According to a recently published housing report, it is unlikely that home prices in Washington State will decline any time soon. And that’s not surprising, given the current state of the real estate market.
Report: Home-Price Declines Unlikely in Washington
Home prices across the state of Washington have risen steadily over the last few years, due to strong demand, limited inventory, and improvements within the broader economy. In fact, house values in Washington have risen faster than every other state in the nation in recent years.
This rapid price growth has some people wondering if the state is due for a decline in property values. While home prices in Washington are expected to slow down a bit over the coming months, it seems unlikely that they will go down any time soon.
Earlier in 2018, the economic research team at Arch MI published an update to their Arch MI Risk Index®. This is a statistical model based on various housing market indicators. Their latest report suggested that “the average probability of home price declines across America remains unusually low, at 5 percent.”
In other words, it appears unlikely that prices will drop anytime soon, in terms of the national average at least.
Washington had an even lower probability of home-price declines. The company’s economists said the state had only a 2% probability, or likelihood, that house values in Washington State would drop over the next two years. No other state had a probability lower than 2%.
Stated differently: There is a 98% probability that home prices in the state will either rise or remain flat over the next two years, according to this particular report. Other forecasts suggest they will continue to rise.
The housing research team at Zillow, for example, recently predicted that the median home price for Washington would rise by around 4.4% over the next 12 months. This forecast was issued in February 2018 and therefore extends into the first part of 2019.
As of January 2018, the median house value in the state was around $350,000 and rising, following a gain of 10% over the last year or so.
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The above-mentioned report puts Washington among the most favorable states in the country, in terms of home-price forecasts and expectations. But not every state had such a positive forecast. Prices in other parts of the country could level off, or even drop, over the next couple of years.
According to the report: “[States] most at risk are Connecticut and New Jersey, where home price growth and population growth are already weak. In general, home prices in higher-cost areas are still likely to grow due to economic growth, but at a slower rate.”
Strong Demand and Limited Supply
The bottom line to all this is that the real estate market in Washington will probably continue to outperform the national average, in terms of annual home-price appreciation. That has been the case for the last few years, and it could continue for the foreseeable future. Our state benefits from having a strong economy, a high employment rate, and other factors that boost housing demand and home prices alike.
Meanwhile, housing inventory across Washington remain low. There just aren’t enough homes listed for sale to satisfy the demand from buyers. These and other factors are why prices are expected to continue rising over the coming months.
Related: What to know when buying in WA
Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions.