Summary: The price of homes in Washington state have exploded in recent years, as has demand. But what will 2020 bring?
According to forecasts,the real estate market in Washington State will continue to be relatively strong into 2020. Zillow predicts that prices in Washington state will increase 2.0% over the next year. The market in Wasington state is currently warm, and the local economy is strong with growing populations. Average markets have no more than two month’s supply of homes.
Tacoma the Hottest Housing Market in Washington
Seattle has long been known as the hottest market in Washington state and among the hottest in the entire country. But over the past few months, the market in Seattle has actually cooled. In fact, median home prices in Seattle have dipped 4.3% over the past 12 months and are expected to continue falling by another 3.6% over the next year.
On the other hand, Tacoma’s home prices have spiked 7.9% over the past year and are expected to rise another 3.4% over the next 12 months.
It seems as though the heat went from Seattle to Tacoma, and that buyers are getting tired of the continued skyrocketing prices of homes in Seattle. Most buyers aren’t able to keep up with the prices and can’t compete with high-income buyer.
As such, many buyers are setting their sights on Tacoma. In fact, there have been more bidding wars in Tacoma over the recent past then there have ever been. And this heat is expected to continue in the area.
Related: Seattle and Bellingham lead the way
That last sentence says it all. The current imbalance between supply and demand has caused significant and steady home-price gains over the last couple of years. Due to population growth and economic improvements, there is plenty of demand within housing markets across Washington (and especially in the Seattle area). But there’s not enough supply to meet it.
Home Buyers Compete for Limited Inventory
There just aren’t enough homes on the market for the amount of buyers seeking them. And this is putting upward pressure on house values statewide. And these trends could continue throughout 2019 and into 2020.
According to the real estate data company Zillow, the median home value for Washington rose by around 4.2% over the past year to the current median price of $388,400 Historically, going back several decades, house prices in the U.S. tend to rise by around 3% to 4% annually. So the gains seen in Washington State over the last year could certainly be called “above-average.”
Related: How much is my home worth?
Zillow’s economists expect price growth to slow a bit over the coming months. But they expect that real estate markets across Washington may continue to outpace the nation in terms of price growth
Inventory is the real story in this market. Housing supply is limited in most cities across the state, particularly in the Seattle metro area. A “balanced” real estate market has around a five- to six-month supply of homes for sale. At the start of 2019, most big-city real estate markets across Washington had less than a two-month supply of homes for sale.