Puget Sound Home Prices Rise

Seattle-area home price growth was second to only one other US city early in pandemic – Seattle Times

Towards the end of every month, the Case Shiller Home Price Index is released. Why is this important? Because the Case Shiller Home Price Index is the biggest and most respected index for housing prices nationwide, and very likely earns a headline in every major newspaper in every big city in the US. Case in point: the Seattle Times article referenced in the quote above.

The Index tracks 20 large cities across the nation, and tracks their median home price. To clarify, it doesn’t necessarily track just the city inside official city limits…it tracks the whole MSA (metropolitan statistical area). So when Case Shiller says “Seattle’s” prices rose 6.9%, what they’re really saying is that housing prices in the Tri-County area rose 6.9% (all homes across Pierce, King, and Snohomish Counties).

This month, Seattle was first in month over month appreciation at 2.5%, and second in year over year appreciation growth at 6.9%. Very cool!

The only problem with the Case Shiller Home Price Index is that, for example, for the headlines it generates on May 26th, the data is actually for March – Which is to say that, really, home prices in March 2020 rose 6.9% compared to home prices in March 2019.

Why is that important? Well, obvs, we all know that quite a bit has happened in our world between March, 2020 and end-May, 2020. So what’s going on NOW in our housing market?

Check out these data points for a more current look at the Seattle specific housing market (not the Seattle MSA). (BTW, this data comes from the same analytics firm that our friends over at Case Shiller use for their reports, Altos Research):

Within Seattle City Limits, the median house price on May 22 was $798,000

• This is 2.5% higher than the median house price on April 24th, 2020 (+$19,500 in the last month)
• This is 10.07% higher than the median house price on January 3, 2020 (+$73,000 since the beginning of the year)
• This is 5.14% higher than the median house price on May 24th, 2019 (+$39,000 since this time last year)

There was a 7 day trailing average of 888 homes for sale within Seattle City Limits on May 22

• This is 76 more homes for sale than on April 24th, 2020 (+9.36% more homes for sale than a month ago)
• This is 252 more homes for sale than on January 3rd, 2020 (+39.62% more homes for sale than at the beginning of the year)
• This is 108 fewer homes for sale than on May 24th, 2019 (-10.84% fewer homes for sale than at this time last year)

Wait a minute, you might be thinking...You’re telling me supply is increasing, but prices are ALSO increasing? Anyone remember Economics 101 about basic expectations for supply/demand?

The current absorption rate for single family homes in Seattle has been steadily increasing since hitting its low on April 15th. The absorption rate measures buyer activity relative to seller activity. It is currently at 47.78%, indicating available inventory at just 1.09 months

• Our current absorption rate is 3.51% higher than it was on May 1, 2020 (a 7.93% increase in absorption rate compared to last month)
• Our current absorption rate is 3.16% higher than it was on January 1, 2020 (a 7.08% increase in absorption rate compared to the beginning of the year)
• We hadn’t started tracking absorption rate data yet last May (2019), so I don’t have that data, but I CAN tell you that our current absorption rate is 13.67% higher than last July 1 (a 40.08% increase in absorption rate compared to last summer!)

Summary

The Case Shiller Index data is cool, but it isn’t real-time data. With that said, the real time data shows Seattle’s housing market has remained strong throughout this pandemic, and buyers continue to buy. Throw in record low interest rates and the corresponding increase in purchasing power, and—despite a global pandemic—our median house prices continue to trend higher.