Seattle Home Prices on the Rise: A Tough Situation for Home Buyers
Rising home prices is typically good news for local real estate markets, as it is a sign of a strong market and tends to motivate both sellers as well as buyers. However, in Seattle, rising home prices has actually led to a housing affordability crisis. Many people who want to live in the city limits have found that it's too expensive to own real estate in Seattle, and instead opt to rent apartments, townhomes or single-family homes in the different neighborhoods.
Now, according to The News Tribune, the housing affordability crisis is expanding beyond the borders of Seattle and creeping into the neighboring suburbs as well. Those who already own real estate in the Puget Sound region may benefit from selling their home during this time, but they may be faced with a shortage of qualified buyers ready to purchase.
Are Homes Affordable in Seattle and the Surrounding Region?
For many people who want to establish themselves in Seattle, they are faced with the startling fact that homes are not that affordable in the city or throughout the suburbs. Homes are in high demand, inventory is low, and prices are on the rise. However, prices are rising so swiftly that many home buyers cannot keep up with the costs. Research shows that most suburban regions are less affordable than they were just one year ago, including neighborhoods in East King County.
What Caused the Affordability Crisis?
The main contributing factor to the housing affordability crisis in Seattle and throughout East King County is the fact that home prices are rising quicker than wage growth. Employees who work in this same region are not being paid according to the cost of living in the area. According to the article, recent data shows that an average worker in Seattle would have to dedicate between 42 and 54 percent of their weekly paycheck to housing costs. Compared to a more stabilized, more affordable rental market like Cincinatti, this is a bit of an outlier. Throughout the entire country, that is only 97 counties in which more than 43 percent of a weekly paycheck is necessary in order to own a home.
What Does This Mean for Sellers?
On the surface, rising home prices might seem like a good problem for interested sellers to have. Ultimately, they would be set to generate a significant return on their real estate investment. However, in order to sell a home, you need to have a qualified buyer who has the financing available to purchase it. Buyers can't get financing if they cannot afford the price of the home. So while the increase in home prices would generally indicate an increase in value, home sellers may find that their properties do not sell as quickly as they would expect. It may take time for the right buyer to come along.
What Does This Mean for Buyers?
For buyers, the housing affordability crisis is much more daunting. Home prices are expected to continue to rise, as inventory remains in high demand. King County, a popular suburb of Seattle, is considered to be particularly unaffordable at this time. The data indicates that housing affordability is at its lowest since 2010, on the outskirts of the recession. Currently, it costs nearly 48 percent of a person's weekly wages to own a home in one of the King County communities. This leaves many buyers unable to purchase homes, even if they are ready and willing to do so.
While there's certainly affordability issues to overcome if you are looking for single-family homes in Seattle and the surrounding suburbs, it's not impossible to find the right place to call home within your target budget. By working with a qualified real estate agent who has a pulse on the local community, including those in East King County, you will be able to secure the house of your dreams in the place that feels like home. For more information on the current market conditions in the Seattle suburbs, contact us today.