Last week's economic events included a number of readings on housing related topics. The National Association of Home Builders released its report on builder confidence in housing markets, Housing starts reached their highest level since the great recession, and existing home sales exceeded expectations and the prior month's reading. The Federal Reserve released minutes for its most recent FOMC meeting, which indicated that while a majority of FOMC members are leaning toward raising the Fed's target federal funds rate, concerns over certain aspects of the economy continue to keep the Fed from citing a date for raising its target interest rate.
Summary: Are you thinking of buying a home? There are plenty of great housing markets across the state of Washington that you may want to consider buying in, and Seattle and Kirkland are just a couple of them. In this article, we’ll compare each market to help you determine if either one makes a great fit for you.
Real estate markets across Washington State are highly competitive right now. Common conditions include rapidly rising home prices, short supply, and fierce competition. Today, we will look at five similarities between the Seattle and Kirkland housing markets as we head further into 2020.
1. Double-Digit Price Growth In Years Past
Both the Seattle and Kirkland real estate markets experienced above-average growth in home prices in recent years. In fact, house values in both cities have risen by double digits per year from 2012 to 2018. That said, price growth has slowed down since then in both markets, which we’ll get into next.
2. Price Dips in More Recent Years
Perhaps it was a blessing for homebuyers, but home price averages in both Seattle and Kirkland declined for a period from mid-2018 to mid-2019. Prices were exploding so quickly that many might argue that such a slow down was inevitable.
In Seattle, home prices dipped 5.8% from mid-2018 to mid-2019, and in Kirkland, prices dipped 4.7% over the same time frame.
3. Median Home Prices Well Above $700,000
According to the latest data from Zillow, the median home price for Kirkland, Washington sits around $782,100 this spring, while the median home price in Seattle is currently around $755,600 (as of April 2020). Those are hefty home prices are well above the statewide average of $422,400. This is yet another thing that housing markets in Seattle and Kirkland have in common.
4. Tight Inventory Conditions
This is an issue that has caused frustration for a lot of home buyers in both the Kirkland and Seattle real estate markets. There is a severe inventory shortage within both of these markets. The short version is that there aren’t nearly enough homes listed for sale to satisfy the current demand from buyers.
Consider the evidence:
A balanced real estate market is one that has around five to six months of supply, according to economists. That means, in theory, that it would take five or six months to sell all homes currently sale for sale if no new ones came onto the market.
When you sink below this theoretical threshold, you have a market that favor sellers over buyers. And that’s clearly what is happening in both the Seattle and Kirkland real estate markets, as we head further into 2020.
According to recent reports, both of these cities had around a 1-month supply of homes for sale in April 2020. By comparison, the average for real estate markets across the country was a 3-month supply of homes for sale — and even that is well below normal. So both the Kirkland and Seattle housing markets are experiencing chronically low levels of housing supply.
5. Multiple Offers, Bidding Wars, Etc.
The supply shortage mentioned above has created a real estate market where bidding wars and multiple offers are a common occurrence. Homes that go onto the market in or around Seattle tend to attract multiple offers within days of the initial listing — if not the same day.
It’s also common for houses to sell above the seller’s original asking price, as potential buyers try to outbid one another. This is the current reality for both the Kirkland and Seattle real estate markets. And it’s something that home buyers will probably have to contend with for some time.
6. Quick Home Sales
Housing analysts use a particular metric known as the “median days on market” to get a feel for how active or sluggish a particular real estate market is. This is basically the midpoint for how long it takes to sell a home in a particular area.
In April 2020, the median days on market for Kirkland and Seattle was around 6 and 9 days, respectively. This means that homes listed for sale in the area spend a median of 6 to 9 days on the market, before going under contract, according to Redfin. Both markets are considered to be very competitive now, and the low number of days on the market is a testament to that fact.
Have Questions About Mortgages?
If you’re in need of a mortgage to buy a home in Kirkland, Seattle, or any other market in the Pacific Northwest, we’d love to help. Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington, and we currently offer many mortgage programs in all of Washington, Oregon, Idaho and Colorado. Please contact us if you have mortgage-related questions.