In a typical year, the real estate market heats up mid-February for a busy spring season before lulling a little bit over the summer months before a fall resurgence. In my recent blog post on the April MLS data I noted that the market was potentially not as impacted by COVID-19 as was predicted, but that there had nonetheless been a drop off in inventory and sales levels over the Spring. So what is a realistic Seattle real estate summer outlook? That was the topic of conversation this morning on a conference call with Matthew Gardner, Chief Economist at Windermere Real Estate.
Brief overview of COVID’S impact on US Economy & Seattle real estate
The economy was performing remarkably well in January and February before being effectively turned off in mid-March. While current national unemployment is near the 15% mark, and is expected to reach up to 18%, it is particularly prevalent in the restaurant and hospitality industries, which account for about 1 in 10 US jobs. Around 80% of the currently unemployed in the US are considered lower income. As a result, rental markets are likely to be the most adversely impacted.
Matthew Gardner reassured that the Seattle housing market, on the other hand, has proven itself to be quite resilient. It has remained a sellers market throughout the pandemic as well as the past 8 years, and 45% of King County homeowners have more than 50% equity in their homes – meaning they have more of a cushion to fall back on than, in comparison, most did during the 2009 housing recession. Builders, meanwhile, are not building much new housing due to uncertainties, resulting in likely upward price pressure for current inventory. He also added that while many stock portfolios have tumbled by as much as 32%, this did not occur in the housing market, meaning that many investors could eye the housing sector as a way to hedge risk against future pandemics.
On a national basis, the Seattle economy will be comparatively OK. Locally it can almost be considered a predominantly health crisis and not an economic one – in terms of effect on housing. With a lot of high paying jobs in the area that weren’t proportionately impacted, buyer competition will remain high. This is fueled further by the transit difficulties meaning buyers prefer to be close to work. There are also predictions that a side effect of the pandemic will be a resilience on buyers to explore the condo market, creating more pressure on the single family home market.
With current sales numbers trending upward towards normal levels, it is predicted that we are in for a unseasonably busy summer market. This sentiment is echoed by Maggie Richter, a Senior Loan Advisor with RPM Mortgage who confirmed that they had more pre-approvals for loans in April of this year than they did in 2019.
Buyer demand proved itself to be strong over the course of the pandemic thus far and is likely only going to remain the same as more inventory is added to the market by sellers who have been waiting. A summer outlook for the Seattle single family real estate market would be an unusually busy market in which prices are more likely to increase than go down. The condo and apartment markets on the other hand face more uncertain futures as the side effects of the economy and perception on public health could cause decreases in price points.
If you would like to discuss this in more depth or would like data to influence your purchase or sales strategies over the summer months please let me know and I would be happy to assist you.