Because Seattle is a wonderful and vibrant place to live, expect competition for the house of
     your dreams. Sammamish Mortgage has over 25 years of experience helping home buyers
     navigate this market, and we would love to help you get into your perfect Seattle-area home.
     Give us a call at 800-304-6803 to get started with an expert today. We offer highly competitive
     rates on a variety of loan products. Please contact us with any questions you have, or to receive
     a rate quote.

        PLEASE CONTACT US TODAY
        WITH ANY QUESTIONS YOU
        HAVE, OR TO APPLY FOR THE
        VA LOAN PROGRAM.

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