The Case-Shiller home price index was released this morning, and it’s a big milestone: The Seattle Times reports that home values have surpassed the meteoric rise during the 2000s bubble—although there’s no sign of a crash in sight. Earlier this month, data from the Northwest Multiple Listing Service (NWMLS) showed Seattle single-family home prices rising above $800,000 for the first time.
Seattle home prices have been the fastest-rising in the country for years now, hovering just under 13 percent year-over-year growth for the past several months—including this one. But there are other ways to look at the data.
Real estate group Zillow divided up the numbers a different way earlier this month, dividing home growth in the past year by the number of hours worked with eight-hour workdays for a year. It found that the typical Seattle home gains about $54 in equity per working hour, or more than three times a $15 wage. Of course, you can’t take that to the grocery store—but it gives some idea of the growing gap between homeowners and renters in Seattle.
That study used Zillow’s numbers, which are a little different than the NWMLS estimates or even Case-Shiller data, but it still gives some laser-focused estimates of just how quickly prices are escalating. According to data from the Harvard Joint Center for Housing Studies, Seattle-area renters are cost-burdened—i.e., spending more than a third of their income on housing costs—at nearly double the rate of homeowners, and earn about half the median income.
Comparing NWMLS data on median home prices for both single- and multi-family—not values, just data from sold homes—from March 2017 to March 2018 shows a 15.71 percent increase, which isn’t surprising with a continued inventory crunch driving up bidding wars. That’s a $100,500 difference year over year, or about $275 per day.
For condos, the jump is even more dramatic. Although they tend to sell for less than single-family homes—$527,000 in March 2018 compared to $819,500 for single-family—the price bump is more dramatic, jumping 21.53 percent since this time last year, when the median condo sale price was $434,000.
While home values rising this fast could make one jump straight to “bubble,” the factors that contributed to the previous crash aren’t here. This rise has been going on for longer, and many buyers have the salary to support the escalating cost of buying a home. While nationally, subprime mortgages are making a bit of a comeback, locally, the Times reports, very few people are defaulting on their mortgages.
Barring any major changes to Seattle industry, the outlook seems to be more of the same for the foreseeable future: low inventory and rising housing costs. And if the more-of-the-same continues for just two more years, notes the Times’s Mike Rosenberg, the median single-family home price will hit $1 million.
April 2020: when Seattle's median single-family home price will hit $1 million, if the average rate of increase from the last couple of years continues until then. So two years.— Mike Rosenberg (@ByRosenberg) March 16, 2018
Home prices have been going up about 13% a year; the median is now $777,000 https://t.co/iT2RAI5Six
This article has been updated to fix a typo.