This article was originally published on WSJ Marketwatch:
Home buyers in Seattle might be able to breathe a bit easier. The Seattle real estate market is still red hot, but the rate at which its inventory is shrinking has been slowing.
Available inventory in the Seattle real estate market has been under two months for over two years. That’s not a healthy market, and it has pushed double-digit price increases across the region. A balanced market would have 4-6 months of available homes. Sellers are concerned that after they sell, they’ll have trouble finding their next home in this competitive market. It becomes a self-reinforcing cycle. The summer slowdown we’re seeing right now may finally be reversing that trend a bit.
That’s the feeling on the streets from many real estate brokers. From the MLS board to the Realtor association and brokers’ offices, the general murmur is that while the market is still very hot, we can feel a bit of a slowdown in the air. Some buyers are giving up. Some aren’t willing to waive all of their contingencies any longer. Cash buyers still win, and big offers still prevail, but buyers are negotiating a bit harder and sellers are playing along.
King County, at the heart of the Puget Sound real estate market, could use that relief. The median Seattle home price rose 15% over the past 12 months. At $505,000, that pricing is out of reach of many middle-income residents. Still, the influx of technology jobs and the lack of new construction create a demand for homes in the upper pricing tiers of the market.
ondos are scarce. King County has 0.9 months of available condo inventory for sale. Seattle condos are like a black hole. The inventory just keeps imploding upon itself.
With this kind of price appreciation comes bubble talk. The price increases are dramatic. There will be a slowdown at some point, but our situation is vastly different than it was before the 2007 peak. There are 10,000 new technology workers coming to the Seattle metro this year from just four companies. They’re making good money. The mortgage system now verifies income, employment, assets and ability to pay.
In short, the last bubble was built on false credit. Home buyers today have cash, large down payments and good jobs. Seattle’s population shift is a major factor in a long-term reshaping of the city’s real estate market.
A bit of a slowdown would be welcome in the Seattle real estate market. Just don’t expect prices to go down any time soon. The fundamentals for today’s buying frenzy are solid. Seattle has become a more valuable place to live.