The Seattle housing market has proven to be incredibly lucrative for both home sellers and landlords. However, the fact remains: the Seattle housing market is one of the best cities in the country to sell a home. On the other hand, 2015 is expected to bring more inventory into the market, making things more balanced between buyers and sellers. Accordingly, buyers are expected to gain more leverage than they have had in recent memory. With the market expected to return to equilibrium, buyers should be able to find competitive prices and sellers will benefit when they, in turn, become buyers again. The Seattle housing market is more than healthy, and 2015 looks to continue the positive trend.
The Seattle housing market currently boasts a median home price of $359,900. That is well above the national average of $216,567, but still behind cities like San Diego and Los Angeles. A distinct lack of inventory has promoted price increases. In fact, the number of homes available has never exceeded two months’ worth of inventory. And while prices continue to appreciate in the Emerald City; the rate in which they are doing so is beginning to taper, as is evident over the last three years. Three short years ago, homes in the Seattle area were the beneficiaries of an appreciate rate exceeding 25 percent. However, that same rate dropped to 1.5 percent in the last year. Fortunately for the entire housing sector, those gains were enough to remove Seattle from the depths of the last recession.
The Seattle housing market has been the beneficiary of incredible appreciation over the last three years. As a result, homeowners have seen a good majority of their equity return. The following highlights how much equity has been gained relative to the year of purchase:
- Homes purchased in the Seattle housing market one year ago have appreciated by an average of $10,486, whereas the national average was $12,783 over the same period.
- Homes purchased in the Seattle housing market three years ago have appreciated by an average of $87,352, whereas the national average was $55,406 over the same period.
- Homes purchased in the Seattle housing market five years ago have appreciated by an average of $61,898, whereas the national average was $49,675 over the same period.
- Homes purchased in the Seattle housing market seven years ago actually depreciated by an average of $6, whereas the national average increased $9,474 over the same period.
- Homes purchased in the Seattle housing market nine years ago have appreciated by an average of $78,787, whereas the national average increased $3,419 over the same period.
The Seattle housing market is receiving strong support from its subsequent job sector. In fact, Seattle was just named the “best city for jobs” in 2015 by Forbes. Detroit, on the other hand, made the list of “worst cities for jobs.” Perhaps even more encouraging, construction jobs are expected to experience the most growth, both statewide and locally. Experts have already predicted an increase of more than 5 percent in construction-related occupations.
Where Seattle really shines, however, is in its unemployment rate. Currently, Seattle has an unemployment rate nearly one entire percentage point below that of the national average, 5.1 percent and 5.9 percent respectively. For the city of Seattle, that represents a 0.6 percent decrease from the previous year. Perhaps even more encouraging, the 1-year job growth rate has peaked at 2.8 percent.
The strong forecast may be attributed to the increasing number of businesses that wish to relocate to Seattle. While some of the expansion is a result of Seattle recouping from the recession, a large portion of it is thanks to the increasing amount of tech companies that hope to call The Emerald City their home. A lot of the companies expressing interest in Seattle, Amazon included, are technology-based endeavors. In moving to Seattle, the jobs these companies create will serve as the foundation for the entire housing sector.
While new construction is down from last year, as is evident by the 3.4 percent decline in single-family housing permits, Seattle is well above its long-term average – more than 5 percent to be exact. As more homes are brought into the market, prices are expected to moderate. That said, the Seattle housing market is still more affordable than most, though not by much. By the end of last year, Seattle homeowners spent nearly 15 percent of their income on their mortgage premium. Conversely, on average, homeowners across the United States allocated more than 16 percent of their income to paying off their house.
Unfortunately, affordability in the Seattle housing market is not expected to last for much longer. Despite the easement of price gains, appreciation rates are expected to exceed income growth. Moreover, interest rates are expected to increase by the second quarter of this year.
According to Trulia, the most popular zip codes in Seattle are as follows:
- 98118: Average Listing Price ($553,167)
- 98117: Average Listing Price ($579,004)
- 98106: Average Listing Price ($347,200)
- 98103: Average Listing Price ($465,784)
- 98115: Average Listing Price ($583,625)
Of the neighborhoods with the most promising forecast, both Belltown and Broadway appear to be ready for a productive 2015. Investors shopping in the area may want to take this into consideration. Those looking to sell may have the best luck in the following neighborhoods: Mountlake Terrace, Shorline, Seattle itself, Issaquah and Snoqualmie. These neighborhoods represent the top 5 seller’s markets in the Seattle housing market. However, those looking to buy, or perhaps get into the Seattle market, should look at Sumner, Gig Harbor, University Place, Enumclaw and White Center.
Those more interested in buy-and-hold assets will find Seattle particularly appealing. As it stands, Seattle is currently the 8th most expensive city in terms of rental prices. Just a one-bedroom apartment rents for an average of $1,580 a month. To get to that point, rents increased a surprising 8 percent over the course of last year. Experts expect rates to increase even more in 2015.
The rate in which real estate is renting for in the Seattle housing market should have a big impact on homeownership in the coming year. Millennials, in particular, are starting to feel the pressure of bloating rents. Homeownership is actually starting to become cheaper than renting. Therefore, an entire population could conceivably look to join the housing market in the coming months.
Seattle Housing Market Summary:
- Current Median Home Price: $359,900
- 1-Year Appreciation Rate: 1.5%
- Unemployment Rate: 5.1%
- 1-Year Job Growth Rate: 2.8%
- Population: 652,405
- Median Household Income: 67,479
Seattle Housing Market Q1 Update:
There is really no way around it: the Seattle housing market continues to shine. With strong supplementary fundamentals, the city’s housing sector is one of the strongest in the country. Unemployment has already demonstrated a strong propensity towards declining, and continues to do so. In a period of no more than four months, unemployment went from 5.1 percent to 4.8 percent. However, perhaps even more impressively, the job growth gas increased to 3.2 percent, from 2.8 percent. For all intents and purposes, the Seattle housing market is in a position to thrive.
That said, Seattle real estate investing will continue to receive a lot of attention. Most of that attention will be concentrated on the city’s distressed market. According to RealtyTrac, Seattle has about 1,284 homes in some state of distress. That means that almost 1,300 homes are either at risk of being repossessed, have been repossessed, or are scheduled to go up for auction. Each of these scenarios can provide great deals for those interested in Seattle real estate investing.
While the amount of foreclosures are actually 28 percent lower than last year, they still offer great discounts. The average non-distressed property has an average sales price of $407,450 in Seattle. However, distressed properties sell for an average of $260,000. That is a discount of 36 percent, or about $147,450 per home.
An overwhelming majority of Seattle’s distressed inventory, 74.4 percent to be exact, is scheduled to be placed up for auction. Surprisingly, that number is down 34 percent from last year. The remaining foreclosures, which remain unchanged from last year, are all sitting on the books of banks as non-preforming loans. Whether bank-owned or at auction, these are great deals ready to be taken advantage of in Seattle real estate investing.