This article is an update to the Seattle real estate outlook we published back in August of 2016. It takes a fresh look at housing market trends in the Seattle metro area, with an outlook through 2017 and beyond.
A Real Estate Market to Watch in 2017
At the end of 2016, Seattle began to pop up on a number of “hottest real estate market” lists. For instance, the Urban Land Institute (ULI) ranked it within the top five U.S. markets to watch in 2017.
According to the ULI report: “The fundamentals for the success of the Seattle market appear well established for another year.”
The real estate data company Zillow also predicted that Seattle, Washington would be one of the hottest markets of 2017. Their outlook ranked it at #2, behind Nashville, Tennessee.
Highest Annual Increase Among Major Cities
According to the most recent S&P/Case-Shiller Home Price Index, published on February 28, 2017, Seattle experienced the biggest year-over-year increase in home price gains of any major U.S. city.
Home values in the city rose 10.8% from December 2015 to December 2016 (the latest data available at the time of publication). That was the biggest gain of any city tracked by this particular index. Only Portland, Oregon came close, with an annual gain of 10%.
The February 2017 Case-Shiller report stated:
“Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over the 11 months leading up to December. Seattle led the way with a 10.8% year-over-year price increase in December, followed by Portland with 10.0%, and Denver with an 8.9% increase.”
The strongest price gains appear to have occurred within the lower pricing tiers. A home price analysis from 2011 to present showed that the Seattle real estate market was most stable in the higher tier (over $532,716), and much more volatile in the lower tier (under $335,111).
It’s worth noting that the lower end of the pricing spectrum is where most first-time home buyers shop, and that’s where prices appear to have risen most.
Seattle Real Estate Outlook for 2017 and Beyond
The real estate outlook for Seattle in 2017 and beyond can be summed with a single sentence: Home prices will most likely continue rising through the end of this year, but at a slower pace than what we saw during 2016.
House values in Seattle rose by double digits in 2016, with the median home price climbing above $600,000 for the first time ever. But the outlook of most housing analysts and economists is that prices will rise more slowly going forward. Inventory has a lot do with this.
The economists at Zillow, for example, recently published a more modest outlook for the Seattle real estate market. They expect house prices in the area to rise by around 2.8% between March 2017 and March 2018. That’s a far cry from the gains we saw in 2016, but it’s no cause for alarm.
Over the last couple of decades, home prices in the U.S. have risen by around 3% per year on average. So Zillow’s real estate outlook for Seattle suggests a historically “normal” level of appreciation.
Population Growth Drives Housing Demand
Population growth has a lot do with all of this. Seattle is a great city that attracts new residents from all over the country. This brings more home buyers into the real estate market, boosting demand and prices.
According to the ULI report cited earlier, Seattle’s population is expected to grow at nearly twice the national rate in 2017. “The combination of strong job growth and rising incomes is projected to push household formation up in 2017, which will increase demand for both single- and multifamily housing,” the report stated.
Disclaimer: This article offers a Seattle real estate outlook for 2017 and 2018. Price projections and other data were provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.