What a difference just two years can make.
Around this time in 2019, Seattle-area home prices had dipped and price growth nationwide was slowing.
Cut to 2021: Seattle has clocked another month as one of the hottest American housing markets as home prices here and nationwide climb at a record-breaking pace.
Single-family home prices in the Seattle metro area were up 20.2% in April from a year earlier, the region’s biggest-ever 12-month leap, according to the S&P CoreLogic Case-Shiller Home Price Index released Tuesday. (The index lags by two months and reflects portions of King, Pierce and Snohomish counties.)
Travis Meidell, who works in tech and bought a home in Lake Stevens this spring, said the local housing market felt like it “got more competitive” over the course of his home search that stretched from 2020 into this spring. “It became more cutthroat.”
Prices climbed faster in Seattle than nationwide even as costs nationally jumped 14.6%, “literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data,” said S&P Managing Director Craig Lazzara in a statement.
For more than a year, a flood of buyer demand, a tight supply of homes and super-low interest rates have fueled wild growth in housing markets all over the country. While there are some recent signs buyer demand could finally be slipping, things were still red-hot in April.
The frenzied market has laid bare the vast divide of pandemic experiences, with many low-wage workers losing jobs early in the outbreak while others worked from home and tech stocks soared. Rising housing costs could also exacerbate racial gaps in homeownership. A recent Redfin survey found that Black homeowners were more likely than white homeowners to have made financial sacrifices, like taking on an extra job, in order to afford their first home.
Among major metro areas in April, only Phoenix and San Diego saw quicker year-over-year growth than Seattle, both at roughly 22%, according to the Case-Shiller index. The index reports a three-month rolling average of home prices.
Not everywhere in the Seattle area has seen the same trends. Many of the toughest markets to buy a home in recent months have been outside Seattle proper.
In April and May, home prices were up between 17% and 22% year-over-year in parts of Snohomish and Pierce counties, compared with jumps between 9% and 11% in Seattle, according to Zillow. Hot spots included Snohomish, Mill Creek and Lake Stevens in Snohomish County and Parkland in Pierce County.
All that competition has left homebuyers feeling the pressure.
Kristen Mandery, who grew up in Edmonds, has watched the sizzling market with a front-row view as she searched in recent months for a new house to be close to her mom.
The first house for which she submitted an offer went to another buyer for $400,000 over its list price, the second for $375,000 over. She finally secured her new house in an off-market deal and paid about $25,000 over the list price.
“I’ve lived in this area over 40 years and I’ve never ever seen the housing market like this,” Mandery said.
When Meidell began searching, he and his wife hoped to buy in Edmonds but prices there eventually stretched beyond their reach, he said. They instead bought farther north in Lake Stevens, settling for a longer commute and paying about $90,000 over the five-bedroom home’s list price to compete against other buyers.
As the couple searched for a new house, Meidell said he set up a search with filters for his budget and other parameters. The options seemed to get slimmer before his eyes.
“Every week you could watch the dots just rapidly disappear,” Meidell said. “It was this continuous state of anxiety: If I don’t do this, eventually there will be nothing left.”
Just how long can all this last?
New data on local home sales to be released next week will show whether demand has begun to slow in Western Washington.
Nationally, CoreLogic Deputy Chief Economist Selma Hepp predicted Tuesday that price increases will stay in the double digits through the rest of this year.
Hepp argues that although jaw-dropping price jumps may feel reminiscent of the 2008 crash, “mortgage interest rates remain 50% lower than they were in 2005, when home price growth last peaked, keeping the ratio of mortgage payments to monthly households income lower today.”