Median home values in the Seattle metropolitan area, which includes Bellevue and Tacoma, have not only reached their pre-bubble peak—they’ve surpassed it, according to a new report by real estate group Zillow. While in the summer of 2007, homes in the area reached a median value of $380,000, they rose 19 percent past it in July.
Median home value in the area now, according to Zillow, is $450,900.
The rise in values applies to the vast majority of individual homes in the area. 80.2 percent of homes in the Seattle metro are worth more than their highest value before the bubble, the report found.
Seeing housing prices rise this high might feel familiar—and it could seem tempting to call it another bubble. But those banking on another burst might not want to hold their breath.
"We aren't in a bubble, and won't be entering one anytime soon,” Zillow Chief Economist Dr. Svenja Gudell told Curbed Seattle about the national market over email. “There are big differences between the market then and the market now: Then, loose credit, speculation and overbuilding were ingredients in a recipe for disaster.”
“Now, healthy homebuyer demand is being driven largely by a stable economy and demographic tailwinds, which is exactly what we would expect in a healthy market,” explained Gudell. “Supply has been slow to catch up to this demand, which is causing home values to grow at a faster clip than we might otherwise expect. Beyond that, the market's fundamentals look largely healthy.”
Goodell added that in “most markets today,” affordable homes remain in the market. We followed up and asked if those markets, by Zillow’s analysis, include Seattle.
Senior economist Dr. Skylar Olsen clarified to Curbed Seattle that Goodell meant that homes are “affordable on a monthly basis.”
“If we’re talking about how easy it is to save or that down-payment, Seattle is out of reach for many, many would-be homebuyers,” Olsen clarified.
Monthly affordability, Olsen said, is “all due to mortgage rates and interest rates.” if you look at the median income in the metropolitan area, $75,330, and compare it to the monthly payment on a median-value home, the picture looks affordable.
But there’s that down payment. 20 percent down on a $450,000 house is $90,000—even more than a year of area median income, even for just King and Snohomish Counties, where area median income jumps $89,600,
“The down payment is harder to save for than ever,” said Olsen. “Seattle home values are higher than they’ve ever been, and that’s true for 80 percent at homes, that’s not even true at the median.”
Our fast-growing rent “makes it very hard to save for that downpayment,” Olsen continued. “And really that inability to save means that as home values increase, that down payment goes further out of your reach unless you can really make some trade-offs.”
There is, unsurprisingly, a difference in income for who’s buying compared to who’s renting: The median household income for homeowners in the metropolitan area (including Pierce County) was $96,400 in 2015, compared to that $75,330 figure overall, and $50,440 for renters, according to data from the Harvard Joint Center for Housing Studies.
Even with many priced out of homeownership, that doesn’t mean a bubble is set to burst. With a steady increase of jobs to the area and buyers with the money to pay for the homes, the skyrocketing market could be sustainable for now.