Previously, we explained how some housing analysts and economists are making bold predictions for the Washington State real estate market through 2018 and into 2019. Home prices in the area are expected to outpace the national average over the coming months.
This is particularly true within the Seattle metro area, and it’s largely the result of chronically low inventory within the housing market.
Update on Housing Market Inventory in Washington
According to the most recent housing market reports, all of the major cities in Washington had less than a 2-month supply of homes in February 2018. The nation as a whole had about a 3.2-month supply of homes for sale in February. And both of these numbers fall short of what is considered a “balanced” or normal real estate market.
According to most economists, a healthy real estate market has between a 5- and 6-month supply of homes for sale. In theory, that means it would take 5 to 6 months to sell all of the homes currently listed for sale if no new ones came onto the market in the interim. It’s just a standardized way to measure inventory within a housing market. And Washington State is still falling short.
Tacoma and Seattle had the lowest inventory levels in February, with a 0.7-month and a 0.8-month supply, respectively. Above all else, this is why Washington State keeps generating positive housing market and home price forecasts. House values across the state are expected to continue rising as a result of the supply-and-demand imbalance.
Home Prices Keep on Rising in 2018
With low inventory and strong demand within Washington’s housing markets, it’s no wonder we have seen steady home-price appreciation over the last years.
According to the latest figures from Zillow, the median home value for the state reached $359,000 last month. That was a gain of around 11.3% from the same time last year. Looking forward, their economists are projecting another 5.2% growth over the next year.
Population Growth Brings Buyers Into the Market
The latest census figures showed that, out of the country’s 15 largest metropolitan areas, only five have seen an increase in “net domestic migration” recently. Having positive net domestic migration means that more people move into an area from other parts of the country than moved away. The Seattle metro area was one of the five with positive growth.
Between 2016 and 2017, the metro area gained around 21,000 more residents from elsewhere in the U.S. than what was lost. The area now has roughly 3.87 million residents. Washington State as a whole has seen steady population growth over the last few years as well.
All of this means there are more residents who need to find housing. Some will become renters, while others will enter the housing market in search of a home. This supports the demand side of the supply-and-demand equation in the Seattle area and other Washington housing markets. And it comes at a time when inventory is at record lows.
So what’s the outlook for the rest of 2018 and into 2019? Basically, more of the same.
While home prices are expected to rise more slowly over the coming months, they are projected to continue along an upward path. Every forecast we have encountered agrees on this, and that’s largely due to the low housing market inventory across Washington State.
Disclaimer: This article includes various trends, projections, and forecasts relating to the Washington housing market. This information was compiled from third-party sources not associated with our company. We have gathered it here as an educational service to our readers.
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.