Like the rest of the country the Washington housing market is healthy and thriving, and last years positive numbers look like they’re going to spill over into the 2016 housing market. But like much of the west coast housing supply is having a hard time keeping up with demand. “We’re in for another crazy spring real estate market,” predicts J. Lennox Scott, chairman and CEO of John L. Scott, Inc.
In the popular King County market the number of available homes is down nearly 30% from a year ago resulting in higher home prices. Sale prices for single family homes in the county are up 19.8% already for the year, and in ten other counties around the state double digit price gains have been reported as well. Current inventory levels are around 2.4 months, well below the 4-6 months that is preferred for a balanced market. The Puget Sound region is below 2 months, and King County is the lowest at 1.3 months of supply. The fast turnaround of homes being sold means that much of the housing market of Washington favors the seller as opposed to the buyer. And even the higher priced real estate market is moving.
According to Zillow Seattle and Bellevue real estate markets are at the top-tier in terms of dollar amount with homes selling at $505K and %591K, respectively. Housing market predictions for both cities expect any inventory that comes on the market to go quickly. And rental units in both markets are equally in low supply. On housing website Trulia Seattle has a median rental cost of $2,495 per month.
“Buyers who are looking for houses cannot start looking at the top of their affordability range. They should look 15 to 20 percent below their limit and be prepared to go over list price if they have any hope of success,” says past chair of the Northwest MLS board Frank Wilson. So what are buyers who have been priced out of the market for single-family homes doing? With the increasing rental costs the latest trend has been condos.
Many buyers are looking to invest in condos as a way to take advantage of historically low interest rates and to invest in homeownership. “We have noticed increasing demand for condos and townhomes as they are becoming more affordable for first-time buyers,” says president of Windermere Real Estate O.B. Jacobi. In the past year pending sales of condos increased 5% and active listings dropped 37%. Another option for those seeking to purchase a home is to look outside of the more popular housing markets. This may mean much longer commute times, but could save anywhere between $50-$100K.
The Washington housing market faces challenges as the shortage in supply is driving up home prices to worrisome levels. But industry experts anticipate a long, steady increase in pending sales projecting favorably into 2017. Factors for this optimism include the stability in long-term interest rates, strong job growth, and housing demand.
Influencing Factors for the 2016 Washington Housing Market
- The Washington real estate market has seen a 9.3% increase in home values in the past year. Home values average $287,700 in the state. Forecasts have home values increasing another 4.3% in the next year. The average sale price for homes, however, is $295,000 in the state, proving that Washington is a sellers market.
- Homes spend an average of 82 days on the market.
- Foreclosures in the state (2.8 per 1,000) are on par with national averages (2.7). This is a moderate number and shows a relatively healthy mortgage environment throughout the state.
- Rental prices in the state are averaging $1,603, which is about $200 more than the national average.
- Inventory levels are well below the preferred norm throughout the state for both sales and rentals.
- Washington’s economy continues to be strong. The state ranks in the top ten nationwide in job growth, with a 3% increase in the past year.
Best Places to Live in Washington
Seattle real estate has long been a coveted market for Washington residents and out-of-towners. As stated earlier it is also on the high-end home value in the state. It is not only the largest city in the Washington but also in the Pacific Northwest region of the country. In 2013 it was the fastest growing city in the United States and it is consistently in the top five. What makes Seattle so popular? For one the economy is strong. Since the 1980’s the city has been a major technology center with companies like Microsoft and Amazon being founded here. Seattle has also been a leader in popular culture. The musical history of Seattle is extensive, from jazz and alternative music to the birthplace of Jimi Hendrix. The Emerald City has been a regional hug for the performing art for decades. As such another major factor to Seattle’s great economical success is its large tourism industry. Seattle hosts a number of fairs and festivals each year that celebrate everything from films to various ethnic-centric gatherings. Seattle’s draw has boosted home values and made availability an issue. Taking a look at one-bedroom apartments listed on Craigslist Seattle the average price for a downtown location is around $2,000. But even with high prices Seattle’s housing market continues to flourish.
One area of interest for people looking to stay close to Seattle without the high price tag is Kitsap County. A short ferry ride away, Kitsap has become an option for those working in Seattle who want more affordable housing. Pending sales in the county have increased 9% from a year ago. Sale prices in the county are currently around $266K, but look for this number to increase rather quickly in the next year. Another popular market garnering attention in light of Seattle’s inflated housing cost is Port Ludlow with average sale prices also around $260K.
Vancouver real estate has seen a large increase in the past year in home values. The good news is that Vancouver remains a buyers market. Home sale price averages are $240,000, about $4,000 less than the average home value. This is incentive to buy as the rental prices in the market are close to the state average at $1,500. Vancouver’s location makes the city some of the state’s prime real estate. Located on the Washington-Oregon border Vancouver is directly north of Portland, Oregon, one of the nation’s hottest markets. Vancouver’s residents have a great advantage in commerce. They can shop in Portland where there is no sales tax, but live and work in Vancouver, as Washington has no state income tax. For this reason the city is a popular destination for retirees. Vancouver has made efforts to become more of an attraction to visitors. The art and culture scene has been given a major facelift in the past 15 years resulting in a formally designated “Arts District” formed in 2014.
If you’re looking to stretch your dollar the Spokane real estate market may be what you’re looking for. Home sales in the city average $158,000, and rentals are $1,026. These prices are fantastic considering all that Spokane has to offer. Spokane has great outdoor recreation in the Riverfront and Manito parks. The Northwest Museum of Art and Culture is a Smithsonian-affiliated institution. Spokane also houses Gonzaga University. Gonzaga brings in a steady influx of young and educated residents. Looking to capitalize on this demographic efforts have been made in the city to develop economic industries such as aerospace manufacturing, health sciences, clean technology, digital media, and information science and technology. If you’re willing to spend a little more, buyers looking for homes under $220,000 should look at Kennewick and Tacoma real estate.
Kennewick home value averages are $218,000 and rentals are $1,418. Located in the southeastern part of the state Kennewick City borders the Columbia River. Rich with history, including being a part of the Lewis and Clark Trail, Kennewick has seen a rebirth in its downtown attractions. Recent investments have brought a mix of business to the downtown area, such as art galleries, local breweries, and upscale dining.
Tacoma has similar housing costs to Kennewick with home values around $213,000 and rentals averaging $1,375. Tacoma is a port city on Washington’s Puget Sound, about 32 miles southwest of Seattle. For the past 20 years Tacoma has seen many major developments to its downtown metro areas in an effort to boost revitalization. A branch of the University of Washington was opened in the city; the first modern electric light rail service in the state is located here; Tacoma has the largest density of art/history museums in Washington; and the city’s waterfront districts have been completely resorted and the area is now a major draw for the city.