Home prices across King County have fallen 12 percent since their spring highs. King County’s median single-family home price ticked up just 0.6 percent in December from a year before, and condo costs rose at the same rate — the smallest annual gain since early 2012, when the market was bottoming out.
Home prices on the Eastside have now dropped on a year-over-year basis. In Seattle, the median house is nearly $100,000 cheaper than last spring. And across King County, the number of condos available for buyers has more than quadrupled in the past year.
The cool-down in the local housing market continued in December, ending a topsy-turvy year for real estate, according to new figures released Monday by the Northwest Multiple Listing Service.
King County’s median single-family home price ticked up just 0.6 percent in December from a year before, and condo costs rose at the same rate — the smallest annual gain since early 2012, when the market was bottoming out.
It’s a huge shift from the prior six years, where the average year-over-year increase was 12 percent, adding as much as $100,000 to the median home in a single year.
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On the Eastside, prices fell 3.1 percent from a year before, the first time prices declined on a year-over-year basis since 2012. In the city of Seattle, prices ticked up just 1.9 percent from a year prior, amounting to a slight decrease on an inflation-adjusted basis.
Compared with the record highs reached last spring, prices are down $91,000 in Seattle, to a new median of $739,000, and they’ve fallen $69,000 on the Eastside, to $909,000. Most remarkably, in the last seven months prices have declined more than $170,000 in Queen Anne/Magnolia, the central Seattle area that includes Capitol Hill, and in East Bellevue.
Buyers who once had to make decisions on home purchases in a matter of days now have weeks or months to ponder their options and negotiate, because there are so many more homes to choose from.
The number of single-family homes for sale across the county in December jumped 148 percent from a year prior, the fourth straight month of record-breaking gains in inventory. Condo inventory skyrocketed 314 percent.
There were actually fewer people putting their homes up for sale than this time last year, but buyers continue to disappear from the market, with sales decreasing 19 percent.
It’s standard now for buyers to put contingencies that, for example, allow them to negotiate the price down if an inspection turns up anything broken. Previously, bidding wars were so heated that buyers had to sign away all their rights to win a home.
“Sellers are more willing to be flexible on pricing, even after a short time on the market,” Redfin agent Jessie Culbert said. “It’s much more of a conversation at this point, versus a buyer just saying, ‘Have my soul and my unborn child, please get me this home.’ ”
It’s been an up-and-down year for real estate here. When 2018 began, prices soared nearly 20 percent in January from the year prior, the most in the country. Those double-digit gains, which were the norm for years, continued through May, before an abrupt shift in the market.
Prices countywide have now fallen 12 percent since their spring peak, which, outside of the Great Recession housing bust, is the biggest seven-month decline since 2000.
There are several reasons for the fall: Interest rates, though on the decline recently, are up over the past year. Rents have stabilized over the past year, adding less pressure to buy now. Foreign buyer interest has dropped off significantly. And prices have gone so high that they have shrunk the buyer pool, leaving only high-income earners able to compete on most homes.
“Buyers in December were reaping the benefits of market-weary sellers who were willing to give up part of their bloated home equity to make a deal and move on,” John Deely, principal managing broker at Coldwell Banker Bain in Seattle, said in a statement.
Three other areas have lost more than $110,000 since the spring: Ballard/Greenlake, Shoreline-Richmond Beach and Redmond-Carnation. And in the condo-only market of downtown Seattle, prices decreased about 10 percent in the past year.
On the other end, prices soared 42 percent in Mercer Island over the past year (although there aren’t many sales there this time of year, so volatility is high), and were up 18 percent in Renton-Benson Hill and 10 percent in Kirkland-Bridle Trails.
AJ Taaca, a 34-year-old architect, put his ground-floor condo near Cal Anderson Park in Capitol Hill on the market for $415,000 recently but it sat for a month with no takers.
“It was scary,” Taaca said. “It wasn’t like five offers, and escalating prices. It was more of, ‘oh gosh, there’s a lot more [inventory] on the market.’ There was a lot of competition out there.”
Taaca dropped the price and about a month later was able to sell the condo for $399,000.
We’re getting into the slow time of year for the housing market, but this year’s changes have been more significant. In the prior five years, prices rose an average of $3,600 from November to December across King County; this time they declined nearly $5,000.
Most people in the real-estate industry expect the market to stay cool for the next couple of months, since the short, rainy days make this a notoriously slow time for people looking for homes, regardless of how the market is doing. Brokers surveyed by the Northwest Multiple Listing Service expect things to pick back up in the normally frenzied spring market, but few are predicting a return to double-digit price gains.
“The last six to nine months have been a good reality check for buyers, that things can change, and I would be pretty surprised to see the spring market in 2019 bring a lot of [price] escalations and multiple-offer scenarios,” Culbert said.
Snohomish County is starting to follow King County’s lead. Inventory in Snohomish has also more than doubled in the past year while prices are up 4.5 percent, the smallest increase in two and a half years. The median house sold for $470,000, down from the record high of $511,000 in the spring.
The same shift still hasn’t really made its way to the rest of the Puget Sound region, however. Prices rose 7.5 percent in Kitsap County and 9.2 percent in Pierce County from a year prior, with a median price of $344,000 in both places. Both counties saw modest 13 to 19 percent growth in inventory.
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