The market’s chilled out, but Seattle home prices still too hot for many first-time buyers

Seattle lost the title of the nation’s hottest housing market in August 2018 — but looking at home prices, which have stayed sky-high, that might be hard for shoppers to believe.

New monthly data shows the median price of a single-family home in Seattle — $760,000 — is exactly the same as it was one year ago. The same holds true for Bellevue, where a typical home ran $935,000 in August.

And while King County as a whole charted an infinitesimal bump in year-over-year home prices, it was so small that you might miss it if you blink: The price of a median home in the county was $670,000, compared with $669,000 twelve months ago, according to the monthly report from the Northwest Multiple Listing Service, released Monday.

In the past four months, prices have dropped from a peak of $700,000 in May. This kind of almost predictable seasonal movement isn’t what home shoppers were used to seeing during the frantic years of bidding wars and weeklong listings. Between 2015 and 2018, home prices at the end of the summer buying rush were as much as $100,000 higher than they’d been the same time the year before.

No longer: The new watchword of the Seattle housing market, in terms of both sales and prices, is a return to stability, brokers say.

It’s a big change from 18 months ago, said Anna Morgan, a Bellevue John L. Scott broker who started with the firm in January 2018, the height of the feeding frenzy.

“Last spring, where houses were selling in a weekend with multiple offers, it was like drinking from a fire hydrant,” she said. “It was fantastic, but it wasn’t sustainable.”

Now, home inventory in Seattle is up 20% even over 2014 levels, spelling more choice for buyers entering the market. And an increase in pending sales is having ripple effects into the construction industry, said Matt Motzkin, the owner of House Doctors of Eastside Seattle. Last year, most of his work came from remodels. This year, he said, “we’re seeing folks putting in a lot more effort to sprucing up their house for sales.”

“Before, even if the house was a piece of crap, folks were fighting over it,” he said.

Condo market

As the market for King County’s single-family homes stabilizes, condo sales continue to slow. In Seattle, median condo prices are down by 11% over last year, to $450,000.

The Eastside also saw a slight contraction in the condo market. Prices there fell by 3.1% over last year, to $479,500. Together, Seattle and the Eastside account for almost all of the county’s condo market.

North of Seattle, too, housing markets are starting to slow down. Snohomish County, which was charting 8% year-over-year price increases this time last year, saw single-family home prices fall 0.45% compared with last August, to $490,000.

And pending sales are up almost 20% over last year, indicating that buyers who have been waiting for the market to cool are finally taking advantage of more tempered prices, said Steve Colony, a broker at Keller Williams in Marysville.

“Anything above $450,000 was drastically overpriced,” he said. “Now prices are starting to come down and people who have wanted to buy houses for the past years are making offers and starting to put their own houses on the market.”

But the market in Pierce County remains tight: Prices are up, by 6.25% over last year, and there are almost 600 fewer active listings for buyers to choose from than there were last year, a drop of over 20%.

The shock wave of frustrated buyers looking to escape high home prices in Seattle, though, has rolled well beyond the counties immediately to the north and south, to Kitsap and Thurston counties, where home-buying activity is frenetic.

In both those counties, home prices actually kicked upward going into the fall. That’s unusual, because prices generally peak in the summer. Kitsap County, where home prices have risen almost every month for the past two years, clocked its biggest year-over-year bump in 14 months, to $396,263. (This time five years ago, a typical home in the county — which includes Bremerton, Poulsbo and Bainbridge Island — cost $245,000.)

In Thurston County, active listings in August were down by close to one-third over last year. At the current rate of sales, it would take only four weeks for buyers to snap up all the homes on the market around Olympia.

Brokers advised prospective buyers that more homes would likely come on the market as the season progresses.

“With kids back in school and summer vacations over, homeowners who wish to sell their house before the winter season will look to put their home on the market soon,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, in a release. September and October, he said, are “historically the best for selection and availability out of the next six months.”

But that may be beside the point for first-time buyers if prices are still too high for them to buy at all, despite low interest rates.

Some of his first-time clients are using federal lending programs with lower down payments, and others are getting help from family, said Dean Rebhuhn, the owner of Village Homes and Properties in Woodinville, where a typical home is priced at $685,000.

But the way most of them overcome the challenge of assembling a down payment, he said, is to just keeping driving, to places like Marysville.

“Drive to affordability,” he said. “It’s been going on for 50 years. No reason to stop now.”

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