Puget Sound region sees ‘extraordinary’ drop in housing inventory
Amid the ongoing pandemic, the Puget Sound housing market has become a peculiar one to say the least, thanks in large part to plummeting inventory. Windermere Chief Economist Matthew Gardner stopped by Seattle’s Morning News on KIRO Radio to weigh in on what’s driven this trend.
Housing prices across King, Snohomish, and Pierce County have skyrocketed over the last month, with double-digit year-over-year increases in median home prices in all three areas. This comes amid an historically low inventory for prospective home buyers.
“We have to go back to good old Economics 101,” Gardner said. “When you have net new demand and you limit supply, what happens to prices? They rise, and that’s very much the case.”
According to the Northwest Multiple Listing Service (NWMLS), all three major counties had under a month’s worth of inventory in September, a year-over-year decrease of 43%. Looking at historical data dating back to 1999, Gardner couldn’t find a single month with inventory supply that low.
“It is quite extraordinary,” he noted. “Yet at the same time, buyers are clearly out in force.”
Despite the economic recession brought on by the COVID crisis, demand has been buoyed by “remarkably, historically low mortgage rates,” and a surge in high-income buyers.
“In most areas, we are virtually sold out in the more affordable, mid-price and upper end segments of the market,” John L. Scott Real Estate CEO J. Lennox Scott told the NWMLS in a recent news release. “We’re also seeing a record-setting number of luxury properties going under contract across King, Pierce, and Kitsap counties.”
Elsewhere, the downstream effects of the recession have largely been felt by lower income renters, rather than homeowners.
“Middle and upper middle classes are doing just fine,” Gardner described. “The wealthy are doing really well, and lower income households are absolutely not. They are hurting more than anyone else.”
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