It may be tucked away in the Pacific Northwest, but those looking to invest in properties haven’t forgotten the Washington State real estate market. Many recent reports named WA as the hottest state in the US housing market in 2018. This wouldn’t come as a surprise for property investors who’ve been keeping up with the Washington State housing market. On the other hand, if you’re new to the business and wondering where to invest in real estate, keep reading to learn what put Washington State real estate on the top and find out which are the best cities to invest in Washington State.
Washington State Real Estate Market Trends 2018
Washington State stands tall in the real estate investing business thanks to a great workforce and growing economy. In recent years, Amazon and other companies based in the state have driven the economy’s growth. As a result, this has attracted both money and talent to Washington making it one of the best places to invest in real estate traditional rentals. This led to an increased demand for housing in nearly all sectors – apartments, condominiums, as well as single-family homes.
Appeal to Foreign Investors
The US housing market has always been welcoming to foreign property investors. Many Chinese investors have been purchasing investment properties in the country and “roughly 51 percent of the deals were in New York, California, and Washington”, as stated by a New York Times article, with Seattle being a particularly popular city in the Washington State real estate market. Are you a non-US citizen thinking of investing in the country? Read this: What You Need to Know About Investing in the US Housing Market as a Foreign Investor.
Inventory Remains the Same
If you want to invest in Washington State, one issue you should be aware of is the tight inventory in some parts of the market (especially in Seattle). As stated, job growth in WA has increased the demand for housing as more buyers are moving into the market. A strong economy is definitely a good thing for real estate investors, as it tends to make things more competitive. However, the supply of homes in the Washington State housing market is not even close to meeting the increasing demand.
Real estate experts believe that a balanced real estate market has 4 – 6 months of inventory. Currently, the Washington State real estate market only has 1.5 months of inventory. This means there aren’t enough homes for sale to meet the demand from buyers. As a real estate investor looking for an investment property in the state of Washington, you might want to start searching now.
Do you have a free Mashvisor account? Click here to use our Property Finder and find rental properties in a matter of minutes!
Home Prices / Values Are Increasing
An obvious response to the lack of supply is the increasing property values and home prices in the market. Thus, affordability has become another issue for first time home buyers as home prices in Washington State increased nearly 4% during the first quarter of 2018. This increase is even across all types of housing, from starter homes all the way to luxury properties. As a result, many residents can’t afford to buy in many parts of the state (again, Seattle in particular). If you’re already an owner of an investment property in the Washington State real estate market, this is good news to you as most residents are choosing to reside in rentals rather than buying their own house.
If you’re struggling with affordability, you can still find investment properties within your budget in WA using our Heat Map Tool. Simply set the heat map to highlight the areas from least to most expensive using the “listing price” filter. For example, the image below shows the most affordable neighborhoods in Seattle in red:
Is Washington State Real Estate in a Bubble?
Due to the increasing home prices accompanied with the low home supply, real estate investors, agents, homebuyers and others who are actively involved in real estates might begin to worry that Washington State is approaching a housing bubble. However, James Young, director of the Washington Center for Real Estate Research at the University of Washington, believes that the market can continue to grow as long as there is demand for property.
“A bubble happens when you have the prices going up without the demand going up,” he said. “You’ve still got demand going up in Washington, so I don’t see a huge issue here.” What we can take from this is that these factors made the Washington State real estate a sellers’ market in 2018. Thus, sellers can sit back and relax for the moment and, as for those thinking of putting their home on the market, there doesn’t look like there’s a better time to do it!
Where to Invest in Washington State Housing Market
Even though it’s a sellers’ market, buyers still have the chance to find good investment properties for sale in WA when using the right real estate investing tools. For example, using our property finder tool, we were able to locate these profitable properties:
Property 1 in Hamilton:
- Listing Price: $55,000
- Traditional Cash on Cash Return: 11.82 %
Property 2 in Tacoma:
- Listing Price: $174,900
- Airbnb Cash on Cash Return: 9.40 %
Moreover, we also provide another tool called the investment property calculator which – when you sign up for Mashvisor – you can use to analyze rental properties in different cities/neighborhoods in the US housing market. This, in turn, allows you to find the best locations to buy a rental property! According to the investment property calculator, the best cities to invest in real estate traditional rentals in Washington State are:
- Median Property Price: $176,425
- Price Per Square Foot: $109.80
- Traditional Rental Income: $1,200
- Cash on Cash Return: 7.99%
- Median Property Price: $84,500
- Price Per Square Foot: $56.00
- Traditional Rental Income: $1,200
- Cash on Cash Return: 7.46%
- Median Property Price: $224,450
- Price Per Square Foot: $108.50
- Traditional Rental Income: $1,295
- Cash on Cash Return: 5.91%
- Median Property Price: $125,000
- Price Per Square Foot: $137.10
- Traditional Rental Income: $1,350
- Cash on Cash Return: 5.78%
If you’re interested in short term rentals in the Washington State real estate market, we’ve also got your back! Our investment property calculator provides data analytics for traditional as well as Airbnb rentals. Moreover, you’ll see from the numbers below that investing in short term rentals yields a higher return on investment when you invest in Washington State rental properties. The best cities to invest in real estate Airbnb rentals in Washington State are:
- Median Property Price: $89,975
- Price Per Square Foot: $116.30
- Airbnb Rental Income: $1,858
- Cash on Cash Return: 10.72%
- Median Property Price: $300,000
- Price Per Square Foot: $157.20
- Airbnb Rental Income: $4,158
- Cash on Cash Return: 10.45%
- Median Property Price: $324,999
- Price Per Square Foot: $173.10
- Airbnb Rental Income: $2,370
- Cash on Cash Return: 9.77%
- Median Property Price: $214,933
- Price Per Square Foot: $163.10
- Airbnb Rental Income: $2,158
- Cash on Cash Return: 8.85%
- Median Property Price: $279,950
- Price Per Square Foot: $195.60
- Airbnb Rental Income: $3,616
- Cash on Cash Return: 8.01%
Washington State Real Estate 2018
To sum up, home prices and little inventory are the two leading factors that make Washington one of the hottest states in the US housing market. Other indicators also point out that the Evergreen State is enjoying a sellers’ market at the moment. There’s no need to worry about a housing bubble as there is still demand for Washington State real estate thanks to its strong economy and growing population.
Mashvisor helps any real estate investor make smart investment decisions using different tools. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
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