In a recent real estate column in Seattle Times, reporter Mike Rosenberg asked a question on many minds: “Why are Seattle-area home prices so high?” At the most basic level, it all boils down to two factors: supply and demand.
There simply are not enough homes on the market to meet demand as King County only had about 2,000 single-family homes and condominiums available for sale in March 2018, compared to an average of about 7,800 homes available in any given month during the past two decades. Strong home price gains have many thinking that “homeowners would want to cash out: The average homeowner across the metro area who sells today has owned the home for about 10 years and makes a 64 percent profit over what they originally paid,” which is among the highest returns on investment in the nation. But, homeowners are hesitant to sell precisely because of the same market conditions that are driving prices up, and they don’t want to have to turn around in buy amidst fierce competition.
It isn’t just that there are far fewer homes available for sale than in years past, it’s also that demand is increasing. “Since 2000, King County’s population has grown 26 percent” and with jobs growing at a slightly faster rate, competition for homeownership has skyrocketed. High wages can be attributed to the tech industry, as “the average person with a local computer or math job now makes $113,610, a 22 percent jump from 2000, adjusted for inflation.” Now that bidding wars have become the norm, a buyer that loses out on one deal after another will likely translate to bidding up to get into the home they want.
Though there are other factors contributing to Seattle home prices, Rosenberg says “the basic supply-and-demand issue is at the core of why home prices here have grown faster than anywhere else in the country since late 2016.” And with demand continuing to rise, supply falling, and a strong economy, it seems there is no end in sight.