I work in both the condo and single family markets here in Seattle and the answer to the question, “is the housing market cooling off or just taking a breather?”, is the talk of the town right now. But the answer is different depending on whether we are talking houses or condos so I wanted to weigh in on all the chatter about it.
According to a recent article in the Seattle Times, “The average price of single-family homes in King, Snohomish, and Pierce counties slipped 0.1% in July from June. July was the fourth consecutive month of slowing 12 –month price gains. Still, over the year, the Seattle metro index posted a 7.3% gain.”
This might make one wonder if the market is cooling down and initially I personally was drawn to the fact that the velocity of the market appreciation has slowed down toward the end of the summer and likely will show the same numbers as we move through fall. But when I think about the further information where we (Seattle Metro) are still above the average of the 20-City Case Schiller report, I am comforted and also not surprised, because it’s been largely discussed that our growth in value seems to be driven by job growth and economic recovery along with the shortage of housing inventory.
I further think the reason for the slowing in the value increases that are quoted from June and July, are also likely due to buyers themselves losing steam in Seattle’s hyper multiple offer environment and many buyers have decided to “take a breather” and let things cool off. So I don’t think the market slowing is a wide spread economic warning or local market indicator of a general slowdown. With job growth still occurring in Seattle, and overall economic recovery still in progress, including the fed obviously feeling confident enough to indicate that they may raise rates by year end, my feeling is that our buyers and sellers are still trying to find the new normal and adjust their expectations of the house or condo they can afford.
Lastly, this article does not chat about condos specifically. That market tends to perform differently than the single-family housing market and historically has lagged behind the single-family market by about a year or so. Therefore my predication, based on this Case Schiller info discussed in this article, is that condos still have some steam left in them and some upward pricing pressure as buyers still try to live closer to the main employment centers that are hiring and seek lower maintenance in-city active lifestyles.
So while things may slow a bit from time to time this year, I feel that, overall, Seattle houses and condos are going to likely increase in value over time. Even if a rise in rates happens this year. Buyers waiting for “things to cool off” may still find themselves paying more for the same house down the road even if the overall environment is less competitive at that particular moment.
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.