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Summary: Looking to buy in Federal Way in 2020? Read on to find out what the market is like today and what it’s forecasted to be in the coming months.
This blog post is part of an ongoing series for home buyers across the Seattle metro area. In previous reports, we examined current real estate conditions in places like Lynnwood, Bellevue, and Kirkland. Today, we will take a look at the housing market in nearby Federal Way, Washington.
The following report will be helpful for anyone who is planning to buy a home in Federal Way in 2020. It contains the latest data and trends for this real estate market.
At a glance: Federal Way is a city of about 95,000 located at the southern end of the Puget Sound. It is situated just north of Tacoma, and about 23 miles south of Seattle. As of February 2020, the median home value in Federal Way was around $392,100, making it much more affordable than Seattle.
The Federal Way Housing Market in 2020
Home prices in Federal Way, Washington have risen steadily over the last few years, and at a faster pace than most other cities in the U.S. That’s something the city has in common with other housing markets in the Seattle metropolitan area. But it’s also a more affordable real estate market when compared to Seattle itself.
As of February 2020, the median home value in Federal Way was around $392,100, as already mentioned. In comparison, the median value in Seattle during that same month was closer to $741,800. Recent forecasts suggest that the market in Federal Way right now is very hot, with prices expected to spike 7.3% over 2020. As such, homebuyers who hesitate to get into the market in 2020 may find that they’ll be paying higher prices further into the year.
That’s the first thing to know about buying a home in Federal Way in 2020. While the average house price within the local real estate market is higher than the national average (which is currently at $244,000), it’s still fairly low by Seattle metro area standards. So it could be an affordable alternative for those who want to live in the area but cannot afford Seattle’s much higher home prices.
In Federal Way, tight inventory conditions are fueling competition among home buyers — and leading to quick sales. But in Seattle, the market has cooled somewhat, and the competition among homebuyers is not as fierce as it once was. That said, things are expected to start picking up in Seattle, with home prices anticipated to increase 4.2% over the next year.
Low Supply, Fast Home Sales
There seems to be a common theme in the state of Washington these days: tight inventory. Housing supply is incredibly short throughout the state, and that includes Federal Way. According to the latest real estate market and MLS reports, the overall King County had just over a month supply of homes for sale as of February 2020. That’s much lower than the five to six months that is considered to be a balanced market. So the local real estate scene still favors sellers over buyers, from a supply-and-demand perspective.
In King County, inventory was down about 43% in January 2020 from the same time last year. The total active number of listings in January 2020 dropped to 2,118 from 3,688 in January 2019. The number of new listings in King county also dipped to 2,361 last month from 2,591 in January 2019. This is another important factor for those planning to buy a home in Federal Way in 2020.
As you might imagine, the lopsided supply-and-demand situation within the Federal Way real estate market is resulting in fast home sales. Houses and condos listed for sale in the area typically go under contract within the first week.
Sizzling Hot Market in Federal Way and King County in 2020
Across the 23 counties covered by the Northwest Multiple Listings Service (NMLS), housing inventory is down approximately 33% in the area compared to the same time last year.
Typically, many buyers get into the market right after the new year rings in, but so far in 2020, we’re seeing an influx of homebuyers than usual. That, coupled with very low mortgage interest rates and a positive labor force and increased wages, leads to an increase in home prices and a very hot real estate market.
Homes in the lower price range in particular, are receiving multiple offers. Even homes in the luxury sector are seeing dwindling inventory, even as high as the $1 million to 1.5 million price range.
Home prices in Federal Way have increased 4.6% over the past months. And while prices in King County as a whole remained stable throughout the past 12 months, they’re expected to spike 5.1% over the course of 2020.
Right now, pending transactions are higher than new listings being added in all big counties in Puget Sound. Inventory is still on a gradual decline, making it tough to keep up with buyer demand.
Consider how fast prices are expected to rise in Federal Way and how low interest rates are right now, it makes sense to consider making a home purchase sooner rather than later.
Need Financing in Federal Way?
If you’re in need of a mortgage in Federal Way, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, WA and serve borrowers in Colorado, Oregon, Idaho and Washington. We offer many mortgage programs for you to choose from that best suit your financial situation. Please contact us if you need a mortgage loan to buy a home in Federal Way, or anywhere else in Washington.