By Morf Morford
Tacoma Daily Index
If you drive through (or in) Seattle, you can’t help noticing construction cranes in every direction. Most of those are for housing units of some kind, but believe it or not, the rate of housing construction in Seattle has steadily declined over the five years.
Here are some statistics for you –
Seattle Metro is expected to deliver 7,574 new units by the end of this year, considerably less than the number of apartments delivered in 2020 (9,359 units).
Looking at the last five years of construction in the area, Seattle Metro has witnessed a continuous decline in apartment deliveries. The number of new rentals dropped from 13,350 units (that’s over a thousand a month!) in 2017 to 11,571 units and 9,359 rental units by 2019 and 2020.
That’s almost a 20% drop from 2020 to 2021.
At city level, Seattle is expected to add 3,799 units this year, being one of the top metros by apartment projections.
Approximately 1,600 apartments have already been completed in the first half of 2021.
Redmond is the second hottest housing construction market in King County and is expected to deliver 1,220 new apartments by the end of the year.
If you are wondering about the market for this latest generation of apartments, one third of apartments built in the last five years were aimed at high-income renters (renters by choice – those who have the means to buy but choose to rent instead), while a little over a half were apartments for low and middle-income renters.
And yes, they are occupied; the occupancy rate of apartments delivered in the King County metro area in the last five years is 93.2%.
When it comes to houses, as of July of 2021, home prices in Seattle were up by 8%, with a median price of $799,000. 1,457 homes were sold (slightly under a 20% increase from a year ago) with the median days on the market dropping from eight days to seven.
Many homes get multiple offers, some with waived contingencies. More than 60% of buyers nationwide were putting offers on houses sight unseen, and the number of homes being bought without an inspection nearly doubled compared to 2020.
The average home sells for about 4% above listing price and goes pending in around 7 days.
Homes in the most desirable neighborhoods can sell for about 10% above list price and go pending in around 5 days.
Almost half of homes in Seattle (47%) sell above the original listing price. (A little over 13% sell for LESS than their original asking price.)
In Seattle, so far in 2021, more than 4,500 homes sold for at least $100,000 more than the asking price. That number was 400 in 2020.
In short, home prices in Seattle are increasing at the third-highest rate in the country.
The Seattle housing market is showing some signs of cooling, but still feels out of reach for plenty of first-time buyers. For now.
But “now” might be a long, long time.
About half of the housing in the Seattle area is the traditional single-family detached home, the other half is apartments and smaller units.
In June, the National Association of Realtors released a report calling for a dire, “once-in-a-generation” solution to the shrinking supply of houses in the U.S. That report estimates the U.S. is experiencing a shortage of anywhere from 5.5 million to 6.8 million units.
As desirable (and expensive) as they might be, traditional single-family detached homes take a lot of space, so the vast majority of new construction is in the apartment/condominium category.
Few aspects are more central to any economy, if not society, than housing.
The housing market is changing, what we consider adequate/desirable housing is changing and, of course we are changing.
According to the US Census, in 2030 (that’s a shade over eight years from now) one in five Americans will be at (or beyond) retirement age.
By 2034 older adults will outnumber children for the first time in U.S. history.
Because of population aging, immigration is projected to overtake natural increase (the excess of births over deaths) as the primary driver of population growth for the country.
The U.S. population is projected to grow slowly, age considerably, and become more racially and ethnically diverse. Despite slowing population growth, particularly after 2030, the U.S. population is still expected to grow by 79 million people by 2060, crossing the 400 million threshold in 2058.
You can see more on census projections here: https://www.census.gov/library/publications/2020/demo/p25-1144.html.
The obvious question is, will those people want to live how and where we do in 2021?
Those people at or above retirement age will certainly downsize. Will that cause a drag on the market – at least in some areas?
Many ethnicities live on a more extended family basis, with rooms dedicated to aging parents or siblings or nephews and nieces.
Will they conform to our near standard two or three bedroom format or will they demand or create their own architectural legacies?
No matter what happens, as we wrangle over zoning, ADUs, homelessness and the work from home movement, larger demographic shifts are coming that will literally change the texture and tempo of housing in America.
Seattle’s housing market is probably not a blip on the screen.
It just might be the clearest sign of things to come.