Last week, I wrote about home prices falling in Seattle at an abnormal time due to some noticeable shifts in supply and demand. To quickly summarize, the median sale price of single family homes fell from May to June in Seattle for the first time since 2013. Even more abnormal was that prices also fell in King County, which hasn’t happened in at least 15 years.
As for the supply and demand part of the equation, a recent uptick in homes hitting the market, the most in Seattle since 2010, coupled with a drop in demand (pending sales and closed sales dropped year over year) helped ease the burden on home buyers.
It’s not abnormal for median selling prices to drop during parts of the year, in fact it tends to happen cyclically each year. Nonetheless, it was strange to see a drop from May to June.
Maybe enough buyers are finally getting priced out of the market? After all, there’s only so many people who can afford how expensive a typical Seattle home has gotten. Maybe the rising interest rates are starting to have an affect on just how much people can afford?
All that being said, and even with an abnormal May to June drop, home prices in June were still up 7% compared to last June, which comes back to the question: will home prices keep rising in Seattle?
Although there have been some shifts in demand, we still have two primary factors working in the favor of future price gains: a thriving job market and low levels of single family development that hasn’t kept pace with population growth since the financial crisis hit in 2008.
I don’t have a crystal ball, but I do have some historic data we can look at. One thing that keeps coming to mind is how the market behaved prior to the real estate bubble and crash during the Great Recession. I’ve previously compiled data for King County year to date average sale prices going back to 1989… just take a look at the chart to see how steady the gains used to be.
From 1989 to 2003, the year to date average sale prices in King County rose an average of 7.001%.
Hmm… haven’t we seen a 7% rise in prices before? Exactly how much the median sale price rose year over year this June in Seattle.
*information and statistics compiled from Northwest MLS