What’s the deal with the Washington housing market, and how does this year’s performance compare to last year’s market performance?
We asked Kami Shaw, our affiliate with Windermere Real Estate, to provide us with data on the housing market’s performance in Washington State, and what we received is a set of data that can be invaluable for real estate investors and real estate agents alike.
In this article, we will discover how the Washington housing market has been performing up until the third quarter of 2017 in comparison to the year 2016. This will include an economic overview, a home sales activity overview, home prices overview, and the average days that homes spent on the market.
About Kami Shaw and Windermere Real Estate
Windermere Real Estate is a proud member of the Leading Real Estate Companies of the World® (LeadingRE), a global network of premier firms which collectively sell more real estate than any national brand. Kami Shaw is a real estate agent with Windermere Real Estate with over 19 years of experience in the business. Her specialties as a buyer’s agent, a listing agent, and in relocation and appraising have provided Kami with a very high level of experience and enabled her to offer the highest quality of services to her clients.
Kami’s perfect 5-star reviews on Zillow is a reflection of her expertise and proficiency as well as her utmost care for her clients’ interest and dedication to her work.
What’s Happening in the Washington Housing Market?
The following is an overview of the Washington housing market performance for the first three quarters of the year 2017 in comparison to the previous year of 2016, including an economic overview, home sales activity, home prices, and the days on market, as well as a conclusion of whether the Washington housing market is a seller’s market or a buyer’s market based on the data provided.
The data used in the following sections is based on a report written by Matthew Gardner, Chief Economist at Windermere Real Estate.
Over the past 12 months, the Washington State economy has added over 79,600 new jobs, which translates into an impressive growth of 2.4% in comparison to the national growth rate of 1.2%. However, as anticipated by Windermere’s report for the last quarter, there has been a modest slowdown in the growth rate due to the state reaching closer to full employment.
This growth rate included all major job sectors with the exception of Aerospace (which is due to a slowdown at Boeing), and given the current rate of expansion, Matthew Gardner has raised his employment forecast and predicts that Washington will be adding 81,000 new jobs in 2017.
With Washington’s robust job market, it comes as no surprise that the state’s unemployment rate continues to fall. With the current unemployment rate sitting at 4.6%, Washington is essentially at full employment.
Matthew Gardner believes that Washington’s economy will continue to outperform the US economy as a whole, and with such a strong expansion, it is expected that a solid income growth will also take place across Western Washington.
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How Does This Affect the Washington Housing Market?
Naturally, with this growth in the economy and with the increase in employment, the demand for new homes will increase as well. As will be seen in the following sections, this increased demand in the housing market has resulted in higher home sales and home prices, as well as fewer days on market for homes that are for sale.
This means that real estate investors who purchased homes in 2016 have benefited enormously from this growth, resulting in high rates of appreciation, and it was much easier for them to close their deals. Since there are no indicators that this growth is going to stop anytime soon, the housing market is still a great opportunity for real estate investors to purchase new homes waiting for appreciation to tick in, but it is especially a great opportunity for investors who are looking to sell real estate properties due to home values being much higher than in the previous year.
Washington Housing Market: Home Sales Activity
As seen in the above chart, home sales have increased efficiently, with a rate of 3.6%, between the period of 2016-Q3 2017. With only a few counties having a significant growth in home sales over the past 12 months, Clallam County being on top, this matter indicates the continuation of the issue of a drastically low listing supply, causing a number of counties to have a decline in home sales over that period. What this means is that, although there has been a significant increase (32%) in home listings from Q2 to Q3 of this year, the shortage in listings supply remains a serious issue that might not be resolved until mid- to late-2018.
Finally, we can conclude from this section’s data that the property inventory is still considerably low, and it is unlikely to improve by the end of this year. However, the significant increase in property inventory from Q2 to Q3 of this year may suggest that earlier next year the inventory situation might improve drastically, but we still remain to see what the increase rate will be from Q3 to Q4 before we are able to forecast it.
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Washington Housing Market: Home Prices
The shortage of home listings has led to an exponential increase in home sales prices, as seen in the chart above, which is natural in any market that suffers from a shortage in supply and an increase in demand. This increase (average of 12.3%) in home sales prices, which can be seen most prominently in Grays Harbor County, is considered as a great advantage for homeowners who were looking to sell their homes, resulting in them gaining higher profits from the increase in sales prices, but it has also posed a greater challenge for people who are looking to purchase new homes.
Mortgage rates continued to be low throughout 2017, which is unlikely to change by the end of the year. This will result in average home prices to escalate even further. But it is also expected that mortgage rates will rise modestly in 2018, which could result in a slower price growth.
With a demand that far exceeds the supply, the price rates in Western Washington continue to grow beyond the long-term average.
And since the new home market is not expected to expand at a significant pace, real estate investors will be relying on the resale market, which will lead the home prices growth to keep rising beyond the average rates.
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Washington Housing Market: Days on Market
With the increase in demand and the shortage in supply, homes are selling faster than ever. The average time that it took to sell a home in 2017 was 8 days less than in 2016. Most counties have been performing especially well in that regard, with King County in particular performing extraordinarily well as homes take an average of only 17 days to sell on the market.
It is expected at some point that the property inventory will start to grow again, which will naturally lead to an increase in the average time needed to sell a house. But since this isn’t expected to happen anytime soon, the housing market will remain a seller’s market for the time being.
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Washington Housing Market: Conclusions
With everything taken into consideration, the Washington housing market remains strong as a seller’s market and not a buyer’s market. Although the price growth seems to remain robust, the activity of sales has slowed down slightly, while listings have increased in comparison to the second quarter of this year.
With that said, the real estate market seems very strong, and property buyers will continue to face very strong competition for accurately priced and well-located homes.
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