Real estate markets across the state of Washington are starting to become a little more buyer-friendly, with cooling prices and growing inventory. But we probably won’t see a true buyer’s market in Washington for quite some time. This is largely due to housing supply shortages, combined with steady demand from buyers.
Buyer’s Market in Washington? Not for a While
According to a report published in August 2018, about 14% of all real estate listings nationwide underwent a price cut during the month of June. (A “cut” in this context means that sellers lowered their prices due to a lack of offers.) That was up from 11.7% at the end of 2016.
That’s the first sign that real estate markets in Washington and nationwide are starting to shift. Further evidence can be found just by looking at home prices. In many cities across the U.S., home values are rising at a slower pace now (in 2018) than they did last year. And they’re expected to continue cooling as we finish out the year and move into 2019.
These and other changes have some housing analysts predicting a return of the buyer’s market sometime in the near future.
A seller’s market is basically the opposite. That’s when there are plenty of buyers in the market but not enough homes listed for sale to meet the demand. Sound familiar? Generally speaking, house values tend to rise faster under these conditions.
Aaron Terrazas, senior economist for Zillow, recently wrote: “The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.” He cited the increase in real estate price cuts, mentioned earlier, as one sign of this shift.
But Washington State is a special case when it comes to real estate. Strong demand and low supply made Washington one of the hottest housing markets in the country during the summer of 2018. In terms of year-over-year price gains, it has outperformed nearly every other state over the last couple of years. So the “shift” being reported nationwide is more muted in Washington.
More Inventory, Slower Price Growth
Home prices are rising more slowly now than in previous years, across the state. And there does seem to be more inventory coming onto the market. But despite these changes, we probably won’t see a real buyer’s market in Washington for some time yet.
For the rest of 2018, and probably throughout 2019, real estate markets across Washington State will likely continue to favor sellers over buyers. It will take time for the inventory situation to change enough to tip those scales.
Major housing markets across the state are still experiencing tight inventory conditions. Most people know about the supply shortage in the Seattle area, since it has generated so many headlines over the last couple of years. But similar conditions are being reported in other cities as well.
That’s why Washington has been a seller’s market for the last few years. There have been plenty of buyers and investors actively seeking homes to buy, but not enough properties to go around. These conditions could change over time, given the cyclical nature of the real estate market. But we probably shouldn’t expect to see a buyer’s market in Washington anytime soon.
Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions.