Seattle housing cools as recession fears continue to linger

Dec 5, 2022, 1:40 PM


Aerial view of Laurelhurst. An upper class residential neighborhood in Seattle, Washington. Lake Washington sits on the left and Union Bay on the right. . (Photo by: Education Images/Universal Images Group via Getty Images)

(Photo by: Education Images/Universal Images Group via Getty Images)

Seattle had one of the fastest-growing housing markets in the country when tech giants like Amazon and Microsoft were hiring in droves. But with the current layoff environment, the housing market has been cooling.

According to a report from Redfin, housing sales are down 42.2% from last year, as prices rise by 7.6%. A similar study from RE/MAX shows that Seattle’s active housing inventory in October was up 130% year-over-year, the largest increase recorded so far in 2022.

Mass tech layoff could spell disaster for Seattle

The current median home sale price is $675,000, down from April’s high of $757,750.

As the market continues to cool, Matthew Gardner, Chief Economist for Windermere Real Estate, went on the Gee and Ursula Show to discuss why he thinks the downturn won’t last.

“I’m going to argue the fact that we’re not going to see a massive downward correction in home prices because so many of us refinanced our home through COVID,” Gardner said.

“By my calculations, there are probably 25 million homeowner households with mortgages rates at 3% or lower,” he continued. “Do you want to lose that mortgage rate? A lot of people will not move because of that, I think.”

Gardner said that means supply will be limited, but demand will still be out there.

“That can actually cause price stability, or actually allow prices to continue to rise again, I think we’ll start seeing that probably in the latter part of next year,” Gardner predicted.

There is likely to be a continued recession, though, as record-high inflation continues to plague the country. In Seattle, the Consumer Price Index showed that food prices were nearly 12% higher compared to last year.

“The trouble is, every time the [Federal Reserve] has done that, to slow down the economy, we have a recession. So soft landings, they are remarkably bad at, because they start raising interest rates too late, and they carry on too long.

“So, is there going to be a recession? That means we can lose jobs across the country. My last forecast is probably about 1.5 million jobs will be shed in America.”

Gardner thinks the reason so many companies are reducing staff is because of a lack of clarity on the direction they will be heading in the immediate future. This is partly due to the change from fully remote work that started at the beginning of 2020 with the pandemic, but now employers are trying to get staff back in the office.

Gardner does believe that the overall impact of layoffs will be limited, pointing out that due to the pandemic, there were more low-interest rates on loans from the government, causing the industry to overstep.

The new adjustment puts the job market closer to where it was in 2020 at the start of the pandemic. That’s not to discount the indirect jobs that were created through the tech growth, which are likely to see a decline as well.

“Now, you might say, ‘that’s gonna be terrible.’ We are so tech-centric here in Seattle. But if you think about the pandemic, in one month, the information sector is where most of those jobs are housed.

“They lost 800 jobs, but they got them all back the following month and added more than 20,000 since then. So we’re seeing some cutting of the fat. However, given the increase we’ve seen, if we were to lose a fifth [of the ] 10-15,000 jobs, that’s going to take us back to where it was given a half ago.”

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