Our Crystal Ball doesn't work.
Of course, there is no such thing.
Here at Added Equity, we know that nobody has a crystal ball. Predictions of the future are just that: predictions. Not guarantees. But the Seattle housing market? Hey, we’re in real estate – so yeah, sure, we have an opinion…
Real estate agents are frequently ridiculed for their propensity to prognosticate – inevitably in the direction of higher values. It’s fair to say that at least some of the criticism is justified.
At Houses.Direct we try and keep our predictions limited in scope and grounded in known facts. Here is our annual January post about the Seattle Housing Market and where we think its headed in the New Year:
(More???) Bad News for Buyers: Seattle Market Likely to Remain Hot Into 2017
With the first few weeks of the year behind us, we’ve got enough to go out on the proverbial limb. So here we go. We think the 2017 Seattle housing market is going to be…
Hot. Again. Really, the market has been cooking for years running now. The housing recovery seems as robust as the recession that began in 2008 and ended in 2012 or so. Which really isn’t that surprising, a big market drop is often followed by a big market bounce. The positive trend will continue into 2017 with further significant appreciation in values – although buyers may finally get relief in 2018. Here’s why.
As always, the analysis begins with mortgage rates. As rates go up, buyers can afford less house (because more of their mortgage payment goes towards interest). So rising rates are a natural headwind for the housing market. People – even “experts” – have been clamoring for years that interest rates will soon rise. But for a long time they simply didn’t. That began to change in 2016, with mortgage rates ending the year at their highest since 2014.
While up, though, they still are quite a ways below their historic norm of 6% or so. At today’s 4.175%, buyers retain a lot of buying power.
Most experts believe rates will continue to rise this year – although not by much. Expect 2017 to be the last year of historically “cheap money” for home buyers, with rates still low enough that they continue to fuel the market.
The economy and employment is the other side of the same coin. Not much change there either, with the national economy looking pretty strong in 2017, and labor markets beginning to respond accordingly. It’s now a “mature recovery.”
Real estate is of course local, so any forecast must take account of local conditions. Seattle? Ah, the vibe isn’t really “mature” at all. With dozens of cranes dotting the skyline, and new skyscrapers appearing weekly, the town feels like there’s another Gold Rush underway.
Which is actually pretty close to reality – a Virtual Gold Rush, at least. Amazon continues its march towards being the first company valued at $1T, and it’s leading the charge in filling the newest coolest neighborhood in the country, South Lake Union. If the future of the internet is in “the cloud,” surely our latest nickname speaks volumes: Cloud City.
And finally, housing inventory remains at historically low levels. But “housing” will soon be abundantly available, with 10,000 rental units coming online in 2017. Presumably that will help slake the thirst for a home in Seattle, while also creating a large pool of future buyers. Because honestly, once someone moves here, they usually stick around.
So there you have it, our 2017 Seattle Housing Market Forecast. Look for continued significant price appreciation, although at a rate slower than years past. And 2018 now looks like the year when values might level off and finally cool down from the heated housing recovery of the past five years.