October brought a degree of reprieve from seemingly relentless price increases for Seattle-area home shoppers, as median prices in King County dipped slightly from September.
Still, the Puget Sound housing market has never been hotter — so hot, in fact, that the region is home to the top four most competitive housing markets in the country, according to Seattle-based digital brokerage Redfin.
Homes in Olympia, Tacoma, Seattle and Bremerton are selling so quickly, and with so little scrutiny, that nowhere in the country is worse to shop for homes right now than those four cities.
“The number of people who can work from home is changing everything about the housing market,” said Redfin broker Rachel Lieder Simeon, who focuses on Tacoma and Olympia. Home shoppers searching for space and affordability are flooding into markets they couldn’t have considered before the pandemic because of their distance from the now-redundant office, she said — including buyers from as far away as Silicon Valley.
Even considering October’s slide, prices in King County remain well above where they were a year ago. The typical King County home sold for $745,000 in October, according to new data from the Northwest Multiple Listing Service (NWMLS) — down from September’s all-time high of $753,600 but still nearly 13% more than the same month last year. Pierce County prices, too, saw a slight dip from September’s record high of $434,999 to $430,000 — nevertheless 13% more expensive than a year ago.
Home price movement in Snohomish, Kitsap and Thurston counties, meanwhile, contravened the typical autumn cooldown. All three counties charted new record-high prices last month and double-digit price growth year-over-year.
Median prices in Snohomish County leapt 17% year-over-year to land at $579,972 last month; Kitsap and Thurston counties, where typical homes sold for $437,000 and $395,000 last month, both saw 13% year-over-year growth.
Other indicators, too, paint a picture of clamoring buyer interest: Not only do Puget Sound homes cost more than ever before, they’re also selling with unprecedented velocity — and very little scrutiny.
In Seattle and Bremerton, most homes on the market sell within a week, according to Redfin. Homes are selling even faster down south, near Olympia and Tacoma —typically within five days. In white-hot Thurston County, it would take just 13 days to sell all the homes on the market at the current level of demand, according to the NWMLS.
In hopes of coming out on top in now-omnipresent bidding wars, buyers in those markets commonly waive contingencies, such as the right to inspect the home and the right to back out of the deal if a mortgage appraiser values the home at less than the sale price, according to Redfin. (Redfin considers price growth, time on market, the presence of multiple offers and whether buyers waive contingencies when scoring the country’s most competitive markets.)
Many buyers are also offering high down payments as proof of their solvency, Simeon said. That gives the advantage in the Puget Sound region’s competitive markets to home shoppers with cash — or stock options — on hand.
Announcements from major tech employers that remote work is expected to continue through the foreseeable future have brought employees flocking to the Puget Sound region, Simeon said. She recently helped one such couple relocate from a 1,000-square-foot condo in Silicon Valley to a home on five acres near Olympia, which they purchased for nearly $750,000 without ever having seen it in person.
“COVID-19 has drastically changed people’s buying habits,” she said. In the South Sound, “almost every home that comes on the market in a decent neighborhood at a decent price point gets multiple offers.”
In Seattle itself, though, demand seems to be cooling off very slightly. Here, median home prices fell 2% from September’s all-time high, to $800,000, a 3% increase over last year, the NWMLS data show. By the last week of October, homes were taking one day longer to sell than the previous month — but were still selling nine days faster than they did in 2019, according to Zillow.
There are some signs the COVID-19 housing frenzy may be peaking in other markets, too. Across the 23 Washington counties the NWMLS tracks, pending sales fell 10% last month, compared to September. The number of new homes for sale in October also dipped slightly in most counties.
It’s not immediately clear, however, whether the homebuying madness will recede to 2019 levels or if the market will plateau through the winter. Mortgage rates continue to hit all-time lows, pulling prospective buyers into the market, said Zillow economist Jeff Tucker.
“While we may see sales cool down over the coming months from an unusually hot summer and fall, it should be temporary and we could be in for an extraordinary spring,” Tucker said.
Low mortgage rates, though, aren’t treating all homebuyers equally, according to research from Zillow.
While a typical Seattle homebuyer can expect to spend proportionally less on mortgage payments — 23% of their monthly income today compared to 27.1% in 2018 — successive years of steep home-price hikes have made it harder to afford down payments. In today’s market, a 20% down payment costs the typical Seattle buyer nearly 11 months of income, compared to 8.3 months in 2014.
That could be one reason some buyers flocked to affordable South King County, where prices rose as much as 24% year-over-year to land between $499,975 and $544,000. But the tony Eastside’s spacious homes also drew interest from buyers: The submarket clocked a new all-time median price high of $1,050,000, a 16.7% hike from last year.
The Eastside condo market also saw substantial activity last month, driven nearly entirely by the opening in September of One88, a new 147-unit luxury condominium building in downtown Bellevue. The building had been nearly entirely pre-sold, according to developer Bosa — evidence that “Bellevue is massively underserved by condos,” said Compass broker Jeff Reynolds, who focuses on the condo market. “There’s strong demand there.”
The Seattle condo market, meanwhile, is “presenting a ‘buyer’s market’ opportunity … like we haven’t witnessed since the Great Recession,” said Realogics Sotheby’s International Realty owner Dean Jones in an email. As condo dwellers upsize into homes, a flood of inventory is lingering for months on the market.
Still, that hasn’t stopped Seattle condo prices from ticking up slightly over last year, to $497,000.