Seattle, WA Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Tue, Aug 17 2021

Jump To Another Year In The Seattle Real Estate Market:


The Seattle real estate market was at the forefront of the national recovery for the better part of a decade. However, prices appreciated at a faster rate than the majority of the country. While great for homeowners, acquisition costs became prohibitively expensive. As a result, prices began to drop towards the end of 2018. When prices started to increase again (around the end of 2019), they were interrupted by the arrival of the Coronavirus. The impact of COVID-19 in the Seattle real estate market is still resonating, and prices are increasing at a blistering pace. Local investors have had to rethink their own exit strategies as a result. While Seattle was once known for its “flipping” potential, investors are now turning to a more viable strategy in the face of rising prices: long-term rental properties. The market indicators leftover in the wake of the Coronavirus favor rental property owners, and they should continue to do so throughout 2021.

Seattle Real Estate Market 2021 Overview

  • Median Home Value: $871,286

  • Median List Price: $708,328

  • 1-Year Appreciation Rate: +14.2%

  • Median Home Value (1-Year Forecast): +17.1%

  • Weeks Of Supply: 3.7 (-1.8 year over year)

  • New Listings: 1,391 (+2.5% year over year)

  • Active Listings: 4,618 (-25.3% year over year)

  • Homes Sold: 1,242 (+10.6% year over year)

  • Median Days On Market: 6.0 (-0.7 year over year)

  • Median Rent: $1,937 (+10.4% year over year)

  • Rental Vacancy Rate: 4.8% (+2.2% year over year)

  • Price-To-Rent Ratio: 37.48

  • Delinquency Rate: 2.9% (-0.8% year over year)

  • Seattle-Tacoma-Bellevue Unemployment Rate: 5.5% (latest estimate by the Bureau Of Labor Statistics)

  • Metro Population: 753,675 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $92,263 (latest estimate by the U.S. Census Bureau)


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Seattle housing market trends

Seattle Real Estate Investing 2021

Is Seattle a good place to invest in real estate? Since few markets have appreciated faster than The Emerald City over the last 10 years, it is a fair question to ask. Seattle’s median home value is well above the national average, making some exit strategies prohibitively expensive. Nonetheless, Seattle remains a great place to invest in real estate. Regardless of a market’s current status, there’s always a viable exit strategy investors may use, and the Seattle real estate market is no exception.

Real estate in Seattle is relatively expensive. According to Attom Data Solutions’ second-quarter 2021 U.S. Home Sales Report, only two qualifying cities saw bigger year-over-year increases in median home prices during the second quarter of 2021. Per the data released in the quarterly report, “the largest annual increases in metro areas with a population of at least 1 million in the second quarter of 2021 were in Boston, MA (up 27 percent); Austin, TX (up 26 percent); Seattle, WA (up 25 percent); Nashville, TN (up 24 percent) and Tampa, FL (up 24 percent).”

Homes have increased in value so much, in fact, that the Seattle real estate investing community has changed the way it prefers to do business. In particular, there’s a way to make today’s high prices look a lot more attractive over the long run: building a rental property portfolio. In addition to the latest round of appreciation, several market indicators suggest investors may have better luck buying rental properties than flipping houses.

That’s not to say rehabbing isn’t capable of returning great profits, but rather that investors have a new avenue to explore in today’s landscape. Three fundamentals have started to tilt the scales in favor of passive income investors:

  • Cash flow

  • Lower borrowing costs

  • Supply and demand

At the very least, years of cash flow equivalent to Seattle’s median rental rate can help justify today’s higher acquisition costs. With a median rent price of $1,937, it is possible to simultaneously rent out an investment property while having someone else pay down the mortgage. That way, investors could build equity in a physical asset and collect cash flow each month with the right long-term investment.

The Fed has announced it intends to keep interest rates at or near historic lows in response to the current pandemic. As of July, the average commitment rate on a 30-year fixed-rate mortgage was 2.97%, according to Freddie Mac. While up slightly year to date, today’s rates are some of the lowest government-backed rates buyers have ever seen. As a result, now is a great time to borrow money for a rental property. Prospective buyers will be able to offset today’s high prices with years of lower monthly obligations. If for nothing else, lower mortgage payments mean Seattle real estate investors can pocket more of the rent they collect.

With a price-to-rent ratio of 37.48, it is considerably more affordable than buying one. While that may not sound optimal for buy-and-hold investors, I can assure you it works in their favor. The city’s price-to-rent ratio creates a healthy demand for rental properties, which—in turn—stirs up the competition. More importantly, however, is the amount of available inventory in Seattle—or lack thereof. With a mere 3.7 weeks of supply, real estate in Settle is drastically unbalanced. A healthy, balanced market usually has upwards of six months of inventory. Even buyers who are financially capable of doing so can’t get into a home; the competition is too high. Therefore, it’s fair to assume more people will be forced to rent. In one fell swoop, landlords will find themselves with more demand and the ability to raise prices.

Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

Foreclosure Statistics In Seattle 2021

According to Attom Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, a total of 65,082 U.S. properties received a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first six months of the year. “That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago,” according to the report.

Foreclosures are down yearly just about everywhere, and the Seattle real estate market isn’t any different. In fact, the entire state of Washington ranked 41st among the 50 states for the rate of foreclosures in the first half of this year, according to Attom Data Solutions. In that time, a total of 608 properties filed for foreclosure, or 0.02% of the state’s entire housing inventory. Foreclosure filings in the first half of 2021 are down 64.0% over the same period in 2020 and 81.1% for 2019. Therefore, it’s fair to say, Washington has fared better than most states across the country.

It is worth noting, however, that foreclosures are expected to rise sooner rather than later. If for nothing else, fewer states are protecting renters with foreclosure moratoriums brought about by the Coronavirus.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

As the largest city in Washington, the Seattle real estate market will most likely be the largest contributor to the expected influx. It is too early to tell just how many distressed homeowners will file, but one thing is certain: Investors who line up financing today may be able to help distressed homeowners soon. It is entirely possible for savvy real estate investors in Settle to simultaneously acquire a deal with good profit margins while helping distressed homeowners.

2021 Median Home Prices In Seattle

The median home value in Seattle is currently a very robust $871,286, according to Zillow. At that price, the median home value in Seattle is about $772,353 more than the national average. Still, today’s median home value doesn’t tell the whole story. The median home value in Seattle was about $379,000 about nine years ago (May 2012), when the economy started to recover from the previous recession. Since then, prices in Seattle have increased by nearly 130.0%.

A great deal of Seattle’s price increases can be found in the following neighborhoods, which have appreciated the most over the last 20 years (according to NeighborhoodScout):

  • Antioch U-Seattle / 4th Ave

  • Boren Ave / Madison St

  • Seattle Community College-Central Campus / Broadway

  • 12Th Ave S / S King St

  • E Jefferson St / 20th Ave

  • Cornish College of the Arts / Stewart St

  • Delridge

  • James St / Boren Ave

  • Queen Anne Ave N / Boston St

  • Mars Hill Graduate School / Elliott Ave

Thanks, in large part, to a flourishing tech industry, growing demand, and low inventory levels, demand drove local prices up for about six consecutive years, so much so that Seattle saw a decline in appreciation rates around 2018. While most markets across the country continued to show signs of positive appreciation, Seattle’s home values had reached a tipping point and dropped for a short period. Nonetheless, the drop was short-lived, and appreciation rates began to take off towards the end of 2019.

The new market created by the Coronavirus appears to have increased home values more than anyone imagined. In association with historically low interest rates, less than a month’s worth of inventory brought out buyers in record numbers. In a matter of weeks, listings were receiving several offers, allowing owners to increase asking prices. To this day, prices are still increasing on the heels of record demand and insufficient inventory. More importantly, appreciation doesn’t seem to be slowing. In the next year, forecasts are calling for a 17.1% increase in home values. If Seattle’s real estate market trends continue on their trajectory, today’s prices could represent a bargain.

Seattle Real Estate Market Trends

One of the most interesting Seattle real estate market trends to keep an eye on throughout 2021 will be the exodus from cities to suburban neighborhoods. High prices were already forcing many city dwellers to rethink their living arrangements, but the Coronavirus may force their hands to move sooner. As a result, we could see vacancies increase and prices decrease within Seattle. Should this transition occur to the extent many are expecting, nearby neighborhoods should expect to see an uptick in both demand and home values. Bellevue and Tacoma (two of Seattle’s less-expensive neighbors) may inherit many of the people fleeing Seattle in search of lower costs and more affordability.

Local investors paying attention to Seattle real estate market trends should pay special considerations to the neighborhoods surrounding The Emerald City. While Seattle real estate remains a commodity, investors may find better alternatives in Tacoma and Bellevue. Looking outside of the city’s limits could result in a more affordable deal with better profit margins, all without sacrificing demand.

Seattle Housing Market: 2020 Summary

  • Median Home Value: $767,906

  • 1-Year Appreciation Rate: +2.2%

  • Median Home Value (1-Year Forecast): -1.7%

  • Average Days On Market (Zillow): 42

  • Median Rent Price: $2,600

  • Price-To-Rent Ratio: 24.61

  • Seattle-Tacoma-Bellevue Unemployment Rate: 9.3% (latest estimate by the Bureau Of Labor Statistics)

  • City Population: 744,955 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $85,562 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 7.28%

  • Foreclosure Rate: 1 in every 9,157 (1.0%)

Seattle Real Estate Investing 2020

Seattle’s real estate market trends were on the same trajectory as the rest of the country in 2020. In particular, moves to combat the Coronavirus’s impact caused a dramatic spike in both activity and home values. When the Fed announced mortgage rates would remain near record lows for at least a few years, more people looked into buying to take advantage of low borrowing costs. Rates rested below three percent for the better part of the year, and buyers came out in droves. The resulting competition drove up prices faster than many people anticipated, and the Seattle real estate investing community was forced to alter its exit strategies as a result.

The first thing many Seattle investors did was look into taking advantage of 2020’s lower interest rates. As it turns out, lower borrowing costs and high home prices favored long-term strategies like owning rental properties. While investors continued to flip homes in 2020, profit margins grew slimmer and drove people towards rentals. Not only were flips becoming less viable, but lower interest rates helped justify high acquisition costs and even helped maximize rental property cash flow.

If that wasn’t enough, the same inventory shortages increasing demand for homes also forced more people to remain renters. Investors saw that many buyers wouldn’t be able to find a home due to supply constraints, so the city’s renter pool would be huge. More renters in 2020 and beyond mitigate the risk of vacancies for landlords, making rental portfolios safer over the long run.

Seattle Housing Market: 2018 Summary

Few markets, if any, were as hot as the Emerald City in 2018. Nearly every fundamental indicator, for that matter, was pointing up at the time. That’s not to say real estate in Seattle was perfect—far from it, in fact—but the truth remains: Seattle was one of the hottest housing markets in the country. Seattle real estate news, at the time, was nothing short of excited about the direction things were heading no more than two years ago, and the sentiment holds true today. Outside of inventory levels, real estate in Seattle has pretty much lived up to expectations.

Seattle Real Estate Investing 2018

The median home price in Seattle was the beneficiary of several positive indicators. Due, in large part, to a booming tech scene and very encouraging fundamentals, median home prices jumped exponentially in 2018; combine that with the same inventory shortage the rest of the country was experiencing, and there’s no wondering why Seattle’s appreciation rates were so high. Seattle’s home values increased an impressive 17.2% from the previous year. In one year, the median home value in Seattle increased from somewhere in the neighborhood of $670,000 to $772,729.

The rapid rate of appreciation returned a great deal of equity to many Seattle homeowners. As a result, RealtyTrac noted a relatively small amount of distressed homes in Seattle. At the time, the Seattle real estate market had about 410 foreclosures. In 2018, the foreclosure rate in Seattle was about 26.0% lower than the previous year.

According to RealtyTrac, the “median sales price of a non-distressed home was $615,000. The median sales price of a foreclosure home was $325,646, or 47% lower than non-distressed home sales.” For those of you keeping track, that was a savings of almost $290,000 per distressed property in 2018.

The Seattle real estate market, not unlike the rest of the country, was dealing with a supply and demand issue. More people than ever were competing for fewer homes, which accounted for the record rate of appreciation. As a result, prices went up at a historic pace, and there’s nothing to suggest they will stop anytime soon.

Seattle Housing Market: 2016 Summary

  • Median Home Price: $420,500

  • 1-Year Appreciation Rate: 9.1%

  • 3-Year Appreciation Rate: 21.6%

  • Unemployment Rate: 4.8%

  • 1-Year Job Growth Rate: 3.6%

  • Population: 652,405

  • Median Household Income: $71,273

Seattle Real Estate Investing 2016

The Seattle real estate market produced remarkable returns for investors and homeowners in 2016. The median home price for Seattle real estate was an astounding $420,500 during the second quarter, compared to the national average of $239,167. However, making the Seattle real estate market even more enticing was appreciation rates, which reached epic proportions during the second quarter of the year. Homes in Seattle appreciated at a one-year rate of 9.1% during the second quarter, nearly double the national average of 4.9%, while three-year rates soared to 21.6%, compared to 17.8%.

Local real estate was selling at a blistering pace in 2016, according to Seattle real estate news. According to the National Association of Realtors, homes sold within 25 days during May, second only to San Francisco at the time. The Seattle housing market was a hotbed of investing activity.

As of July 2016, there were 1,316 properties in the Seattle, Washington area in some stage of foreclosure. According to RealtyTrac, the number of Seattle real estate foreclosures in July was 18.0% lower than the previous month and 7.0% lower than the same period in 2015. The number of REO properties in Seattle increased 15.8% from the previous month but dropped 26.7% from the previous year.

The unemployment rate in Seattle in 2016 was about 4.8%, slightly lower than the national average. The one-year job growth rate was 3.6% during the second quarter, compared to the rest of the country, which saw jobs grow at a rate of 1.9%.

Seattle Housing Market: 2015 Summary

  • 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 Real Estate Investing 2015

The Seattle housing market boasted a median home price of $359,900 in 2015. That was well above the national average but still behind cities like San Diego and Los Angeles. A distinct lack of inventory prompted prices to increase. The number of homes available never exceeded two months’ worth of inventory. And while prices continued to appreciate in the Emerald City, the rate at which they were doing so was beginning to taper.

The local job sector had a great deal to do with how well Seattle real estate performed in 2015. Seattle was named the “best city for jobs” in 2015 by Forbes. Perhaps even more encouraging, construction jobs saw growth, both statewide and locally. Where Seattle shined, however, was in its unemployment rate. Seattle had an unemployment rate nearly one entire percentage point below the national average at one point in 2015.

There is no way around it: the Seattle housing market was firing on all cylinders in 2015. With strong supplementary fundamentals, the city’s housing sector was one of the strongest in the country. Unemployment demonstrated a strong propensity toward declining.

According to RealtyTrac, Seattle had about 1,284 homes in some state of distress in the first part of 2015. That means that almost 1,300 homes were either at risk of being repossessed, got repossessed, or were scheduled to go up for auction. The foreclosure rate was 28.0% lower than the previous year. The average non-distressed property had an average sales price of $407,450 in Seattle. However, distressed properties sold for an average of $260,000. That was a discount of 36.0%.

Seattle County Map:

seattle-county-map

Seattle Real Estate Market Summary

The Emerald City, not unlike the rest of the country, has been dealing with a supply and demand issue for quite some time. More people than ever before are competing for relatively fewer homes, which would account for the record rate of appreciation in recent history. However, the recent introduction of the Coronavirus has served to temper local appreciation. Instead of increasing year-over-year, home values may decline, which could represent a great opportunity for investors. If for nothing else, some of the best investments are made in disrupted markets, and 202 doesn’t appear to be an exception.

Have you ever wanted to invest in the Seattle real estate market? Is Seattle a good place to invest in real estate? Please feel free to let us know what you think in the comments below:


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Sources

https://www.zillow.com/seattle-wa/home-values/
https://www.zillow.com/home-values/
https://www.zillow.com/research/data/
https://www.attomdata.com/news/most-recent/attom-q2-2021-u-s-home-sales-report/
https://www.attomdata.com/news/most-recent/attom-mid-year-2021-u-s-foreclosure-market-report/
https://www.attomdata.com/news/market-trends/foreclosures/attom-data-solutions-q1-and-march-2021-u-s-foreclosure-market-report/
https://www.redfin.com/news/data-center/
https://theenergylogic.com/housing-tides/housing-tides-interface/
https://www.bls.gov/eag/eag.wa_seattle_msa.htm
https://www.census.gov/quickfacts/fact/table/seattlecitywashington,US/PST045219
http://www.freddiemac.com/pmms/pmms30.html
https://www.neighborhoodscout.com/wa/seattle/real-estate

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.