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Tuesday’s monthly Case-Shiller home price index, which uses data from April, tells a familiar story about the Seattle metro area: Our home prices are among the fastest-rising in the nation. It’s been that way since September, notes the Seattle Times, and shows no sign of slowing down.
Seattle’s home prices are growing 2.3 percent faster than the national average, according to the index.
Data released by Zillow last week also found that the Seattle metro’s home values were appreciating more quickly than anywhere else in the country. Their number is almost identical: 12.7 percent year over year.
The metro’s median home value, according to Zillow, is $440,100. We’re still only about halfway to the San Francisco area, but we’ve surpassed Zillow’s estimate for the New York metro. For Seattle specifically, that number jumps to $670,300.
The typical family looking for a starter home in the Seattle area has to spend about half their income on it, the Times report said. And that’s if they can even find one—inventory continues to drop as home values continue to skyrocket.
By Zillow’s count, there are 22 percent fewer homes on the market now than this time last year. They attribute the scarcity in part to an increasing number of single-family homes going up for rent—increasingly lucrative to long-time homeowners and investors alike in the current rental market. Their data says that rental single-family homes have grown by 45 percent since 2000, especially just south of the Seattle city limits.
“It has become exceedingly difficult for young families—particularly lower income families—to buy a home,” Aaron Terrazas, Senior Economist at Zillow, told Curbed Seattle in an email. “Unable to afford to buy, they end up renting.”
“The phenomenon can also feed itself as long-time homeowners and investors opt to hold onto their homes and convert them into rentals,” he explained.
It’s certainly not the only factor keeping inventory low—other cities have much higher growth in rental single-family homes without the dramatic drop in inventory. But with Seattle’s growing population, it’s not surprising that investors are clamoring to get a piece of the rental market or that homeowners would try to make some extra cash off it.
Another way single-family houses factor in: single-family zoning, which cover 65 percent of Seattle.
Sightline Institute in particular has published multiple reports arguing the advantages of letting up on single-family zoning to allow apartments, duplexes, and ADUs to create more housing—and allowing both ADUs and additional flexibility in those areas were original recommendations of the Housing Affordability and Livability Agenda. (Eventually, the mayor decided to not move forward with that particular recommendation.)
Whatever factors are compounding our rising home values, it’s pretty clear that homeownership is out of reach for many Seattleites—and certainly most current renters.