Forecasts and predictions for the Seattle, Washington real estate market in 2021 suggest that home values could continue to climb for the foreseeable future. But we could see a bit of a cooldown in 2022, due to affordability issues.
At present, the Seattle real estate market remains highly competitive as home buyers attempt to outfox one another for limited inventory. This lopsided supply-and-demand situation is putting upward pressure on home prices across the Seattle-Tacoma-Bellevue metro area.
Here are the latest trends and forecasts for the Seattle housing market through 2021 and into 2022.
Seattle Real Estate Forecast 2021 – 2022
There are a lot more home buyers than there are homes for sale.
This is a common condition affecting many U.S. cities in 2021, and the Seattle real estate market is no exception. In fact, the largest city in Washington offers a more extreme version of the supply-and-demand imbalance playing out in cities across the country. There are lots of buyers, but very few properties to go around.
As a result, housing market forecasts predict that Seattle will experience continued home-price appreciation over the coming months.
But there’s also an affordability component to all of this. With a median home value that now surpasses $800,000, the Seattle housing market has become unaffordable to an ever-growing number of residents. Going forward, a lack of affordability could cause home buyers to pull back a bit in 2021 or 2022. Such a reduction in demand could take some of the steam out of home prices, leading to a slowdown in price growth — or even a dip.
As of spring 2021, however, home prices continue to climb in the Seattle area with housing market forecasts predicting more of the same.
Catching Up with Home Prices
The median home price for the Seattle, Washington real estate market is now north of $800,000. The median price for the broader metro area, which includes Tacoma and Bellevue, is closer to $600,000. Both have risen significantly over the past couple of years.
According to the real estate data company Zillow, the median home value for the city of Seattle was around $817,000 as of March 2021. That marked at 8.2% increase over the previous 12 months. Other cities across the Seattle-Tacoma-Bellevue metro area have experienced even bigger gains.
In nearby Tacoma, Washington, the median home price rose by more than 17% from March 2020 to March 2021. Among the three counties that make up the Seattle metropolitan area (King, Pierce and Snohomish), the Pierce County real estate market has experienced the most home-price growth over the past year.
In March 2021, the research team at Zillow issued the following prediction for this red-hot real estate market: “Seattle-Tacoma-Bellevue Metro (98111) home values have gone up 13.1% over the past year and Zillow predicts they will rise 11.7% in the next year.”
Recent forecasts for the Seattle area real estate market predict that home prices will continue to rise for the foreseeable future. And that seems likely, when you consider the lopsided supply-and-demand situation.
But, as we’ve seen in the past, there is a limit to how much home prices can rise before buyers start to shy away from the market. Home prices in Seattle dipped during 2018 and again during 2019, for this very reason. So it’s a reasonable prediction that such a downturn could happen again in 2022. Time will tell.
Supply Shortage Continues to Haunt Home Buyers
New-home construction within the Seattle area real estate market has lagged behind population growth and demand for several years. Additionally, a lot of homeowners in the area are reluctant to sell due to the affordability issues mentioned above.
As a result of these and other factors, the Seattle housing market continues to experience very low inventory levels in 2021. This supply shortage has been going on for several years now, and it actually worsened over the past year or so.
According to a March 2021 report from Realtor.com, the total number of active real estate listings within the Seattle-Tacoma-Bellevue housing market declined by more than 41% from February 2021 to February 2022. That is a significant reduction in inventory, and it came at a time when supply levels were already low.
A separate report issued in March 2021 showed that the Seattle, Washington real estate market had a 0.7-month supply of homes for sale in February 2021. That is a very low level of inventory — one of the lowest we’ve seen among major metro areas.
This underscores the highly competitive nature of the Seattle real estate market in 2021. There are so few homes on the market, and so many buyers out there seeking properties to purchase. These housing market trends will likely persist into 2022, and possibly beyond that as well.
These trends are also fueling the bold home-price forecasts for the Seattle real estate market in 2021 and into 2022. With demand soaring and supply levels running low, it seems likely that prices will continue to climb.
A Fast-Moving Market With Quick Home Sales
Given all of these trends, it will probably come as no surprise that the Seattle housing market is moving quickly.
According to the Realtor.com report mentioned earlier, homes listed for sale within the Seattle-Tacoma-Bellevue metro area spent a median of just seven days on the market. That means they’re going under contract quickly, due to strong demand from buyers.
The median number of “days on market” has declined measurably over the past year or so. As of spring 2021, Seattle was one of the fastest moving real estate markets in the country, in terms of home sales. Buyers beware.
Population growth has a lot to do with these trends. According to the U.S. Census Bureau, the city of Seattle’s population grew by a whopping 23.8% from 2010 to 2019. By comparison, the state of Washington’s population grew by 13.6% during that same nine-year period. The national growth rate was 6.3%.
The Seattle-Tacoma-Bellevue metropolitan area is one of fastest growing metros in the country. This brings more home buyers into the market, at a time when there is not enough inventory to go around.
Buying Versus Renting in Seattle
Seattle housing market forecasts predict that prices could continue climbing through 2021 and into 2022. And for a lot of local residents, this means they might be better off renting versus buying a home.
Another March 2021 report from Realtor.com reinforced this notion. According to their analysis, Seattle tops the list of cities that favor renters over buyers in 2021. They found that a typical homeowner pays nearly $1,000 more per month than a typical renter.
To quote that report:
“The [work from home] trend has widened the gap between renting and buying in tech hubs like San Jose, Calif., Sacramento, Seattle and Los Angeles, where those who choose to rent saved an average of 30% in monthly costs compared to those who buy.”
This is not surprising when you consider that rents in Seattle have declined during the pandemic, while home prices have continued to soar. For many local residents, renting is the smarter option right now.
Of course, if you’re determined to own, these statistics probably won’t sway you. Just know that it can be a lot more affordable to rent a home in Seattle, when compared to buying.
Disclaimer: This article includes predictions and forecasts for the Seattle, Washington real estate market in 2021 and 2022. Home prices and other housing-related predictions represent an educated guess. No one can predict future real estate trends with complete certainty, nor do we claim to have that ability.