Seattle has clocked another month of record-breaking home price growth — and that’s not good news for everybody.
Seattle-area home prices climbed 25.5% year-over-year in July, the third-fastest increase in the country behind Phoenix and San Diego and Seattle’s highest-ever 12-month jump, according to the latest S&P CoreLogic Case-Shiller Home Price Index, released Tuesday.
The index reports a three-month rolling average of home prices and lags by two months. Its measure of the Seattle area includes parts of King, Snohomish and Pierce counties.
Nationally, prices climbed nearly 20% year-over-year in July, according to Case-Shiller.
July 2020 was still early in the pandemic, but prices in the Seattle area were already on the rise as potential sellers held onto their homes and buyers looked to take advantage of low interest rates.
CoreLogic Deputy Chief Economist Selma Hepp said surges in investor buyers, millennial home shoppers and “move-up buyers” with bigger budgets helped drive price increases over the last year. Slim supply hasn’t helped.
But rapid price growth can also push plenty of potential buyers out of the market.
If a typical Seattle-area buyer put away 10% of their income every month, they would need to sock away funds for roughly 12 years to save up 20% on an average home, based on current prices, according to Tomo, a real estate startup. That’s up from 7 1/2 years in 1990. (Buyers can sometimes secure a house with less than 20% down, but in competitive markets, higher down payments give buyers an edge.)
The price growth reflected in the Case-Shiller index came even as Seattle’s housing market entered a typical summer slowdown this July. More homes were for sale and some buyers were taking a break from their searches. In August, the median single-family home in King County cost $850,000, according to separate data from the Northwest Multiple Listing Service.
Local prices are growing fastest in areas of Snohomish County such as Snohomish, Mountlake Terrace and Lake Stevens, where prices in August were up more than 30% year-over-year, according to separate data from Zillow. In King County, prices were up about 19% in Burien, 18% in SeaTac and 14% in Seattle, according to Zillow.
“But there are signs that this growth is nearing a peak,” said Zillow analyst Nicole Bachaud. “Three-quarters of all cities in the Seattle area experienced a slowdown in month-over-month appreciation from July to August, indicating that a slight shift in the market is coming where we will start to see home price appreciation moderating towards more ‘normal’ levels.”
Nationally, home prices climbed in July for the 14th consecutive month and the fourth month of record-setting growth, said Craig Lazzara, managing director at S&P.
It’s too soon to say whether price hikes are being driven by buyers looking to the suburbs or an acceleration of home purchases that would have happened anyway in the next few years, Lazzara said.