The Case-Shiller Index report for November 2017 is in, and it shows a 6.4 percent gain across 20 major metros in the United States. But the Seattle metropolitan area—which includes King, Pierce, and Snohomish counties—saw a year-over-year gain of around twice that, at 12.7 percent.
The year-over-year price increase comes in tandem with a steep drop in inventory. said Cheryl Young, senior economist at real estate site Trulia, in a phone conversation.
“We’ve seen a lot of really tight inventory, and that’s kind of the main narrative of the housing market these days,” said Young.
Young said “strong fundamentals” are driving demand, like a steady rise in median income and job growth—and while many people are looking for a home, those that already own homes are hanging onto them as value rises. “We have lots of income and people kind of driving prices up,” said Young, and “people that are normally looking for something like a trade-up home… maybe they’re growing their family… and look for something bigger, we’re seeing people stay in those homes, so that inventory is locked.”
Young told us that across home markets—starter homes, mid-level, and “premium”—inventory is similarly low. From the fourth quarter of 2016 to the fourth quarter of 2017, starter home inventory dropped 26.7 percent. “Trade-up” homes dropped 24.1 percent. Even high-end inventory is suffering, with a 20 percent decrease in inventory, according to Trulia.
And as inventory drops start to even out across the board, so do price gains. The Case-Shiller Index, which showed a disproportionate rise to starter home values in Seattle at the beginning of the recovery in 2012, now shows homes gaining value relatively equally across the market.
Home prices have been steadily on the rise in the metro, along with the rest of the country, since 2012, with double-digit gains in both the 2016 and 2013 calendar years, but Seattle started to outpace national home price gains in the middle of 2015.
- Case-Shiller Index [S&P]