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Millennials, home prices
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WA home prices continuing to rise, many moving away from urban areas

(Stephen Brashear/Getty Images for Redfin)

Staggering annual median home price changes has become a regular sight locally, with 10-20% rises year to year. Why is this happening? Matthew Gardner, Windermere Chief Economist, joined Seattle’s Morning News to discuss.

“Because there’s no supply. This really is a kind of classic Econ 101. If you limit supply, but you still have a lot of demand, which we clearly have, then that’s going to push prices up,” Gardner explained. “And that’s what we’re seeing without a doubt in the Central Puget Sound. The second half of the year has been quite remarkable. We basically lost the spring market, as we all know, because of COVID. It bounced back remarkably quickly.”

“There is a lot of demand, there is very little supply, and that’s pushing prices to really kind of quite remarkable levels,” he added.

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The rising prices may also be a reflection of the widening wealth gap that we’ve seen during the pandemic, since people who can afford to buy homes in the first place have jobs that have allowed them to continue to work, so they can continue to afford such homes.

“For a majority of homeowners, they continued to work, albeit from home. I think this has been a bigger issue for the rental market than for the ownership market, because a lot of the renters are the ones that lost their jobs,” Gardner said. “There’s kind of a dichotomy, quite frankly, between the rental market and the ownership market — the rental market’s been hit far harder.”

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As we look closer at the housing numbers, it appears as though the bigger winners again are not necessarily the urban cities, it’s more so the outskirts where the trend continues.

“It’s something that’s actually been that way for some time and is purely a function of affordability. If you look at the median price, let’s say in King County, for single family and multifamily units we’re knocking on $700,685 last month. So that is over $130,000/140,000 more than Snohomish County, over $200,000 more than Pierce County. So as prices go up in the central area, then we’re certainly seeing that move away, and part of that actually is because of work from home,” he said.

“I think that there’s a lot of people out looking now who currently live in King County,” he continued. “They’ve been told that maybe they don’t have to come into their offices a couple of days a week. We are already seeing them think, ‘OK, if that’s the case, then maybe I’ll move to Snohomish County, or down to Pierce County. I could get a lot more home for my money. Yes, I’m going to have a lousy commute for a couple of days a week,’ but they’re willing to make that adjustment.”

Listen to Seattle’s Morning News weekday mornings from 5 – 9 a.m. on KIRO Radio, 97.3 FM. Subscribe to the podcast here.

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