After 21 consecutive months, Seattle’s reign of being the nation’s hottest housing market has come to an end. The newest Case-Shiller home price index, released August 28th, revealed Las Vegas outpaced Seattle by a fraction of a percentage point in June.
So, what does this mean for the Emerald City?
Recent articles from Seattle Times and GeekWire explain that while the market has slowed, it isn’t headed towards a crash. Seattle was the second hottest housing market with a 12.8% increase in June, just behind Las Vegas which saw a spike of 13%. Since the housing crash many people have become skeptics and believe that a similar economic disaster awaits, but it is important to remember that the local economy is strong, driven by tech corporations that have no plans to leave the metropolitan.
We’ve seen an accelerated rate of growth for nearly two years for a number of reasons. A large contributor was Amazon choosing to expand and build it's new headquarters, which led applicants from around the world seeking to make Seattle their home. The increased number of residents was further propelled by overseas buyers making property investments here. Canada introduced a new, 25% tax on international buyers who were interested in purchasing in places like Vancouver, B.C. instead chose to look at properties within the Seattle metropolitan.
Growth in the Seattle area was two times more than the national growth average, and price growth has slowed for very practical reasons.
Chinese buyers have become much more hesitant to purchase here because the value of the yuan has dropped, making homes here costlier than before. CNBC explains that home prices in the greater Seattle area have increased by 45% in the last two years and if you account for exchanging currency, Chinese buyers are purchasing homes for prices 54% higher than they could in August of 2016. The lessened number of buyers from overseas alone has made the market less competitive.
Another reason for a cooldown? Now that Amazon has settled into it’s new digs in South Lake Union, they have finished the bulk of their hiring. Their employees have found homes and there is no longer a rush of tech workers needing a place to live.
I could continue explaining that a slow in home-price growth is normal, but it is more valuable to instead say this: Everything is going to be okay. Whether you own a home, are shopping for a home, or are a satisfied renter, Seattle has proven to have a healthy economy and the current slowdown is normal.
As always, I am happy to provide professional insight if you have questions regarding real estate.
You can read more about the current market on Seattle Times and GeekWire, or explore CNBC’s insight on overseas buyers here.