The average price of existing single-family homes in King, Snohomish and Pierce counties in October rose 1.3 percent from the previous month, compared with an average price gain of 0.9 percent in September.
Seattle area home prices continued their march upward in October.
The average price of existing single-family homes in King, Snohomish and Pierce counties rose 1.3 percent from the previous month, after taking seasonal fluctuations into account. In September the average price gain was 0.9 percent.
Over the year, the Seattle area posted an 8.8 percent gain, compared with an 8.2 percent increase in September, according to S&P Dow Jones Indices, publisher of the Case-Shiller index.
Nationally, October home prices increased over the month in all 20 metropolitan areas surveyed, with the overall index rising by 0.8 percent after adjustment for seasonal fluctuations. Average prices rose 5.5 percent annually.
David Blitzer, who oversees the index at S&P Dow Jones Indices, said in a statement that economic conditions supported the climb in home prices nationally. Inventories of existing homes are fairly tight, while sales of new homes remain mixed.
The Federal Reserve’s recent decision to raise the interest rate that banks pay shouldn’t lead to “runaway mortgage-interest rates,” Blitzer said.
San Francisco, Denver and Portland had the highest price hikes over the year, with another month of double-digit price increases of 10.9 percent for all three.
The Chicago metro area posted the weakest increase in average home prices at 1.3 percent.
The Seattle area, which is experiencing its worst shortage of homes for sale in over a decade, has seen home prices accelerate since January, when the average price was 6.8 percent higher over the year. October’s 8.8 percent annual gain was the highest yet this year.
Home prices in the Seattle area are just 3.4 percent below the last peak set in the summer of 2007, according to the Case-Shiller index. Nationally, average prices are still 12.3 percent off their 2006 peak.
Lower-priced homes got hammered during the recession and took longer to rebound than higher-priced homes. In the first half of 2015, these lower-priced homes appreciated 10 to 11 percent over the year, compared with 6 to 8 percent for higher-priced homes. In October, annual price gains for lower- and upper-priced homes in the Seattle area were about 9 percent.
The Case-Shiller index is based on existing single-family-home sales and tracks the average change in the price of a home between the current sale and the previous sale.
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Meanwhile, Zillow said the median value in October of Seattle area single-family homes was $380,200, up 8.6 percent over the year.
Seattle-based Zillow’s home-price index is based on the estimated value of all properties in a market, not just those that sold in a given month.
While the pace of the Seattle area’s price gains is well above the historical average, only six out of 66 experts in a survey sponsored by Zillow believe the market is already in a bubble. Two more experts believe there’s significant bubble risk in the next year, while 13 experts say there’s significant risk in three to five years.
Zillow Chief Economist Svenja Gudell said the market is far healthier now than a decade ago, when loose lending and speculation inflated the housing bubble.
“I don’t think we’re in a housing bubble in any market,” Gudell said in an interview earlier this month. Solid demand and a tight housing supply are what’s driving prices higher, she said.
While institutional investors are part of the demand, they’re less active now: In October, 2.7 percent of home sales in the Seattle area were to institutional investors, compared with 4.3 percent a year ago and a peak of 7.7 percent in March 2013, according to RealtyTrac. (The California-based data provider defines institutional investors as buyers purchasing at least 10 residential properties in a calendar year.)
But cash buyers — including ones from overseas — still represent a major threat to first-time buyers. In October, 20.6 percent of Seattle area home sales were cash sales, RealtyTrac reports, down from 23.4 percent a year ago and a peak of 31.6 percent in February 2011.
Combine that with rising interest rates and home prices and some prospective first-time buyers may have to rent longer.
“The median age of first-time homebuyers will reach new highs next year as more millennials delay key life decisions and stay in rental housing longer,” Zillow’s Gudell said in a statement. “This is likely to help rents keep rising, though at a slower pace than we’ve seen, which will contribute to worsening rental affordability.”