a lot trends that have been unfolding since the start of the pandemic lockdowns continue: a central location is less of a priority and the suburbs are heating up more than ever. But as amenities return to denser urban areas and some return to offices, downtown condos are back on the rise – and the market is likely only to get more competitive from here.
The story isn’t entirely straightforward, and won’t be for a while. Since sales are reliably different every month of every year, year-over-year statistics tend to be more revealing for things like selling prices and market demand. But 2020 was, to say the least, bonkers. There is still a lot to be learned from last month’s numbers.
King County’s pockets are growing, but prices in outlying areas are rising much faster – a trend that began long before the pandemic but has increased as shoppers have turned away from the city. King County saw a 6.7% increase in median selling price from this period in 2020, according to the North West Multiple Enrollment Service, while Pierce, Kitsap and Snohomish counties saw their prices increase from 16.6% to 18.4%. Almost everywhere is on fire in these three counties, but a few areas where high prices meet high sales include northern Pierce County around Fife and Sumner and southern parts of Tacoma. Matthew Gardner, chief economist at Windermere Real Estate, also notes massive changes at Mountlake Terrace.
There are a few factors at play: Many businesses only require a partial return to the office, and it’s easier to have a lousy commute for three days than five. Because you get more house for less money, some buyers, Gardner says, have been able to pay everything in cash from the profits they made by selling a house closer to town.
That’s not to say that more central locations don’t have their moments. Northeast Seattle, with its new light rail stations, is cooling down again after a frantic year. But in terms of price, most of King County’s hotspots are outside Seattle: the Eastside saw a 22.6% increase in selling prices, particularly concentrated in the Newcastle and Issaquah area and Kirkland. Outside the luxury highlands, Renton’s selling prices jumped 20.2%, with an even bigger increase in sales closing at 34.7%.
A radical change for downtown condos
As people searched for more space, condo prices remained pretty stagnant throughout the year, especially in Seattle. But with so many reasons to live downtown return – offices, entertainment, bars, restaurants – well-paying shoppers are returning. Data from the NWMLS shows pending sales increased 36.7% in downtown and Belltown, and closed sales soared 126%.
But demand has never stopped, and those sales numbers aren’t even the highest this year. During the spring and summer, prices in the area plummeted, but demand continued to rise as downtown living became more affordable for many overpriced people. While this ship has pretty much sailed now — kudos to anyone who bought before this month — it adds more economic diversity to the downtown area in the longer term.
“What we saw when the pandemic hit was a massive increase in supply,” says Gardner. “There were a lot of fears that people would be fleeing the city center because of the coronavirus and that it would cause a market collapse. ” When condo prices started to adjust in response to high inventory and low demand, he notes, something different happened.
“I think there were a lot of people who, before the pandemic, had always wanted to move downtown, but they couldn’t afford it,” he explains. “And all of a sudden we started to see that this price [change] happen, all of a sudden they might. So that demand has been met.
Yet after months of increasing sales, inventories are starting to shrink, which could push prices up further. Although from the outside it looks like new condos are being built all the time, most of these builds are luxury rentals. With high construction costs and an uncertain market, developers and builders are holding back more than usual, says Dean Jones, CEO of Realogics Sotheby’s International Realty.
“I think we’re heading into another year of ascension where there will only be more people coming downtown and there will be a very limited amount of supply,” he says. Two condominiums are currently on presale, and once those units are completed and occupied in 2022, he believes it will “likely take several years” for any significant supply of new apartments or condos to return.
These year-over-year changes are compared to a truly appalling 2020 for condos, and we still have a pretty uncertain future in terms of having to leave home. But at the very least, the numbers indicate that the city center is returning to something much closer to its pre-pandemic state, for better or for worse.
Of course, condo sales aren’t limited to downtown, but few other Seattle neighborhoods have the same sample size. West Seattle in particular is plunging condo prices: Despite an overall 6.8% increase in the median selling price, condo prices have fallen nearly 10% since the same period last year. Condo prices are up in Northwest Seattle neighborhoods like Fremont, Greenlake and Ballard, with a 10.5% jump in median selling price.
Elsewhere, beach houses leave a mark
Some took advantage of more work-from-home opportunities to ditch city life altogether – and many of them apparently ran to the beach. Closed sales along the Pacific coast increased significantly in the spring, and although buying declined, prices did not fall. Pacific County, which includes Long Beach, has seen its prices rise more than 40% year-over-year every month since July. Other coastal communities have seen dramatic changes: Jefferson County, which includes Port Townsend, continues its strong year-round increases to 20.7%. Clallam County, which contains Port Angeles, Sequim and Neah Bay, saw its biggest jump of the year this month at 29.7%.
While you thought San Juan County would work with this pack, this market has already exploded a bit too much hard. After a frenzied 146% increase in sales and a 47.3% price hike in April, things have finally calmed down, with closings down 46.1% and prices flat.
The big picture of real estate
How fast is Seattle growing compared to other regions? The Case-Shiller Home Price Index calculates numbers for metropolitan areas across the country, and although they’re lagging behind by a few months, it can give a broader picture of what the city looks like on the national scene. Figures for July were released in late September, and the Seattle area recorded the third-highest year-over-year increase in house prices against other major metropolitan areas, at 25.5%, from a 19.7% increase nationwide.
What about the rent?
There’s more of the same in the rental market: bigger jumps outside of Seattle than inside. List of apartments Calculates a 12% increase in Seattle’s rent from the same time last year, but surrounding areas are seeing even bigger changes, including Kent, Everett, Redmond, Bothell and Lynnwood. Tacoma and Bellevue both increased by almost 19%.
While Seattle rent is always higher than Renton or Kent, rents are significantly higher in Bellevue, Redmond, Kirkland, Bothell and Issaquah.
You have to take rental data with a bigger grain of salt than sales data – the record keeping requirements are much less stringent, and there isn’t a lot of cold, hard data to work with. Companies that calculate monthly data are biased toward numbers in larger luxury buildings, but this is still useful for examining overall trends, especially if the source compares the data to more reliable (but slower) census data.