The Washington real estate market has been one of the hottest markets in the country over the last decade. In conjunction with a lack of inventory, a strengthening economy caused median home values to skyrocket for about ten consecutive years. Consequently, real estate in Washington has appreciated at a rate that helped pace the rest of the country. Nonetheless, the Coronavirus's impact on the real estate market brought the state to a standstill in the first part of 2020, but the setback was only temporary. Washington may have weathered the storm better than most states. Due largely, in part, to a job sector that was slightly more insulated than the rest of the country, employment drove a lot of activity in the local housing market. Today, the Washington real estate market is firing on all cylinders and should continue to do so as long as the underlying fundamentals remain intact.
The Top Washington Real Estate Markets
While the best real estate market in Washington is up for debate, here’s a list of the cities investors may want to pay special considerations to:
Unemployment Rate: 7.1% (latest estimate by the Bureau Of Labor Statistics)
Population: 7,535,591 (latest estimate by the U.S. Census Bureau)
Median Household Income: $66,174 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 8.91%
Foreclosure Rate: 1 in every 30,255 (0.3%)
Washington Median Home Prices
The median home value in Washington is $465,386, according to Zillow’s Home Value Index. TO put things into perspective, Washington's median home value is higher than it has ever been. As recently as the first quarter of 2012, in fact, the median home value in Washington bottomed out around $222,000 during The Great Recession. Since then, real estate in Washington has ridden a strong recovery. On the heels of a strengthening economy and growing optimism, the median home value in Washington appreciated for more than eight consecutive years, to the tune of 109.6%. To put things into perspective, the median home value in the United States is $266,222—or $199,164 less than that of Washington's median home value.
Real estate in Washington has outpaced its national counterpart for the better part of a decade, and the last year was evidence of its performance. Whereas the median home value in the United States increased 8.4% over the last year, the median home value in Washington is the beneficiary of a 12.5% jump. The difference isn’t necessarily an indictment on national real estate trends but rather a sign that real estate in Washington benefited from a lot of tailwinds.
The Washington real estate market isn't expected to slow down anytime soon. In particular, prices are expected to continue rising in the face of increasing demand and a lack of available inventory. In fact, the Coronavirus's impact on the real estate market will most likely be felt for a while. The pandemic stopped builders from adding to inventory levels, which dove up competition over the course of 2020, and will continue to do so well into 2021.
Washington Foreclosure Trends & Statistics
The Washington real estate market has developed a reputation for having a relatively low foreclosure rate. More specifically, however, only one in every 30,255 homes in Washington is considered to be in a state of foreclosure (default, auction, or bank-owned); that brings the state’s foreclosure rate to an encouraging 0.3%. Thanks to the same factors that have facilitated the most recent bout of appreciation across the state, the foreclosure rate in Washington is at a level most other states aspire to be at. Consequently, the foreclosure rate across the United States is approximately 0.8% (more than two times that of Washington's foreclosure rate).
The Washington housing market has done a great job in reducing foreclosures across the state. Despite steady decreases in the last year, there are still several counties with higher distributions of foreclosures than others. The following counties represent the areas with the highest distributions of distressed homes across the entire state:
Cowlitz: (1 in every 8,843)
Island: (1 in every 13,762)
Kitsap: (1 in every 15,849)
Lewis: (1 in every 17,377)
Stevens: (1 in every 21,519)
It should also be noted that foreclosure filings are expected to increase. The Coronavirus is already responsible for a lot of economic turmoil across the country, and Washington is no exception. It is safe to assume Washington will see an increase sooner or later, not unlike the national average saw recently.
Tax Lien Investing
Tax Lien or Deed: Tax Deed state
Redemption Period: None after sale
Washington Real Estate Investing
The Washington real estate market has served investors from across the country well since the last recession came to an end. Case in point: The average home in the Washington real estate market had appreciated more than 100.00% from when it bottomed out in 2012. Almost anyone who purchased a long-term asset at the time (and is still holding onto it) is most likely the beneficiary of a generous amount of equity. However, it should be noted that the same appreciation rates that have increased equity have also made flipping profit margins hard to come by in some of Washington's biggest cities.
Nearly a decade's worth of appreciation has made it hard for investors to find attractive profit margins on rehabs, but there are still plenty of investment opportunities in Washington. The new real estate market landscape left behind in the Coronavirus's wake looks to favor a new investment strategy: rental property investing.
A lot has changed since the pandemic took hold of the Washington real estate market, but the disruption has opened the door for rental property owners or those looking to become landlords. Specifically, three indicators now look as if they are better than ever for long-term investors in Washington:
Historically Low Interest Rates: To stimulate housing activity, interest rates are now lower than ever. At 2.74%, it is one of the cheapest times ever to borrow institutional money, which can help offset today's higher prices. Interest rates are so low, in fact, that it's almost hard not to want to buy a house in Washington.
Cash Flow Potential: Savvy investors who take advantage of today's low rates will lower their monthly mortgage obligations. Lower monthly payments will increase cash flow and make it a lot easier to pay down the mortgage with someone else's money.
Demand: With a price-to-rent ratio of 18.36, it is more affordable to buy a house in Washington than to rent one. Consequently, buyers are coming out in droves to participate in the market. However, Washington doesn't have enough inventory to satiate demand. Even those who want to buy will be relegated to the renter pool and increase the demand for rentals.
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.
Washington Housing Market Predictions
The Washington housing market has done very well for itself in the last nine years. For the better part of a decade, real estate in Washington has exhibited many of the same characteristics as its national counterparts. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can the Washington real estate investing community expect moving forward?
Secondary cities will receive more attention: Seattle has seen demand increase dramatically in recent history. In doing so, prices have increased alongside the competition. It is now fair to assume secondary cities like Tacoma will start receiving more attention. Appreciation in smaller cities has yet to reach the same level as Seattle, attracting many first-time buyers. Cheaper home values will then drive up competition in areas where it wasn't before.
Historic appreciation will continue: Despite the pandemic, real estate in Washington remains red hot. As it turns out, pent-up demand was enough to maintain an active housing sector. However, there aren't enough listings to keep up with demand. As a result, sellers will increase asking prices to line up with the competition.
More people will move to suburbs: Cities were too expensive to begin with, and now they are hotbeds for the Coronavirus. Today, people who are permitted to work from home may start moving to suburbs to seek more affordable, roomier living situations. Of course, the exodus from cities could easily increase suburban home values.
The Coronavirus impacted the Washington real estate market, but not in the way many would have assumed. In the first quarter of last year, local real estate experienced a setback, but it was only temporary. Fear and uncertainty stalled the market for a little while, but the market persisted. In fact, the Coronavirus actually catalyzed a hectic year in real estate. Thanks to a lot of help from low interest rates, buying activity lifted the entire sector. The momentum generated over the course of 2020 looks entirely capable of continuing this year.
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