Seattle, WA Real Estate Market Trends & Analysis [Updated 2020]

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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 in a city where workers were making a lot more than the national average. 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. Therefore, the Seattle housing market is currently experiencing its second drop in prices while the majority of the country is experiencing its first. It is worth noting, however, that the drop isn’t necessarily a bad thing. If anything, it represents a great buying opportunity, and investors should be ready to act.

Seattle Real Estate Market 2020 Overview

  • 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%)


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Seattle housing market

2020 Seattle Real Estate Investing

Is Seattle a good place to invest in real estate? It is a fair question to ask, as few markets have appreciated at a faster rate than The Emerald City over the last 10 years. Seattle’s median home value is well above the national average. 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, and profit margins are growing slimmer for local investors. Fortunately, there’s a way to make today’s high prices look a lot more attractive over the long run: building a rental property portfolio. Due largely—in part—to the 2020 pandemic, several important 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 the new landscape. Three fundamentals, in particular, have started to tilt the scales in favor of passive income investors:

  • Cash flow potential

  • 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 $2,600, it is possible to simultaneously rent out an investment property while having someone else pay down the mortgage. That way, investors could potentially build equity in a physical asset and collect cash flow each month with the right long-term investment.

In response to the current pandemic, the Fed has announced it intends to keep interest rates at or near historic lows. As of August, the average commitment rate on a 30-year fixed-rate mortgage is 2.94%, according to Freddie Mac. Today’s rates are the lowest government-backed rates buyers have ever seen, which means it has never been cheaper to borrow money. Consequently, prospective buyers will be able to offset today’s high prices with years of lower monthly obligations. Traditional borrowers will have an easier time justifying buying a home that’s increased 97.9% in value in as little as 10 years.

With a price-to-rent ratio of 24.61, it is a lot more affordable to rent a house in Seattle than to buy 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 competition. More importantly, however, is the amount of available inventory in Seattle—or lack thereof. According to Realtor.com, active listings are down 25.2% year-over-year in the Seattle-Tacoma-Bellevue area. Even buyers who intend to participate in the market are forced to continue renting because of the lack of available inventory. Therefore, investors who can buy a rental property will most likely find vacancies to be easier to fill. Current conditions help mitigate landlords’ greatest fear: vacancies.

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.

2020 Foreclosure Statistics In Seattle

Few markets across the country have ridden a greater wave of appreciation than Seattle over the past eight years. Since the market really started to recover after The Great Recession (around the first quarter of 2012), the median home value in Seattle has appreciated nearly 100.0%. It is worth noting, however, that nearly a decade’s worth of year-over-year appreciation has made the Emerald City less affordable. Nonetheless, the recent success of the Seattle housing market hasn’t eliminated the possibility of finding a good deal. While Seattle’s median home value is well above the national average, there’s still one place investors may turn to for a bargain: the distressed property market.

One in every 9,157 homes in the Seattle real estate market is distressed (default, auction or bank owned); that’s a foreclosure rate of 1.0%. As recently as July, “ the number of properties that received a foreclosure filing in Seattle, WA was 0% higher than the previous month and 88% lower than the same time last year,” according to RealtyTrac.

The biggest drop in Seattle foreclosures may be attributed to the city’s decline in bank-owned homes. Over the last year, bank-owned homes have declined 63.6%, and now makeup 80.0% of Seattle’s distressed inventory. Auction homes, on the other hand, make up 20.0% of the city’s distressed inventory. As a result, investors looking to secure a deal below market value may be able to place the odds in their favor by speaking with their local banks. Understanding how to negotiate with banks regarding their REO (real estate owned) properties could net large rewards.

For a better idea of where to look for bank-owned homes, the following is a list of neighborhoods with the highest distributions of foreclosures in Seattle:

  • 98146: 1 in every 5,380 homes is currently distressed

  • 98102: 1 in every 7,887 homes is currently distressed

  • 98122: 1 in every 19,252 homes is currently distressed

To be perfectly clear, the Seattle real estate market currently boasts a relatively low foreclosure rate. Seattle’s 1.0% foreclosure rate is slightly higher than the national average, which is currently about 0.7%. However, the introduction of the Coronavirus and “shelter in place” orders issued by local governments could catalyze an influx of forecloses in the future, both in Seattle and across the country. Therefore, local investors may be able to view the current situation as more of an opportunity than an obstacle.

While forbearance programs are expected to keep people in their homes for the foreseeable future, lenders will expect them to come current on mortgage obligations sooner rather than later; when that time comes, there will most likely be an increase in foreclosures, not the least of which investors may be able to take advantage of. As a result, the Seattle real estate market today could look drastically different in a relatively short period. Many of the foreclosures the city fought so hard to get rid of over the last 10 years could reemerge. Investors should start positioning themselves and lining up capital for what’s to come. Taking advantage of potential Seattle real estate market trends will give them a head start.

2020 Median Home Prices In Seattle

The median home value in Seattle is currently a very robust $767,906, according to Zillow. At that price, the median home value in Seattle is about $520,000 more than the national average. Today’s median home value doesn’t tell the whole story, and that’s important to understand. The median home value in Seattle was about $379,000 about eight years ago (May 2012), when the economy started to recover from the previous recession. Since then, prices in Seattle have increased more than most markets across the country.

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 a distinct lack of available housing, 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.

In the last year, real estate in Seattle appreciated by an average of 2.2%. The median home value across the entire country, on the other hand, jumped 4.1% over the last 12 months. The difference is most likely attributed to Seattle’s already high prices, as there was less room to go up.

No more than a few months ago, at the beginning of 2020, prices in Seattle were expected to continue to climb in the wake of insufficient inventory levels and pent-up demand. However, the new market created by the Coronavirus appears to have tempered expectations. Instead of appreciating, median home values are expected to drop 1.7% in Seattle over the next year. The decline will most likely be the result of less activity, and nothing else. Many of today’s most important indicators appear to be resilient. Most importantly, demand appears to have remained intact. While “shelter in place” orders will detract from the spring buying season, there’s a good chance buyers will emerge from the quarantine with buying aspirations. Doing so will simultaneously drive up competition for housing and prices.

While it’s too soon to say exactly what will happen in the coming months, it is safe to assume activity and home prices will drop. However, the drop isn’t expected to last for long. If anything, the lull may be viewed as a great buying opportunity. Local unemployment has improved dramatically, which may catalyze activity. It stands to reason that today’s discounted prices will only last for a short period.

Seattle Real Estate Market Forecast

Real estate in Seattle has been one of the country’s hottest housing commodities for the last decade. With appreciation rates topping one hundred percent in ten years, demand speaks for itself. It is worth noting, however, that the latest Seattle real estate market forecast may call for temperance on local demand. Inquiries for housing within the city limits is expected to decline in the wake of the pandemic. The Coronavirus has caused many people living within the city to rethink their living arrangements. It is now more likely for people living within the city of Seattle to move away from COVID-19 “hot spots,” and trade the cramped quarters of a high-rise apartment for a more spacious suburban residence.

One of the most interesting Seattle real estate market trends to keep an eye on throughout 2020 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 take place 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: 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. Making the Seattle real estate market even more enticing, however, were 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. Homes sold within 25 days during May, second only to San Francisco at the time, according to the National Association of Realtors. 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 in 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 that of 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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