Homes for sale in Seattle are showing strong signs for growth as the rest of the US housing market appears to have flat-lined. 12 out of 20 major US cities saw prices barely increase over the past year while other market hubs such as New York and Atlanta saw new lows, according to the S&P/Case-Shiller 20-city home-price index. The ratio of sales to list price in Seattle is lingering between 96-99.7% and downtown condos have been selling at a rapid pace. Much of this success has been rightly attributed to the strength of the Seattle job market.
The Seattle Housing Market
On average in 2011, buyers were paying 93% of asking price for homes for sale in Seattle. Moreover, we saw an uptick in demand as buyers are now paying over 96% of asking price and the average days on market for a home for sale is just over 2 months.
These numbers, although good for Seattle, hide some of the main reasons for this growth. For one, the number of additional homes for sale in Seattle is very small. Sellers with quality inventory are remaining out of the market in order to ride out the downturn. As a result, the lack of inventory is inflating demand and raising prices on buyers who felt the Seattle housing market would continue to drop. Many of the homes being purchased are average priced homes, distressed homes, and investment property. The Seattle real estate that continues to struggle is luxury.
Woes of Luxury Homes for Sale in Seattle
As you can see below, buyers are generally paying below 90% of asking price for luxury Seattle real estate. One reason for this is because many sellers are inflating the listing price in order to create a buffer for negotiation. In the current luxury Seattle housing market, it’s extremely rare to come in at asking price. Sellers are expecting buyers to come in with offers well below market values in order to try and meet somewhere in the middle. Hence, sellers are attempting to act first with a higher asking price.
Second, the luxury markets just aren’t what they used to be. The pool of potential buyers isn’t large enough to support the current inventory of luxury homes. Although the job market is strong in Seattle, the type of higher paying positions necessary to create a well supported luxury market just aren’t there. Those that do have the capacity to look for luxury real estate are having difficulty selling the home they currently have on hand. Thus, we’re seeing luxury struggle while lower and middle of the road homes are exceeding expectations. These results stem from a job market built on the tech sector.
Seattle Tech Jobs for Seattle Homes
Named by Forbes as #1 for tech jobs in 2012, Seattle has maintained a strong job market in the midst of the recession. This comes at the brink of Amazon expanding into South Lake Union with 10 buildings to house 8,000 employees. Microsoft and the Facebook addition have also played a large role in bringing buyers with higher earning potential.
Many of these tech professionals relocating to Seattle have helped maintain and raise values as these new buyers created higher demand for homes for sale in Seattle. In addition, sellers have artificially raised prices by choosing to stay out of the market. There are currently only 2.3 months of inventory and, from the graph below, you can see that this number has drastically decreased over the last year. Homes for sale in Seattle will continue to see prices rise on sellers remain unwilling to sell at these price points.