DAVE ROSS

Economist: ‘Don’t give up hope’ on Seattle housing market

Aug 11, 2021, 5:10 AM | Updated: 8:54 am
seattle housing, rental, home buyers...
(File, Associated Press)
(File, Associated Press)

While it may not seem like it to prospective home buyers at the moment in the Puget Sound area, there is a slight “cool down” in the housing market. But part of that, Windermere Chief Economist Matthew Gardner explains, is typical for the summer.

‘Some relief’ for Puget Sound home buyers despite rising prices

“Generally speaking, you tend to see inventory levels rise in the summer and that’s certainly what we saw,” Gardner said about July. “People are talking about a cooling. … I like to look at months of inventory, as in how long it would take to sell every home in the market based upon the number of pending sales that occurred the previous month. So you look at that and we’re down at 0.6. So basically just over two weeks in King County, about the same in Pierce and Snohomish.”

“That number by right should be somewhere around four months. Not two weeks,” he noted.

Without a doubt, Gardner says, it is still a sellers market, “but with a slight reprieve” that he says will change in the fall.

“So my view towards people looking to buy right now is we have seen a bump in inventory — bit more choice out there. It is still remarkably competitive, but it is a bit better, or was a bit better last month than it was the month before,” he said.

He did admit, however, that it can be tough for people who want to buy to get their foot in the door and have to become what he calls “forced renters.”

“I think a lot of people out there do want to buy because they believe, as I do, mortgage rates are going to rise. Not precipitously, but they are going to go up,” Gardner said. “And people want to take advantage of the lowest rate possible. So without a doubt, more buyers out there than there are sellers, even though we saw more homes on the market for sale.”

There are also a lot of apartments being built as well in King, Pierce, and Snohomish counties.

“A lot of that is a function that they take so long to permit and build, there is almost a residue of activity going on before the pandemic started,” he said. “But it is good to see more for sale product coming out, that’s going to be important. But there’s still a lot of headwinds for builders, not least of which are housing price, material prices. And although we’ve seen significant softening in lumber prices, it is very, very expensive to build. It’s got to be at a price that people can afford.”

“That’s actually what’s holding back a lot of the new construction inventory from coming online,” he continued. “And if there’s not enough new product out there, we’re still creating households, well what does that do? That puts upward price pressure on the existing housing stock, which is what’s causing the rapid run up in prices we’re still experiencing.”

Thankfully, Gardner says housing prices can only go so high.

“There must always be a relationship between home prices and incomes. That is just a fact of life,” he said. “Now, you can change that if mortgage rates are dropping. For every one percentage point decrease in mortgage rates, a buyer can afford, technically, 10% more house. We’re not seeing the rates drop down that precipitously now, so you take that off the table.”

“We are getting certainly very close to that affordability ceiling, and what’s going to happen — and we are already starting to see it — is a bit of softening in list prices,” he added. “And that’s what I find particularly interesting. In King County, for example, year over year, the average list price is actually down by 2%, … I think we’re getting close to it, certainly in King County. We’re not seeing that, however, in Snohomish and Pierce.”

Why is that? Gardner says because of the ability to work from home and move further out.

“Perhaps they’re looking around saying, ‘well, I can sell my central Seattle house for probably millions. And I can go into South Snohomish County, I can go down to Pierce County, get a lot more house for the money.’ Because the perception is still, down there, that housing is cheap, and it is in comparison to here, to King County,” Garnder noted.

Those people may end up having a long commute a couple days each week, but they get more house.

“So that means that people are looking further out where in their perception it’s cheaper,” he said. “We’ve also got those Californians still coming up here as well, and they just think all our housing is cheap.”

Economist: To restart economy in Seattle area, ‘safety and security is paramount’

As far as Gardner’s advice for potential home buyers: “Don’t give up hope.”

“You will find a house. I know it is still remarkably competitive, and it’s as competitive now as I’ve probably ever seen it. Although it is, as we talked about, a tad better now than it was a couple of months ago,” he said.

“The last thing I would probably say is other than giving up hope, don’t overextend yourself. It’s very easy to get into this emotional attitude that ‘I’ve got to get it, I’ve got to get it,’ and start pushing your boundaries a bit too far,” he added. “Just be cautious about that. Keep on looking. Don’t quit, but also don’t overextend yourself.”

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

Dave Ross on KIRO Radio 97.3 FM
  • listen to dave rossTune in to KIRO Radio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave's Commentary

Dave Ross

Steve Bannon...
Dave Ross

Ross: The person who really needs to testify about Jan. 6 riot isn’t Steve Bannon

Steve Bannon may be the one summoned to testify in Congress about January 6, but there's someone else who has more to answer for.
7 hours ago
Freedom, vaccine mandate...
Dave Ross

Ross: Freedom requires level of unselfishness many in our country don’t have

Total freedom requires a level of unselfishness that doesn't come naturally for a lot of people, as we've seen firsthand with the state vaccine mandate.
1 day ago
car tabs, Orting...
Dave Ross

Ross: Did you vote for I-976 car tab cuts in 2019? Wish granted

While a vaccine mandate cost the ferry system 7% of its staff, let’s remember this is happening in a state that was ready to impose bigger cuts two years ago.
2 days ago
Vaccine...
Dave Ross

Ross: May we live long and prosper with our vaccine choices

Talk show host Dennis Praeger decided to put it all on the line to prove he’s right about vaccines.
3 days ago
Flu vaccine...
MyNorthwest Staff

A new ‘universal’ flu-COVID shot on the horizon, says local MD

Mercer Island’s Dr. Gordon Cohen discusses how future iterations of the COVID mRNA vaccine could also treat seasonal flu.
4 days ago
Crypto power plant...
Dave Ross

Ross: The troubling downside behind megawatts of crypto-power

Power plants feeding Bitcoin miners will create jobs, but they’ll do it by pumping CO2 into the air in service of creating more of the currency.
4 days ago

Sponsored Articles

...

Medicare open enrollment for 2022 starts Oct. 15 and SHIBA can help!

Washington State Office of the Insurance Commissioner SPONSORED — Medicare’s Open Enrollment Period, also called the Annual Election Period, is Oct. 15 to Dec. 7. During this time, people enrolled in Medicare can: Switch from Original Medicare to a Medicare Advantage plan and vice versa. Join, drop or switch a Part D prescription drug plan, […]
...

How to Have a Stress-Free Real Estate Experience

The real estate industry has adapted and sellers are taking full advantage of new real estate models. One of which is Every Door Real Estate.
...
IQ Air

How Poor Air Quality Is Affecting Our Future Athletes

You cannot control your child’s breathing environment 100% of the time, but you can make a huge impact.
...
Swedish Health Services

Special Coverage: National Prostate Cancer Awareness Month

There are a wide variety of treatment options available for men with prostate cancer. The most technologically advanced treatment option in the Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform.
...
Marysville Police Department

Police Opportunities in a Growing, Supportive Washington Community

Marysville PD is looking for both lateral and entry level officers. Begin or continue your career in law enforcement for a growing, supportive community.
...
Comcast

Small, Minority-Owned Businesses in King County and Pierce County Can Now Apply For $10,000 Relief Grants Through Comcast RISE

Businesses in King County and Pierce County can apply beginning on October 1, 2021, at www.ComcastRISE.com for a chance to receive a $10,000 relief grant.
Economist: ‘Don’t give up hope’ on Seattle housing market