Greater Seattle, the Pacific Northwest and countrywide sentiments on today’s housing market seem to be signaling a common theme: Prices aren’t necessarily decreasing, but a small uptick in inventory, paired with some fatigued buyers pausing their searches have resulted in homes sitting on the market a bit longer and a reduction in some of the crazy bidding wars seen earlier this year.
A recent Seattle Times story cited examples of these and interest in alternatives to detached single family homes, resulting in slight bounce back in sales of townhouses and condominium units—the latter of which saw a slump over the last year. We’re watching it all, and are optimistic about the opportunities to follow.
Median home prices are up about 22% in Southeast King County, 24% in North King County and 32% on the Eastside compared to last year, according to recent data released by the Northwest Multiple Listing Service. Surrounding counties also reported strong leaps, including Snohomish County (up 22%) and Pierce County (up 20%). The Seattle Times reported that for much of the coronavirus pandemic, telecommuting white-collar workers have driven bidding wars and price hikes in areas farther out from Seattle.
The Seattle Times article also shared that the housing market appears to be cooling nationwide, and we agree. It notes applications for new mortgages are down. So are online home searches and in-person tours, according to Redfin. Housing market forecasts predict modestly climbing home prices into 2022, but not the soaring trajectory we saw over the past 12 months. Zillow economists expect a “slightly more sedate pace of growth” in prices next year, but put this in perspective: “More sedate” than the huge growth we’ve just witnessed for homes means still-strong growth. Townhomes and condos become more attractive options when single-family detached homes are in short supply.
This brings up yet another opportunity: Owning rentals. Some analysts suggest local residents may better off renting versus buying a home. A March 2021 report from Realtor.com noted Seattle tops the list of cities that favor renters over buyers, for the near term, anyway. Its analysis found that a typical homeowner pays nearly $1,000 more per month than a typical renter.
Although monthly rents that cost less than a mortgage payment won’t sway some buyers who are absolutely intent on owning, the takeaway for prospective developers is to look at multifamily housing opportunities (whether developed or new builds) in a lower-inventory growth market such as Seattle. These are the deals we help our partners put together day in, day out.
If you’re seeking quality commercial real estate investments throughout the Pacific Northwest, we’re here to help. Juniper Capital provides private real estate financing, including hard money loans for commercial, construction, multifamily residential opportunities and more. If you would like more information on this topic, call us today.