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Seattle’s home prices have traditionally been very high relative to other centers across the state of Washington, and tight inventory is one of the driving factors behind this.
We’ll discuss Seattle’s current housing inventory situation and how it could impact buyers looking to buy in Seattle in 2021.
According to reports, the Seattle metropolitan-area housing market is one of the tightest markets in the country in terms of inventory. The number of active listings has declined year-over-year, leaving fewer homes available for Seattle homebuyers.
Related: Seattle housing forecast
Over the past year, housing inventory has been on a decline in Seattle. In fact, data suggests that inventory in the area is nearly at a two-year low. Year-over-year, supply in the Seattle Metro Area and surrounding King County is down, with factors such as dropping interest rates and economic uncertainty influencing the situation.
Last year at the same time, inventory in Seattle was much higher, which put a damper on soaring price gains and actually causing the average home price in Seattle to decline. This is precisely what happened from mid-2018 to mid-2019 when prices in Seattle went from a peak of $787,000 to $741,000. Over the last couple of years, however, prices have been climbing back up.
Supply is particularly tight in the lower price range, where demand is a lot stronger.
Right now, there is barely a one-month supply of available homes for sale in Seattle and surrounding King County, and single-family home supply (not including condos) is sitting at an inventory level of 1.3-months’ worth. Other counties are seeing similar inventory crunches, including Snohomish and Pierce Counties.
The tight inventory can explain why Seattle home prices are start to pick up speed in terms of appreciation. From the valley of $741,000 last summer, prices in Seattle are now averaging $804,500, according to Zillow, as of February 2021.
Among the largest metro areas in the US, Seattle’s real estate market recently saw a sharp decline in available housing inventory. More specifically, according to the Northwest Multiple Listings Service (NMLS), King County saw a decline of 20.84% in active listings from October 2019 to October 2020, and the situation seems to continually tighten as we head further into 2021.
Changing inventory conditions had a cooling effect on home-price appreciation across the metro area last year, but things have shifted gears. We’re starting to see signs of this already. Affordability continues to be an issue in Seattle, even during the lull in prices last year.
And now that prices are starting to pick up again, the situation will be even more of an issue from an affordability standpoint.
A shortage of supply is one of the key reasons why home values in the area rose so much over the past three years or so. Housing demand far exceeded the available supply, and so prices shot up.
And after a brief blip in home price declines from mid-2018 to mid-2019, home price appreciation has picked up speed once again. According to Zillow, home prices in Seattle have increased 9.8% over the past year.
While prices in Seattle have increased over the past year and were expected to continue on an upward trajectory into 2021, there is now some uncertainty over the market. The current coronavirus pandemic has placed a great degree of concern over all aspects of the economy, and the real estate market is not necessarily immune.
While it’s still possible that home prices will continue to increase over the next 12 months, the current health crisis could be a major influencing factor. Only time will tell where things are headed into the near future.
Mortgage interest rates are at their all-time low, currently sitting at 2.73%. Given such a low rate, many homebuyer hopefuls are looking to capitalize on these low rates to help save tens of thousands of dollars – or more – in interest paid over the life of their loan.
Will you need mortgage financing to buy a home in Seattle? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest since 1992. We offer a wide variety of mortgage products and programs with flexible qualification criteria for borrowers across Washington, Oregon, Idaho, and Colorado. Please contact us today with any financing-related questions you have.
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