This article was originally published on WSJ Marketwatch:
The inventory of homes for sale has finally begun increasing a bit in the Seattle real estate market. In King County, the supply of available homes has been at less than two months for nearly two years. For most of 2016, inventory has hovered around one month’s supply.
In April we saw residential real estate inventory bump up from 1.1 months to 1.3. That 18% gain is nothing to dismiss, but it’s one drop in a very large bucket that needs to be filled to give home buyers some breathing room. It’s not enough to satiate the local population hoping to purchase a home, let alone the influx of tech workers moving to the Seattle region. Amazon, Facebook, Google, Nintendo, Microsoft and many others are in a talent-spending competition that rivals any tech hub nationally.
At issue for the region are the burdensome condominium construction regulations, lack of mass transit options and a deficiency of high density housing near the transit centers that exist today. Until the region begins to plan and grow like the big city Seattle is becoming, prices will continue to rise quickly.
Prices will, at some point, start to squeeze the affordability of payments if the current rate of price appreciation continues. The median single-family home sale price in King County was $537,000 in April. That’s up 10.9% from the same time last year when the median was $484,000.
Condos sit in an even more extreme position. Inventory is at 0.9 months of availability. Buyers are gobbling up listings faster than they’re coming on the market.
Seattle condos months of inventory, median sale prices
The median King County condo sale came in at $315,000 last month. That’s a 13.8% year-over-year increase. Condos seem particularly attractive to the newer residents in the Seattle market who have often relocated from urban areas in larger cities. The Seattle real estate market just isn’t keeping up with that demand and is, in fact, falling further behind by the year.
Antidevelopment advocates will say that we can’t build ourselves out of this problem. There is always a contingent in a city that wants everything to remain as it was. There’s no stopping the economic growth in Seattle, though, unless we allow our housing shortage to become so severe that businesses decide we’re no longer a financially viable location.
That would be a real shame. The real estate ecosystem in greater Seattle has to be built on a long-term strategic plan to accommodate smart growth in infrastructure for housing and transportation.
Long-term double digit growth isn’t sustainable without significant stratification of a community. As we head into another year of 11% and 14% gains in Seattle real estate prices, it’s time to focus on acting now.
(Statistics via Northwest MLS. The NWMLS did not compile or publish this information.)