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Summary: Inventory shortages are nothing new for Seattle, Bellevue, and other parts of Washington state. But there’s some renewed sentiment among homebuilders, pointing to the potential for new home builds over the coming months.
It’s no secret that Seattle and Bellevue, Washington have a housing shortage right now. It has dominated the real estate news cycle over the past few years, and it’s something we’ve covered repeatedly here on our blog.
So maybe some good news is in order. Recent reports and permitting trends from the building industry point to a surge in home construction, particularly single-family homes as more and more people look for more space amid the coronavirus pandemic.
Both the Seattle and Bellevue real estate markets, as well as others across the state and the nation, could see a lot more housing construction as new homebuilder incentive strengthens as a result of pent-up buyer demand. This could bring some much-needed inventory onto the market, giving buyers more options.
More New Homes Coming to Seattle and Bellevue in 2020 and Beyond
Home construction starts spiked 17% in June over the month prior, with homebuilders beefing up production as lockdowns continue to ease. According to a recent government report, housing starts increased to an annualized rate of 1.19 million. That marked the biggest month-over-month increase since October 2016, though the rate is still 4% below the level in June 2019.
Applications to build increased 2.1% to a 1.24 million rate, which is a measure of for future construction. After being hit hard when COVID-19 shut down the economy in March and the real estate market came to a halt, stocks of home construction companies are now rallying, and more construction is expected in the coming months to keep up with demand.
In recent years, both of these housing markets (as well as the broader metro area) have suffered from severe shortages of supply. And while there has been an uptick in inventory over the last year or so, the supply situation is still well below what’s considered to be a “balanced” market.
But relief seems to be on the way.
Having said all that, there are new condo developments being built as well, which have been down the pipe for a couple of years now in response to the ongoing inventory shortage. In Seattle and Bellevue, around 2,000 condos have opened this decade so far. But more are needed to meet demand, and approximately 6,000 are in the pipeline to be completed over the next few years.
Bringing Home-Price Growth Back Down to Earth
This new flood of inventory could also have a cooling effect on home prices across the metro area, and especially within Seattle and Bellevue.
For the last few years, this region has experienced a supply-and-demand imbalance that has led to skyrocketing home values. This in turn has created affordability issues for a large portion of the population.
Population growth is a contributing factor in all of this. From 2011 to 2016, the Seattle metro area’s population grew by 8.5%. That was more than double the national growth rate of 3.7% during that same period of time.
It stands to reason that a significant increase in housing supply across Seattle and Bellevue would tip the scales, bringing annual home-price appreciation down closer to historical norms. And that would be a positive development, from an economic standpoint.
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If you’d like information on mortgages or are ready to apply for one, Sammamish Mortgage can help. We have been helping borrowers across Washington, Oregon, Colorado, and Idaho since 1992. We offer many mortgage programs with flexible criteria. Contact us to start the application process for a mortgage loan today.