Summary: The Seattle housing market has cooled over recent years. But that may a good thing for buyers, as it makes things more affordable. This article will explain more.
Do an online news search for the Seattle housing market, and you’ll see a lot of words like “cooling” and “slowing” and “turning a corner.” That’s the big story right now. Data, real estate reports, and anecdotal evidence all seem to suggest that the Seattle housing market has cooled this year. And that effect has been magnified by the conronavirus pandemic.
But perhaps that’s a good thing.
Seattle Housing Market Shows Signs of Cooling
According to real estate research firm Zillow, Seattle’s real estate market is considered “cool” right now. Even though the average home price increased 2.2% over the past 12 months, prices are not expected to increase by much over the next few months. And the current health crisis is making forecasts even harder to make.
On the surface, these reports might sound like bad news. But one could easily argue that they’re a positive development.
Not matter how you measure it, Seattle’s housing market has been overheated during the last few years, especially from 2012 to 2018.
This rapid price growth has created obstacles for a lot of would-be home buyers. It’s not the kind of growth that can continue for long. When house values rise much faster than wages and income, it creates affordability issues for the average buyer. And that’s exactly what we’ve seen in the Seattle-housing market over the past few years.
So these reports about the Seattle real estate market cooling should come as no surprise. It was bound to happen sooner or later. And from an economic standpoint, a slowdown in home-price growth is a good thing at this stage. Even though prices rallied over the past couple of years, any increases seem to have slowed.
One Factor: Less Demand from Foreign Buyers
The question is, why are home values in Seattle rising more slowly today than in the past? A number of factors are in play, actually.
One reason is that demand from buyers has softened in response to higher home prices. In recent years it has become harder for the “average” buyer to find an affordable home in Seattle. So that takes some of the demand out of the market.
Another factor, according to recent reports, is a slowdown in foreign investment. For years, Seattle has been a hotspot for overseas home buyers looking to purchase a house. Home buyers from China, in particular, have boosted demand within the housing market. But that trend is changing.
As Diana Olick pointed out in recent CNBC article:
“In the last two years, both Chinese investors and families hoping to send their kids to American universities have fueled demand for housing in Seattle, which has long enjoyed a strong Asian culture. But the Chinese yuan’s recent fall in value against the U.S. dollar has made housing more expensive for Chinese buyers.”
Other sources have reported the same thing. There is less demand from abroad for Seattle properties, which contributes to the cooling trend within the local housing market.
Still a Very Active Real Estate Market
But don’t let all of the “cooling” talk fool you. It’s true that annual home-price appreciation has slowed measurably over the past couple of years. But Seattle is still one of the most competitive real estate markets in the country right now, due to the shortage of inventory.
While inventory has increased a bit over the past year, there is still a shortage of supply relative to demand. In fact, Seattle’s housing market has been one of the tightest in the nation (in terms of inventory) for the last few years. So home buyers should give themselves plenty of lead time when conducting a housing search.
Mortgage Rates Are Very Low
Not only does a cooling effect make things more affordable for buyers, but so do the incredibly low mortgage rates of today. Both of these combined make now a great time to apply for a mortgage and buy a home.
Need a Home 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 programs with flexible qualification criteria to borrowers in Washington, Colorado, Idaho, and Oregon, and we’d love to help you. Please contact us today with any financing-related questions you have.