For months, Seattle-area home prices have been teetering between growth and decline.
They just dropped over the edge.
The cost of a single-family home in May dipped 1.2% from 12 months earlier, the first negative change in a major U.S. city in a number of years, according to the latest S&P CoreLogic Case-Shiller data.
“Whether negative YOY (year-over-year) rates of change spread to other cities remains to be seen,” said Philip Murphy, managing director at S&P Dow Jones Indices, in a statement. “For now, there is still substantial diversity in local trends.”
Nationwide, home prices have been slowing their gains for the past year — even in the Southwest, where the market is growing fastest. Las Vegas, which overtook Seattle as the nation’s hottest housing market last June, saw gains of 6.4%, still a slight decline over last year.
But an overall fall in Seattle-area prices masks the trend that north and south of Seattle, the market is only getting hotter. In Tacoma and Pierce County, median house prices rose 7.3% in June from 12 months earlier, according to data from the Northwest Multiple Listing Service. (The Case-Shiller index lags by one month and is a composite of prices in King, Pierce and Snohomish counties.) And prices in Kitsap and Skagit County both posted double-digit price increases.
Some of that variation is because prices for less expensive homes, which tend to be outside of Seattle, are still rising.
The Case-Shiller index divides homes into three even tiers: homes that cost more than $625,000, those that cost less than $400,000 and those in between. Of the three, in the Seattle metro area only homes in the least expensive tier posted price increases in May, a 2.74% jump since last year.
Northerly Skagit County, where median home prices hover in the low tier at $380,000, saw an 11.8% increase in prices from June 2018, according to the Northwest Multiple Listing Service data. Realtor Duane Gish, who’s been selling homes in Skagit County for 19 years, said that five years ago the homes he sold were in the $300-400,000 range. Now, they’re closer to $500,000.
“We are seeing that jump around here, and it’s not slowing down like we normally see around this time,” Gish said, referring to the summer slowdown in home sales.
And as Seattle families looking for inexpensive starter homes head north to flee rising prices, Gish has noted that the people buying homes in Skagit County have also changed. In recent years, the majority of his buyers have become people from “down south,” Gish said, “younger people with kids, who want to get their family out of the hustle and bustle of the city.”
While the Northwest Multiple Listing Service data charts growth in some ritzy suburbs like Bellevue and Mercer Island, that’s not the case for the city itself. Prices in the middle tier of real estate are stagnant, the Case-Shiller data shows, while the top tier has been losing value since early this year.
Those top two tiers include almost all the single-family real estate in Seattle proper, where the median home price is $714,600, according to Zillow.
Kelly Meister, a broker at Compass in Seattle, said buyers “don’t have the sense of urgency they did last year,” when prices for top-tier real estate were growing in the double digits.
And, she said, she’s seeing more variation in home prices from street to street and neighborhood to neighborhood than she did a year ago.
Right now, she said, “the Seattle market is like a microwave: Super hot in some spots and cold in others.” Houses that would have been “a major grab” last year in neighborhoods like the Central District and Columbia City aren’t getting as much attention in a slower market.
Meanwhile, in tony neighborhoods like Mount Baker, Magnolia and Laurelhurst, there’s still a great deal of demand for “homes that check all the boxes,” said Barbara Shikiar, a Windermere broker working primarily in Northeast Seattle.
“But homes that are more idiosyncratic, in this type of market,” she said, “those tend to linger.”
Nationwide, the Case-Shiller index showed gains of 3.4% over the past 12 months. Growth is slowing because “buyers are no longer willing to pay any price,” Zillow economist Matthew Speakman said in a statement.
Buyers, he said, “took a breather … The fact that buyers — and prices — slowed their roll right through the middle of home-buying season indicates just how few homes are on the market.” And, he said, high land and labor costs mean builders aren’t putting up inexpensive homes fast enough to woo first-time buyers.
Even though home prices in Seattle are dropping, they remain high. A typical home in Las Vegas, the nation’s hottest market, might sell for $274,000, according to Zillow’s Home Value Index, less than half the median Seattle value.