Is the Seattle-area housing market competitive and sustainable?

 

Although the real estate market usually slows down in winter, 2021 appears to be the exception.

The Seattle-area real estate market has remained competitive once again in the first two months of 2021, with homes in the area continuing to fly off the market.

The Seattle area housing market stays strong in January, but is it sustainable? Keep reading to learn more about how market trends are negatively impacting home affordability.

Lack of Inventory

The lack of housing supply is driving prices up at an unsustainable pace. If it wasn't for the historically low mortgage rates, homes would be unaffordable to most buyers.

In King County, for example, the total number of active listings this January was approximately 12% lower than it was in the same months of 2020.

Some brokers are feeling nervous about where the Seattle market is headed. Others believe that the availability of the COVID-19 vaccine will help the market go back to normal.

Affordable Housing

As prices increase, even the most affordable homes can stretch out of reach for some buyers.

In the Seattle area, the price of houses cheaper than $485,200 increased faster than more expensive homes. Those with prices higher than $726,600 rose at the slowest rate, about 12% compared to15% for the most affordable homes.

House for sale

Seattle's Competitive Market

With new buyers entering the market and not enough homes for sale to meet demand, home sales and prices are still going up. Although high prices are good news for sellers, it raises concerns about affordability.

With a shrinking housing inventory and high buyer demand, homes in Seattle Are continuing to sell at record speeds. Last November, a study from Lombardo Homes ranked Seattle as the most competitive real estate market across the U.S. The study indicated that 71% of homes sold in less than two weeks, with homes staying in the market for a median of 10 days.

What To Expect in 2021

Seattle will remain a seller's market with more demand for houses than a supply of ones for sale. However, things might get better for buyers towards the second half of 2021:

  • With the arrival of the COVID-19 vaccine, more homeowners are likely to feel more comfortable listing their homes. Owners who put on hold their selling plans last spring could get into the market, increase inventory, and lower home prices.
  • The pandemic also slowed down new housing developments last year. Moreover, there will likely be a surge of new construction projects in the summer months of 2021.
  • Settle's strong price appreciation will continue this year, but it will be at a slower rate than it was in last year.
  • The Federal Reserve is expected to support a low-interest-rate climate for most of 2021. Record low mortgage rates make up for the elevated home prices.

Buyer or Seller?

If you plan on buying a home soon, your best shot is to wait for the second half of the year to have more options and better prices. Are you a seller? Seattle's lack of housing inventory provides sellers with immense negotiating powers. So if you have been searching for "We Buy Houses Seattle" companies, now might be the time to sell before inventory starts increasing again.