This is the first of a two-part series on buying a home in Seattle. You’ll find part two here.
We’re more than halfway through 2016, and that means a lot of would-be home buyers are asking the same question: Should I buy a home in Seattle now, in 2016, or should I wait until 2017? What do I stand to gain or lose if I wait? What will the market be like three, six or nine months from now?
Unfortunately, no one can predict future housing conditions with complete accuracy. But there are some things you can do to make an informed decision. This two-part article offers five important considerations for buying a Seattle home in 2016 or 2017.
Buying a Home in Seattle: 2016 vs. 2017
Here’s a summary of the five points covered below: If you buy a home in Seattle in 2017, versus 2016, you could end paying more. That’s because house values in the area are expected to continue climbing over the next 12 months.
Mortgage rates might rise a bit as well. But it’s those rising house prices you should be concerned with, primarily. By some estimates, Seattle home values could rise by 8% over the next 12 months alone (source: Zillow).
Here are five more things you should know about buying a home in Seattle, whether in 2016 or 2017.
1. Seattle home prices have climbed to record heights.
The Seattle real estate market is one of the hottest in the country right now, in terms of home-price appreciation. In fact, prices in the metro area are now higher than they’ve ever been before — even during the housing bubble.
A recent article in The Seattle Times pointed out that “area home prices have surged to a record for the third straight month and continue to rise faster than in all but one other major city, our West Coast neighbor Portland.”
According to the widely cited Case-Shiller Home Price Index, house values in Seattle rose by nearly 11% in May 2016, compared to the same time last year. (Those were the most recent data available at the time of publication.) That’s more than double the national average rate of appreciation.
The real estate information company Zillow reports even bigger gains, using their own proprietary measurement of home values. In August 2016, the company reported a gain of 16.7% over the last 12 months.
So that’s the first thing home buyers should know. When buying a house in Seattle in 2016, you’ll pay more than someone who purchased 12 to 18 months ago.
As a home buyer, it’s important that you enter the market with realistic expectations, as to how much of a house you can afford. And the best way to do this is to look at recent sales prices on websites like Realtor.com, Zillow and Trulia. Price awareness is key in a housing market with rapidly changing conditions, like Seattle.
2. Home prices are expected to “cool” a bit in 2017.
If you wait until 2017 to buy a house in Seattle, you’ll probably pay more than you would if you purchased in 2016. That’s because home prices in the metro area are expected to continue rising through the end of this year and into next. But they might rise more slowly over the coming months.
While the year-over-year price gains in Seattle are staggering, the monthly gains have actually been getting smaller this year. This is based on the Case-Shiller index mentioned above, and it could be an early sign of a cooling trend.
The economists at Zillow also expect home-price growth to slow a bit. In August they explained: “Seattle home values have gone up 16.7% over the past year and Zillow predicts they will rise 8.1% within the next year.”
Their 12-month outlook is less than half of the previous 12 months. But an 8.1% increase in home values is still a pretty big gain, especially from a buyer’s perspective.
So the bottom line here, based on the consensus among economists, is that Seattle-area house prices will likely continue rising through 2016 and into 2017, though they might slow down a bit.