Skyrocketing Prices Shut Homebuyers Out in Washington

It’s no mystery why Washington is an appealing place to live. Between its booming job market, courtesy of companies like Amazon, Microsoft, and Google, incredible parks, mountains, and forests, and no income tax, there are plenty of opportunities for work and play. And it’s not just those who live there that know it: U.S. News and World Report recently named Washington the best state to live in the country, owing to a combination of factors including healthcare, education, economic stability, and public safety.

The state also came in seventh place in Bankrate’s recent Housing Heat Index, a ranking of the most active real estate markets as determined by annual home price appreciation, share of past-due mortgages, unemployment and job growth, the cost-of-living index, and tax burdens by state. In the category of home appreciation, specifically, it earned sixth place. The surge in Washington home values, however, comes at a steep price for buyers.

No Easy Way to Break Into the Market

According to a report released by the National Association of Home Builders, the median home price in Washington is $522,023, but the minimum income amount necessary to qualify for a mortgage is $112,295. This means that of the three million or so households, nearly three-quarters are priced out of the market entirely; a reflection of the Washington cost of living, which has a BestPlaces score of 118.7 compared to the U.S. average of 100. 

The Seattle housing market has remained red-hot throughout the past year, with prices surging 13.6% in December 2020 from a year earlier — this growth rate is the fastest that the area has seen in seven years. As of late November 2020, the median home price here was around $783,000, and it’s expected to exceed $800,000 by the end of the first quarter of 2021. This is partially driven by a short supply of housing; as of February 2021, active inventory in King County decreased 18% year over year.

“The economics of scarcity are driving prices up at an unsustainable pace,” Dick Beeson, managing broker at RE/MAX Northwest, explained. “The real estate vortex we’re in of depleted inventory and high prices is real and unrelenting.”

The Seattle-Tacoma-Bellevue market recently took sixth place on a list of U.S. cities where homes are selling the fastest, with a median of 39 days on the market (a 7.3% decrease year-over-year), median list price of $617,868, and median household income of $94,027. And in March, Seattle was right behind Phoenix, Arizona in terms of cities where prices are rising the fastest, according to the S&P CoreLogic Case-Shiller Home Price Index.

Urban and Suburban Surges

It’s not just the Seattle real estate market that’s seeing activity. Just a bit north in Snohomish County, the median home price was $624,075 in February, a jump of more than 21% from last year. And in the northwestern city of Bellingham, 90 miles from Seattle, the coronavirus pandemic saw the market exploding as remote work became the norm. 

“If you work in a tech company downtown and somebody said ‘you now only have to commute two days a week and you can work from home the rest of the time,’ that changes the definition of a suburb or a bedroom community of Seattle,” Hart Hodges, co-director of the Center for Economic and Business Research at Western Washington University, told KING-TV.

In Spokane, one of the most rapidly-growing metros, the housing market gained five billion in value in just the past year to reach $57 billion. 

“Home sellers are in a great spot, equity-wise,” Spokane Association of Realtors President Eric Johnson told The Spokesman Review. In fact, 41% of homes in Washington were deemed “equity-rich” in the fourth quarter of 2020, putting it at number four in the nation.

If you’re a homeowner in Washington state, you don’t need to sell your home to make the most of its value today. With a Hometap Investment, you can access your equity and use the money for anything, from making long-overdue renovations to paying down debt, all without monthly payments.

The more you know about your home equity, the better decisions you can make about what to do with it. Do you know how much equity you have in your home? The Home Equity Dashboard makes it easy to find out.