‘Significant obstacles’ remain for homebuyers in the Puget Sound region

Sep 8, 2021, 11:56 AM
Puget Sound, Seattle single family zoning, homebuyers...
A row of homes in Seattle. (Joe Mabel, Wikimedia Commons)
(Joe Mabel, Wikimedia Commons)

Home prices in the Puget Sound region are still a difficult and frustrating topic for many, especially for those hoping to be first-time homebuyers.

“It is still tough. I think there’s a couple of things within the numbers in August which are worth while chatting about very briefly,” said Matthew Gardner, Windermere’s chief economist. “Obviously, listing activity is down. But you know what? It’s August, that really isn’t a surprise. Traditionally, we do see a pull-back then.”

“So it’s tight in terms of homes on the market and the number of them, however, pending sales rose in the central Puget Sound, which is certainly a sign that there is still significant interest from buyers out there, irrespective the fact that there is next to nothing to choose from,” he added.

While the bidding wars don’t seem to be quite as frenetic as it was in months past, it is still happening.

“The reason I can say that is that … I like to look at list prices because they’re kind of more of a leading indicator,” he said. “And what I found fascinating was that the median list price, let’s say in King County, was lower than the median sale price.”

“So when you’ve got sale prices above list prices it means that, obviously, homes are going for above the prices being asked, so that is applicable in King and Snohomish counties, not so much yet down in Pierce,” Gardner explained. “But the market is still very, very robust.”

There’s also pockets of additional inventory, and Gardner’s hopeful that will increase in the fall.

“Naturally, all dependent upon COVID,” he noted.

Home office space is now ‘very high on people’s list of requirements’

With so much information — on how long people stay in their house, construction prices, and other housing topics — what’s most important to pay attention to for those who want to be a homeowner?

“Let’s go through that list,” Gardner replied. “Yes, we are living in our homes in the Seattle area in general for twice as long as we did back no more than a decade or so ago. So we’re not moving for our jobs as frequently, or if we are taking a new job we’re staying put, we’re not seeing people downsize, we’re not retiring when we’re supposed to, we’re staying in the workforce longer.”

“So because of that, we’re not going to move,” he continued. “And if we’re not seeing that downsizing, it means that people are looking to move up, those second time homebuyers, they’re limited in terms of the choice of homes out there.”

If they can’t find somewhere, they don’t sell. If they don’t sell, then first-time homebuyers “are shot.”

“On the construction standpoint, although everyone’s been talking about lumber prices, which went parabolic several months ago, they have pulled back dramatically,” he said. “However, it’s not just lumber, it’s all the components to build a house, and also — believe it or not — appliances as well, there’s a shortage out there.”

“So new home builders are having a hard time, again, because of cost,” he added. “So if we’re creating households, we’re not building enough housing, what does that do? That puts upward price pressure on the existing housing stock and that’s exactly where we are today.”

The added challenge is that there’s no precedent for what we’re going through now, at least not that any large number of people have lived through.

“The last time we saw this — we didn’t — it was 1915 with the Spanish flu pandemic,” Gardner said. “So it’s been a long, long time. And so there really is no precedent. We were in a very different place than we are today.”

“However, if we look at the overall numbers, yes, a lot of us are still working, a majority of us are still working and that does very much apply, as I mentioned earlier, to those industries where you can work from home,” he noted. “But in a lot of respects, I think a lot of the larger companies in our area who are planning on people coming back to work after Labor Day, well, given the increase in people catching COVID, they’re now pushing that back, a lot of companies now until the start of January. So it just adds an increased amount of uncertainty.”

“And what markets do not like is uncertainty,” he added.

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

Gardner is confident we’ll get through this, but recognizes that we all just want to come out the end of it.

“We will, but unfortunately just not quite yet,” he said. “Has it got the capacity to drag us back into another recession? I just don’t see that happening. But there’s certain significant obstacles, without a doubt, that are out there still that we were hoping would be gone by now.”

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‘Significant obstacles’ remain for homebuyers in the Puget Sound region