As news that Seattle had topped the S&P CoreLogic Case-Shiller Home Price Index for a staggering 18 consecutive months hit earlier this week, Seattle Times explored a question on many minds: why are Seattle-area home prices so high? The question represented the first in a forthcoming series by reporter Mike Rosenberg, who shares his thoughts after years of experience reporting on the Emerald City’s red-hot market.
Rosenberg breaks the question down into two key fundamentals:
- Lack of inventory
As the article outlines, “the number of homes on the market is at a low point for records that date back to 2000, despite the big increase in population over that span.” And though it’s easy to think that homeowners would want to take advantage of the hot market, many worry about having to “turn around and buy in the same crazy market.”
- Demand is through the roof
In addition to anemic supply, demand for homes in the Puget Sound region is rising, with 26% population growth in King County since 2000 and a job growth rate of nearly 30%. Competition is much fiercer, and it’s “been driven by tech: The average person with a local computer or math job now makes $113,610, a 22 percent jump for 2000, adjusted for inflation.”
The article outlines that given these two key factors, “people are forced to fight over the few homes available, creating bidding wars that drive prices higher.” After losing out on a few offers, buyers “get increasingly desperate, bidding up the price for the next home they see,” which “creates a vicious cycle of desperation and bidding” that drives prices ever-higher. Other factors impacting the housing market in Seattle are high rents, foreign investment, and so few single-family opportunities being built in the downtown core, among others.
According to the latest S&P CoreLogic Case-Shiller Home Price Index, “single-family home costs across the metro area grew 12.7 percent in February from a year earlier,” with an 85-percent increase in value since the market bottomed out in February of 2012. This means our recent local real estate boom “has completely wiped out the effects of the recession on the housing market, when prices sank.”
Strong demand for homeownership drove NEXUS to recently announce they’d be closing their Sales Center at 2609 First Avenue in Seattle and ceasing presale opportunities at the end of June 2018, as just 31 homes remain for sale in the 391-unit, 41-story next-generation high-rise condominium under construction in downtown Seattle. Prospective buyers are encouraged to register online for priority sales information at NEXUSseattle.com or contact Michael Cannon at 206.258.1088.