State of the Seattle Housing Market: 2016


It’s been almost a year since we last took a high-level view of the local housing market and considered whether or not we’re experiencing Housing Bubble 2.0. Let’s step back and take another look at the big picture.

Current Market Highlights

  • standing inventory is at an all-time low
  • new listings are at an all-time low
  • pending and closed sales are middling
  • prices are at an all-time high
  • mortgage interest rates are still near all-time lows
  • the Puget Sound economy is booming

The real estate market has been booming (i.e. plenty of sales, low inventory, and surging prices) for most of the last three years. This is likely due to a combination of factors directly related to real estate as well as the booming local economy. During the recovery since the last recession the Seattle area has seen strong migration, low unemployment, increasing wages, and heavy expansion of the local tech scene. Construction of new housing inventory and listings of existing housing has not been able to keep pace with the strong demand from increasingly wealthy home buyers.

Possible Storm Clouds

That said, there are a number of potentially worrying factors to keep an eye on in 2016:

Is it a good time to buy or sell a home?

I am not your financial advisor. I do not know the future. You should not act on my opinions without doing extensive research of your own.

With that in mind, here are my thoughts on the current market. If I were in the market to buy a home right now, I would definitely be waiting. With economic uncertainty on the rise, home prices at an all-time high and selection at an all-time low, the only reason not to wait would be if you’re afraid that prices are going to continue to power substantially higher in spite of all the storm clouds on the horizon. Personally that is not a bet I would choose to make.

On the other hand, if I were thinking of selling my home right now, I would definitely take advantage of this crazy market. With competition from other sellers so low and demand from buyers still strong, just about any home that isn’t a total dump is virtually guaranteed to fetch a very high price today.

I think we may be in the midst of another housing bubble, but this time the booming economy is being propped up by a lot more than just high home prices. My analysis today is basically unchanged from last year.

I think we are probably in the early to mid-stage of another housing bubble, but it the foundations of this bubble are very different from the last one. When and if this bubble pops, it will not play out the same way the last one did. This time around we’re likely to see a slowdown in the overall economy (and the tech economy in particular) that triggers a slowdown in the housing market, rather than the other way around like last time.

Will a slowdown come in 2016? Who knows, but I think there is a non-zero chance that it will.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.