This year has been a record-breaking, historic, and occasionally quite worrying year for Seattle real estate. But what were the most striking trends of 2021, and what do they help us predict about 2022?
As the year wraps up just as strangely as the one before it, real estate has again broken records all over the nation. The pandemic rages on, and in America, the concept of work from home has changed from a temporary measure to a permanent situation for many workers. This trend has changed where, how — and perhaps above all, why — people buy homes in this country.
The combination of virus-related home buying habits, a volatile stock market, low interest rates, a shortage of (and inflated prices on) building materials, rising home prices, general inflation, and a growing disparity in the distribution of wealth has added up to a crazy, unprecedented year for real estate — and that very much includes the Seattle market.
According to a study released by Seattle’s own Redfin, the typical U.S. home sold for nearly $400,000, up 24.4% from 2020. In Seattle, the typical home sold for $725,000, just under 3% higher than last year.
This may not seem like a lot, but remember that 2020 was the first year of the pandemic, and that real estate market behavior changed drastically then. To see the effect of the pandemic, which is obviously still affecting the market, comparisons to Seattle’s markets in 2019 and earlier are more illuminating — such as this one posted in the Seattle Times, based off the Case-Shiller Index.
This graph, based on the Case-Shiller index, better shows the remarkable gain in real estate values since before the pandemic.
The increase in prices since 2019 is quite dramatic.
Incidentally, this year did bring double-digit increases to some Seattle areas: Norada Real Estate Investment’s year end blog tells us that in “the Eastside and Southeast King County map areas, prices jumped more than 26% from a year ago.”
What’s driving prices up? And will they come down in 2022? To answer that, we must consider other market indicators.
Redfin reported that nationally, “home supply dropped to its lowest level in history — there were just 1.38 million homes for sale in June, down 23% year over year.” All over the nation, supply outstrips demand.