Note: Our market forecast includes Seattle data and data from its surroundings, including Tacoma and Bellevue.
Situated between the Puget Sound and Lake Washington, Seattle is the 15th-largest city in the United States. In total, it's home to almost 4 million people. While its location makes it a major hub for trade in the Pacific region, the city has also made a name for itself as a major center for technological innovation.
In addition, a recent study found that Seattle’s population is among one of the fastest growing in the country, with a growth rate of about 2.4%. Together, that influx of people, combined with a strong sense of industry, makes this city a solid choice for investors looking to expand their portfolios.
The state of the market
Surprisingly, though the real estate market in Seattle was undoubtedly impacted by the coronavirus pandemic, the Emerald City, as it's often called, seems to be more insulated than other metros of comparable size. It also seems to be making a faster comeback.
Its unique position may have something to do with the fact that two of the city's largest employers, Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT), have thrived over the past year as many people have made efforts to stay home.
With that in mind, here's a look at three trends we're seeing in the Seattle real estate market.
Inventory is frighteningly low
While the nation as a whole is going through an inventory crisis, few places compare to Seattle, which only had 0.8 months of inventory as of January 2021. As a result of the low number of available homes on the market, home prices have also soared to a median of $627,000, up 14% year over year. Luckily, both single-family and multifamily housing permits are up, which will hopefully start to ease some of the low inventory burden.
Rental vacancies have held steady
This metric is one area where Seattle has bucked the national trend. Other major metropolitan areas have had people fleeing their cities in droves now that they're free to work remotely. In contrast, Seattle's rental vacancy rate rose 0.1% on a year-over-year basis, which is good news for landlords.
Financial health indicators are in good shape
In Seattle, both the delinquency rate and the foreclosure rate is well below the national average. While it's likely that some measures such as Mayor Durkan’s ban on evictions have hurt landlords, relief options such as mortgage forbearance have enabled them to keep their heads above water.
Seattle housing demand indicators
All data and charts supplied by Housing Tides by EnergyLogic.
Short term, housing demand in Seattle may present a challenge for investors, but as we find a way out of the pandemic, the indicators are starting to show that the city is making a comeback.
For the most part, unemployment has held fairly steady in Seattle since 2016. However, in 2020, unemployment surged as a result of the coronavirus pandemic. At its worst, Seattle experienced an unemployment rate of 16.6%, which was higher than the national average of 14.8%. However, the unemployment rate has since dropped.