Strong real estate investor demand and lower property prices are in the 2020 Seattle housing market forecast. As it remains one of the strongest markets in the nation, it makes sense for investors to be wondering about housing market projections for Seattle real estate. Let’s get into it.
Seattle Housing Market Predictions 2020
With double-digit increases in home values over recent years, a lot of people were left wondering when will the Seattle housing market slow down. It wasn’t just Seattle, but properties in cities all across the Washington real estate market were appreciating at fast rates. But according to the latest housing market statistics, it seems the time for a cooldown has come. Here’s more on that and a couple of other predictions in our Seattle housing market forecast.
1) Seattle Home Prices Will Drop
Expect lower prices when buying an investment property in Seattle. Redfin reports that the average selling price of Seattle houses for sale is $675,000; meaning Seattle house prices are down 0.44 percent from last year. According to Zillow, it’s going to be more affordable to invest in Seattle real estate next year than it’s been in years. The median home value has gone down 3.9 percent over the last 12 months. Currently, it’s a little bit over $700,000. The Seattle real estate market is expected to continue this cooldown trend by dropping another 2.9 percent in value in the coming 12 month period. With prices dropping at a stable rate, there should be no worry of a Seattle housing market bubble.
Small depreciation isn’t anything to be worried about. Seattle real estate investors should have some more space for negotiation with soft housing market trends on the horizon and lower investment property mortgage rates. A buyer’s market gives you better chances of finding Seattle investment properties for sale.
Want to start your search now? Check out this guide: How to Find Investment Properties for Sale Near Me
2) There Won’t Be Much Home Construction
The Seattle real estate market forecast includes construction- just not for residential housing. While Seattle did make it back in the top ten in the Urban Land Institute and the PwC: Emerging Trends in Real Estate 2020 report, the Seattle housing market isn’t looking too strong on the growth prospect as home construction is down. In the outlook for house building, it scored 31 out of the 80 real estate markets studied in the report. But other real estate prospects, like the expansion in office space (8.8 million square feet already under construction) keep the general state of the Seattle real estate market strong.
3) There Will Be Other Factors Supporting the Seattle Housing Market
So is Seattle a good place to invest in real estate? According to the above-mentioned report, Seattle real estate remains in expansionary mode, following a national trend of the longest economic expansion in US history. Clearly, the latest Seattle housing market trends show signs of a healthy correction. Will the housing market crash in 2020? The majority of experts don’t think so. With property prices leveling off, the housing market in Seattle is projected to hold up quite well.
There are a lot of positive factors forecasting a strong Seattle real estate market in 2020, such as:
- Strong investor demand
- Development and redevelopment opportunities
- Job density
- Projected net migration
- Overall strong economy
4) Rental Properties Will Be Sustainable Investments
There are some positive prospects, but is it a good time to buy a house in Seattle for investment? You won’t be able to answer that question unless you look at the return on investment (ROI) of rental property investments in the Seattle housing market 2020. Mashvisor’s investment property calculator analyzed rental property performance across the Seattle housing market– here is the key data:
- Median Property Price: $712,501
- Price per Square Foot: $537
- Average Days on Market: 67
- Monthly Traditional Rental Income: $2,337
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $2,902
- Airbnb Cash on Cash Return: 1.5%
- Airbnb Occupancy Rate: 61%
Based on these figures alone, you might not think the Seattle housing market forecast is too positive. A Seattle property investment in the right part of the market, however, will prove to be quite profitable in 2020.
5) Seattle Airbnb Laws Add Some Restriction
The Seattle housing market forecast 2020 includes the same Airbnb regulations which took effect this year. While these regulations were passed in 2017, they weren’t implemented until 2019. The basic premise of the regulations set on Airbnb Seattle is that property owners now face limits on how many units they can rent out and they are required to get an extra license to operate their real estate business.
Is Airbnb a good investment in Seattle despite these restrictions? It’s important to cover the legal aspect of rental property in the Seattle housing market forecast as Airbnb laws can really restrict the ease of operation, the level of rental income generated, or your Airbnb occupancy rate, ultimately affecting overall rental property profitability. While there are Airbnb laws in the Seattle housing market, they aren’t as restrictive as other markets (like Las Vegas Airbnb laws where non-owner occupied rentals are banned).
Planning on purchasing an Airbnb investment property? You can rent out your home (primary residence) plus one additional unit. Current short-term rental operators in Seattle have until Dec 15, 2019 to obtain their short-term rental operator’s license. Rental Registration Inspection Ordinance (RRIO) registration is also required for all rental properties that are not the primary residence.
6) Certain Seattle Neighborhoods Will Be Stronger Than Others
The Seattle housing market has got over 100 constituent neighborhoods. Of course, different parts of the market will project a different rate of return for rental property investments. Some will have good cash on cash return, others will have high Airbnb occupancy rate, some might have both or neither. You won’t know unless you conduct a real estate market analysis. To help you out, using our investment property calculator again, we’ve pulled some data on the neighborhoods expected to perform best in the Seattle housing market 2020. Here are the best neighborhoods for Airbnb vs long-term rental performance:
South Park (for Airbnb Rental Property)
- Median Property Price: $363,661
- Price per Square Foot: $281
- Average Days on Market: 74
- Monthly Airbnb Rental Income: $5,847
- Airbnb Cash on Cash Return: 12.8%
- Airbnb Occupancy Rate: 69%
Highland Park (for Traditional Rental Property)
- Median Property Price: $445,000
- Price per Square Foot: $321
- Average Days on Market: 151
- Monthly Traditional Rental Income: $2,795
- Traditional Cash on Cash Return: 3.2%
Cedar Park (for Airbnb Rental Property)
- Median Property Price: $514,000
- Price per Square Foot: $381
- Average Days on Market: 69
- Monthly Airbnb Rental Income: $4,597
- Airbnb Cash on Cash Return: 5.1%
- Airbnb Occupancy Rate: 45%
Loyal Heights (for Traditional Rental Property)
- Median Property Price: $341,252
- Price per Square Foot: $421
- Average Days on Market: 47
- Monthly Traditional Rental Income: $1,843
- Traditional Cash on Cash Return: 2.0%
Garfield (for Airbnb Rental Property)
- Median Property Price: $749,000
- Price per Square Foot: $471
- Average Days on Market: 18
- Monthly Airbnb Rental Income: $5,694
- Airbnb Cash on Cash Return: 3.9%
- Airbnb Occupancy Rate: 63%