SEATTLE HOUSING 1Q17: Rising Prices Not Slowing – Demand Pushing into Outlying Counties in Search of Affordability
- As the region grows we are seeing some exit migration out of the greater Puget Sound into outlying counties such as Chelan, Mason, Jefferson and Skagit.
- We expect continued price increases in 2017 – already prices for new construction in King County are up 21% YoY while Kitsap is up 24% and appears to have run out of affordable housing.
- Lot availability is at critically low levels, which will further impact prices: The two highest demand areas in the region (King & Snohomish Counties) have only a 1.5 month supply of lots at Final Plat Approval; there should be close to a 6 month supply to stabilize prices.
Metrostudy’s survey of the Seattle housing market shows that 1Q17 brought in slightly fewer single family sales than 1Q16, down 3% YoY. This is largely due to the weather in January and lack of move in ready inventory, as new home inventory has been slow to keep up with demand in 2017 specifically in Kitsap and Snohomish County.
“Fundamentals are strong, and while In‐migration slowed by 10% in the first quarter we still created a demand for 7,000 owner occupied homes,” said Todd Britsch, Director of Metrostudy’s Seattle market. “As the region grows we are seeing some exit migration out of the greater Puget Sound into outlying counties such as Chelan, Mason, Jefferson and Skagit. The amount of resale homes in these counties has dropped significantly in the past year. Some counties had as much as 8 months supply of resale homes a year ago and today are down to half that. Baby Boomers and Gen x‐er’s are the primary movers, while long time Washington residents that would like the simple life with less traffic but can work from anywhere or are retiring soon will make this move and can often times pay cash if not a large down payment on what seems to be an affordable home.”
The median available price for new construction for King County is up 21%. Kitsap County appears to have run out of its affordable housing with a median list price of $420,000 which is an increase of 24% over this time last year. The rest of the region seems to fall just under the 10% mark in regards to list price change which more than likely means 2017 will usher in another 10% increase in the median closed price by the end of the year. 2017 could possibly be the year that yields the highest percentage change in the median closed price since 2013 which was driven by the qualitative mortgage taking affect. 2017 is being driven by the lack of supply and higher build costs from subcontractors, materials and of course the cost of the raw dirt.
With fewer lots being delivered to the market than sales consistently since 2009 we have seen a net negative flow of lots totaling 17,564 lots. When looking forward at the number of lots pre‐ paring to come online this theme appears it is not going to change any time soon. 2016 once again ran a net negative lot inventory subtracting 1,679 lots from the market. Moving through 2017 the issue of lot availability will continue to be an issue. The two highest demand areas in the region (King & Snohomish Counties) have only a 1.5 month supply of lots at Final Plat Approval. There should be close to a 6 month supply to stabilize lot prices.
In‐Migration remains very strong despite a 10% slowdown versus this same time in 2016. 2017 has already seen an increase of 25,560 new drivers through the first quarter. To put this in perspective the for every 25,000 new drivers there is a net demand of 7,000 owner occupied homes if home ownership is calculated at a historic low level of 50%
For information contact:
Todd Britsch – email@example.com
About Metrostudy: Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com
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