The Seattle real estate market has avoided some of the large losses in housing valuation because of a few factors. One is the strong job growth in the area that fueled an influx of new residents, eager for housing. The other is the geography of the region, which has limited the growth and overdevelopment that has plagued other regions.
Seattle is now the nation’s 15th largest metropolitan area and its location, with over 90 miles of waterfront within the city borders, limits growth. This has been one factor saving Seattle from the building boom that created high numbers of foreclosed homes in other areas, as there is just no more room to grow inside the city limits.
Even so, the housing market in Seattle has been in a slump since 2007. The inventory of homes for sale has increased, and real estate agents struggle to get financing for buyers and sellers. The number of foreclosures in the metro Seattle area is lower than the national average, but foreclosed homes continue to clog the pipeline, add housing inventory and slow sales. The outlying suburbs still have a larger number of foreclosures and foreclosed homes.
The housing market in Seattle has depreciated only about 14%, compared to the national average of 21% but home sales were reduced by 40% from last year. The average time to sell a home is still over 100 days in Seattle. Home prices in Seattle are now close to theirs lows in 2004.
The median price of a home in Seattle is $299,000. Though prices were down 11% in January 2009, this ranks Washington 45th compared to the other 50 state’s home devaluations.
Each home sold generates over $60,000 of economic activity, according to the NAR. That is why this downturn and slump in the real estate market has a particularly strong hold on the economy of the United States. Seattle is no exception, with layoffs at local firms like Microsoft, Amazon and Boeing.
There are still employment opportunities in Seattle. Washington State added over six million residents between July 1, 2007 and July 1, 2008. The Seattle metro area added almost 50 thousand people in this time period, growing the region to 2.23 million, many of whom are looking to purchase homes from local real estate agents.
In stable neighborhoods like Queen Anne, homes turnover, on average, every 17 years. In other close-in neighborhoods, such as Ballard, Capital Hill, and Wallingford, the average turnover is less, but the amount of buildable land remains minimal. However, recent zoning laws have raised height requirements in many neighborhoods, which fueled condo development in past years.
Once zoned for three to four stories, the desire to increase density in order to reduce urban sprawl convinced the city planners to raise the height limitations in these neighborhoods, sometimes to 20 stories. In Seattle neighborhoods where zoning laws have recently been changed, such as Ballard and Capital Hill, high-rise condo construction began and stalled. Huge ditches where cranes recently worked now lie empty in neighborhoods like South Lake Union and Belltown. Commercial foreclosures are increasing in 2009, as banks pull back on loans to developers and builders.
With the recent government support of first time home buyer incentives and tax credits, new home buyers are beginning to edge back into the market. Low interest rates lure buyers back to the real estate market.
The main resistance now is fear. Inexperienced first time home buyers are afraid of losing money on their investment, while wise investors are snapping up homes for sale at bargain prices. Most of the foreclosed homes are now already in the marketplace, and with no new defaults or foreclosures in residential real estate, the inventory of homes for sale should begin to be sold off.
With more consumer confidence, the housing market should turn around. Mortgage rates are at an all time low. Home sales climbed 5.1% for the month of February 2009 and this may be a good indicator of a return to a healthy real estate market.
Seattle Home Site 