Pummeled by a new coronavirus variant, snowstorms and a typical seasonal slowdown, the region’s housing market sputtered through the final month of 2021.
Home prices across the Puget Sound region were essentially flat from November to December, shifting 1.5% or less in either direction in counties across the region, according to data released Thursday by the Northwest Multiple Listing Service.
Fewer homes were listed for sale, and new sales dropped nearly 41% in King County from November to December.
A winter slowdown is typical. But even compared to past Decembers, fewer new homes were listed and fewer homebuyers made deals in King and Snohomish counties.
“It was really the perfect storm. It’s usually a slower market and then when you tossed in snow and the omicron virus, it really made it so fewer people listed their homes and really there just was nothing for buyers to buy,” said Windermere agent Anna Riley.
Prices remain higher than in December 2020 across the region, especially outside King County. Median prices continue to stretch beyond the reach of many would-be buyers.
The median single-family home (including townhomes) sold last month in Snohomish County went for $700,000, up 22.1% from December 2020, according to the NWMLS. In Pierce County, the median home sold for $520,000, up 18.5%.
Kitsap, Thurston and Whatcom counties have also seen double-digit price increases from December 2020 to December 2021.
Price growth is less dramatic in Seattle and King County. The median King County home sold for $810,000, up 9.5% from December 2020. The median home in Seattle sold for $839,000, up 4.9%.
Compare that to South King County, where prices climbed more than 20% year-over-year, or the Eastside, where prices are up 37.3%. The NWMLS will release full 2021 data later this month.
Buyers have faced slim inventory since the start of the pandemic, but the winter months can be especially slow.
“Sellers who have the luxury of time are waiting for March, April and May,” said David Palmer, a Seattle-based Redfin agent.
According to a measure known as months of inventory, it would take less than a week to sell the homes available in King and Snohomish counties at current demand. In Pierce County, it would take just over one week. Those are the lowest levels since at least 2016, according to NWMLS data.
When Adam Albaum and his wife started looking to buy a home in the Ballard area last spring, they quickly “became a little more realistic,” he said.
They expanded their search north to Edmonds, raised their budget above the $900,000 they initially didn’t want to exceed, and Albaum tapped into stocks from his job at Amazon. The couple was beat out on a handful of homes throughout the summer.
“Most of the time, it was a situation where there were a huge number of offers, which just drove the price up,” he said.
A break came as the market cooled in the fall. They secured a 1930s brick home in Phinney Ridge for $992,000, about $122,000 more than the list price, and closed in early December.
An appraisal of the house and comparable sales in the area backed up the price, Albaum said. “I think everyone is overpaying, but if everyone [is] overpaying no one is overpaying.”
Still, Albaum, who grew up in the region, is unsettled.
“My wife and I are extremely fortunate that we have jobs that allow us to compete in this market, but even being successful in it, I look at it with some horror,” he said. “Looking at how the prices have changed over time… It’s hard to imagine how anyone under age 30 or 35 is going to be able to buy a house. I don’t see it as sustainable.”
Price jumps continue to be most severe in areas outside Seattle.
In Puyallup, for example, the median home sold last month for about $518,000, up 17.8% from a year earlier. The median price in the Everett area hit $710,000 in December, up 25.2% from the same time in 2020.
Those trends are driven by the rise in remote work and a lack of affordability in the city, said James Young, director of the Washington Center for Real Estate Research.
For a first-time buyer with a $150,000 household income, “you would have to look at a house for $450,000 or $500,000,” Young said. “Where are you going to get that kind of house? Definitely not in the city of Seattle.”
In the pricey areas of West Bellevue, including areas such as Yarrow Point and Hunts Point, the median home last month sold for $4.3 million. Riley, the Windermere agent with West Bellevue Partners, said the majority of her sales last year were local buyers moving or upsizing. Eight or nine of her 60 transactions were from other parts of the country, she said.
“Many of them are tech executives, to be sure, but there are a lot of Amazon workers, Google people who’ve held onto stock for five or seven years,” Riley said.
The coming year may not see the frenzy of 2020 and 2021.
An expected move by the Federal Reserve Board to increase interest rates, which would make borrowing to buy a house more expensive, could dampen demand for new homes. When the Fed increased rates in 2018, “I remember feeling the market slow down,” Palmer said.
Some economists expect home prices will climb more slowly in 2022 than in the first two years of the pandemic, though the continued influx of high-paying jobs could prop up the Seattle market.
“As long as people move to the area who think a million-dollar home is a good deal, the impact of interest rates isn’t going to be huge,” Palmer predicted. “Where it’s going to hurt is first-time buyers.”