But there are signs that a gradual cooling is starting to take place in Seattle. That’s how other U.S. housing markets with the fastest home-price appreciation in recent years eventually wound down their boom — rather than with the boom-and-bust cycles of decades past.
The Seattle-area housing- market surge has reached new heights, again: The region has now led the nation in home-price increases for 14 months in a row, tied for the longest streak for any metro area in the country since 2001.
Single-family-home prices grew 12.7 percent in October from a year ago across King, Snohomish and Pierce counties, according to the monthly Case-Shiller home-price index, released Tuesday.
Las Vegas was second again, and with an increase of 10.2 percent, is heating up quickly.
Fastest-rising home prices compared with a year ago
1. Seattle +12.7 percent
2. Las Vegas +10.2 percent
3. San Diego +8.1 percent
4. San Francisco +7.7 percent
5. Denver +7.2 percent
Source: Case-Shiller home-price index
Portland, for the first time in years, dropped out of the top five hottest markets.
Home prices nationally rose 6.2 percent, three times the rate of inflation and the biggest increase in more than three years. Even so, Seattle home costs grew almost twice as fast as the U.S. average.
Compared to a month prior, home values actually dipped 0.1 percent in Seattle, though when adjusted for normal seasonal changes, prices grew 0.6 percent, about the same as the national average.
The 14 consecutive months as the nation’s hottest housing market is already a record for Seattle. Previously, Seattle had topped the nation a few times here and there for shorter periods, mostly recently right before the housing bubble popped in 2008.
But Seattle’s position as a national standout is even more unusual than that. It’s tied with Phoenix, which also had the nation’s hottest housing market for 14 straight months, from 2005 to 2006, as the longest run since San Francisco topped the charts for 19 months from 1999 to 2001. (Those both ended with bubbles bursting.)
So when could the Seattle market slow down, and by how much? It might already be happening, just slowly.
In prior decades, U.S. cities with skyrocketing prices often followed that up by crashing back down. Then earlier this decade, several housing markets like Las Vegas, Miami and Los Angeles saw housing prices surge way up before quickly coming back down to Earth, returning to a growth rate similar to the national average.
But that’s changed more recently as the hottest cities have begun to cool down only gradually.
Portland topped the nation for home- price increases for 10 months through mid-2016. During the streak, it averaged home-price increases of 12 percent from a year prior. For the 10 months after, home costs grew an average of 9.6 percent — not exactly a bust.
In 2015, Denver and San Francisco had the top markets, with an average home- price increase of 10.2 percent in both regions. The next year, Denver dipped ever so slightly to 9.3 percent, and San Francisco only slowed to 7.1 percent.
Dallas has also been among the leaders for the last couple of years, and its price growth has only dropped by two percentage points during that span.
There are early signs of the same pattern playing out in Seattle. The region peaked with a home-price increase of 13.5 percent earlier this fall, and price growth has dropped slightly for each of the last three months.
Even if that pace of decline continues, Seattle would continue to see double-digit price increases for at least the first half of 2018.