July 2021 Market Report - A Mid-Year Review!

Thus far, 2021 is shaping up to be a truly phenomenal year in Puget Sound real estate with record-low inventory and incredible growth values largely arising from strong buyer demand, low supply of new and existing homes, and low-interest rates. Let's look at some of the stats... and then talk about what to expect for the rest of 2021 and 2022...

Inventory

Presently 0.7 months in King and 0.3 months in Snohomish County... which are some of the lowest levels we've seen historically. One year ago, we had double the inventory in King County (1.5 months) and triple the inventory in Snohomish (1.2 months). Something particularly interesting to note... 3 years ago King had 1.5 months of inventory and Snohomish had 2.5 months.... this is a huge indication of just how the demand for the suburbs has shifted in 2020-2021.

List to Sell

The average ratio of the sale price to listed price is 107.4% in King and 108.6% in Snohomish County, the highest level we've ever seen. Three years ago, these levels were 103.1% and 100.9% respectively. Keep in mind, these are averages... and we're seeing a huge variation of final sale prices even within the same neighborhoods as these ratios are driven by sellers' and brokers' pricing strategies. We've seen quite a few homes go for list price or something very close in recent weeks, and even helped clients get homes for less than list price.

Values

Median home value in King County rose 16.5% in the last year to $775,000, and in Snohomish County, it rose 27.7% to $655,000. 

Let's look at 10 years... King County is up 142% and Snohomish County is up 191% with a median home value of just $225k in 2011.

What's Next?

I've learned to be cautious of anything which looks sounds or feels too good to be true, and we've counseled our clients to do the same, though also while looking more deeply to ensure they are not missing great opportunities. So what kind of market is this... too good to be true, or an opportunity?

Put simply... it is both depending on your perspective:

· Too Good To Be True: If you are expecting long term annualized growth of 15-20% then the recent market is too good to be true... the unique combination created by long term undersupply of new homes with the economic conditions created by the pandemic created a very unique and robust time in our market which will be hard to sustain for the long term. Therefore, we are not encouraging clients to strongly consider flipping or other short-term strategies based on the large rapid growth of market values.

· Opportunity: If you are expecting long term stable growth in property values averaging 5-10% a year over the next 15-20 years, then this is a market of opportunity where money (mortgages) are incredibly inexpensive and the fundamentals of our regional real estate market are strong (ie: employment, population growth, wage growth, limited supply of land, lower inventory). Additionally, we simply don't have the structural issues we did back in 2005-2007 injecting major speculative risks into the market... so we expect the market to be much more stable.

· While we certainly expect in the next 5 years, we'll see a plateau or even a recession in prices, we believe strongly we're going to see values continue to increase faster than the national average for decades to come simply based on the desirability of our region and the continued career opportunities present from the unique mix of our industries.