Seattle Real Estate Market Update | January 2021
Here are my latest thoughts on the Seattle Real Estate Market:
The Seattle real estate market median sales price is almost 11% higher than it was a year ago. There has been a significant decrease in housing inventory, despite many homes coming on the market, especially in the fall/winter of 2020. This is due to buyers flooding the market and buying up the current inventory, which has resulted in homes selling above the asking price and prices being driven up. The main driving factor for these buyers is the continued low-interest rates. We’re seeing many first-time homebuyers and buyers making move-up purchases in this market, which should continue to be a strong trend in 2021.
- Last month’s market update – Seattle Real Estate Market Update December 2020
Well, folks, we’re jumping into another year here. I know there’s a lot of excitement and expectation heading into 2021. And I can’t say it’s necessarily better so far than 2020, but we have a clean slate, if you want to call it that.
And last year was a huge year for the McDonald Real Estate Group. We were able to help 46 families buy or sell a home last year, which is awesome. And many of you here on YouTube and some that are currently subscribed, they got to help buy or sell a house this year. So thank you so much for being part of my business and also a part of this community.
Now it’s time for the stats. Many of you who subscribe to this channel come here for these market updates. And if you haven’t subscribed yet, please go ahead and hit that subscribe button before we continue.
A few stats to start off with here in 2021, the first one being median sales price here in the city of Seattle, $775,000 to round out 2020. Just as a reference, the stats that we’re referring to are actually from December stats. So this is the final chapter of the 2020 stats. And as we look at the stats, we’re up 10.7% year over year in the city of Seattle. So from last December to this December, up almost 11%.
it was a little bit shaky in the middle of 2020 when COVID came on the scene and things shut down and we thought maybe the housing market might drop significantly just like the stock market did, but thankfully the housing market does not respond to things as quickly as the stock market does and we saw the housing market pick right back up after a brief pause.
So 2020 was a crazy year in Seattle, and the biggest trend that we saw here as the year wrapped up was a just significant decrease in the supply of homes for sale.
Now, interestingly, we saw a whole bunch more homes coming on the market than we normally do this time of year, but as the year came to a close, we just continued to see more and more and more and more and more buyers in the market. And we’ll talk about that a little bit more at the end when we get into the application, but we saw more homes coming on the market, but we still ended up with less inventory.
So if we look at the numbers here, we had 518 new listings in December, which is, get this, 86% more than we saw in 2019, and even more so than we saw in 2018. So a dramatic increase in the number of people selling in December. But just as quickly, we saw 800 closed sales in December and 639 pending sales. So if we do the math, there were more pending sales in December than there were new listings, and there were a bunch of closed sales from the month before.
So as we look at the overall supply, this is crazy. Seattle was at 0.9 months, so under a month of supply, which just means if no new houses come on the market in a month, there’s nothing left. But if we look at the suburbs, so these are the suburbs on the north side of Seattle where I do most of my work, north and east side of Seattle, we’ve got a Shoreline coming in at 0.4 months of supply, which is a 63% drop. Last year, 1.1 months of supply. So dramatic. The Lynnwood area, so a little bit north of Seattle in Snohomish County, 0.1 months of supply. Last year, 1.1 months as well. We’re talking about a couple of days of supply.
And I’ll share a quick story. I had a listing that we just put on the market, and in four days, it was gone with seven offers way over the asking price. Okay? Crazy. And this house was listed for $875,000.
In Edmonds, 0.4 months of supply, and last year, 0.8 months. So still really low supply, which is not uncommon for this time of year, but we’re talking about extremely, extremely low numbers, which just means that we’ve got a lot of people that are buying up the houses and not enough to keep up, even though we had a ton.
So the result is rather than seeing prices go down or dip this time of year, which again is pretty normal if you’ve been following these updates in the fall, we saw home prices go up. So in Seattle, homes were selling just over the asking price. In Shoreline, 3% over the asking price. Lynnwood, 3% over asking. Edmonds was 1.6%, and then Bellevue was 2.6% over the asking price, almost 4% above where it was last year.
So the suburbs and surrounding areas around Seattle, we’re seeing more of a jump than Seattle itself, but even Seattle, with all of the different political turmoil and different frustrations that people have, or trying to get farther out of this city to get a bigger yard, all those things, the city itself is still doing well, but we’re seeing more of the craziness in the suburbs in the surrounding areas on the north side and on the east side.
What is going on, you might ask. That’s lots of information. I talk about the stats every month, but how do we apply this? Why does it matter?
As we’re looking at seeing more and more buyers jumping into the market and supply numbers dipping, prices going up, it’s like how do I make sense of all of this? And one of the main driving factors right now is the low-interest rates. So interest rates as of January 7th, Freddie Mac does a weekly primary market survey, they call it, and mortgage rates were around 2.65% across the board, right? So again, your rate is going to fluctuate depending on your qualifications as a buyer, down payment, credit score, loan program, the house, all those things, is it a residence or an investment property, but across the board, the conventional loan, 30 year fixed, was right around 2.65% on average, which is super, super low. That’s almost an entire percentage point. It was 0.99 of a percentage point.
So, I mean, we’re talking about just right off of the entire percentage point lower than the start of last year, which thinking about a 3.65 interest rate, super low, right? Super low, historically low, but we’re a whole entire percentage point below that.
So what we’ve seen is a lot of first-time homebuyers, mainly younger millennials, that are finally coming of age and maybe have a higher paying job and are ready to jump into their purchase. We’ve also seen a lot of the older millennials making a second purchase, a move-up purchase, selling their first house, and purchasing another because, surprisingly, people were faced with the decision in the spring last year and even summer, “Hey, I can refinance my mortgage and save two percentage points.” Maybe they got into their house at 4.5%. Now, we’re at 2.5%, and I was in a similar situation. So it’s like, well, what am I going to do? Am I going to stay where I’m at and refinance or am I going to buy something else? And a lot of people bought something else and made that decision.
So what they experienced was, “Hey, I’m going to buy a nicer, bigger house, the one I want, and my mortgage payments are going to stay the same.” The loan amount is going to go up because they didn’t necessarily have to put more money into it, but the payments going to remain very similar because of the interest rates being so low. So instead of refinancing and staying put, they made the decision, “Hey, I’m going to buy a nicer, bigger house, get a little bigger mortgage at a lower rate, and I’m going to get out of this higher mortgage.” So it was a decision point for a lot of people.
So as we head into 2021, and I’ll share some more predictions in a separate video, I think that we’re going to continue to see that trend, millennials making their first time home purchase and people continuing to move-up, if you want to call it, or move out of the city and move towards the suburbs, which is why I think Snohomish County increased in their median sales price almost 16%, which is a huge amount. And King County as a whole was up over 13%. And that’s going to be probably more likely on the east side and also on the south side of Seattle, but still, Snohomish County beat King County, which is fairly uncommon. And I think a lot of that had to do with people wanting to move farther out of the city and get a little bit bigger house.
Thanks so much for watching my Seattle real estate market update. I know that if you made it all the way to the end here, that you got some value out of this, so please consider subscribing to my channel so that you can see more updates like this. And if you’re somebody who is thinking about buying a house here in 2021, maybe this is the year, or maybe you’re thinking about selling and buying your next house. I’d love to be a resource for you and bring some value to your situation.