The Seattle, Washington real estate market is currently firing on all cylinders, with stiff competition and rising home prices. And a recent forecast predicted a continuation of those trends, going into 2021.
In early December, the research team at Realtor.com published a pair of favorable forecasts for the Seattle housing market, projecting into 2021. Among things, they predicted that Washington’s most populous city could experience rising home values for the foreseeable future.
Bold Predictions for Seattle Real Estate Market
On December 2, a team of analysts and economists from Realtor.com published a housing market report for 2021. In addition to analyzing trends nationwide, they offered real estate predictions for 100 of the top metro areas in the U.S.
Out of those 100 metros, the Seattle area had the #2 housing market forecast in terms of annual home-price growth.
Realtor.com predicted that home values within the Seattle-Tacoma-Bellevue metropolitan area would rise by 9.7% during 2021. Only San Jose, California ranked higher, with a year-over-year price growth forecast of 10.8%. (A lot of tech workers fled San Francisco during the pandemic, taking up residence in nearby suburbs like those in San Jose.)
Granted, that’s just a prediction for the Seattle-area housing market. It’s the equivalent of an educated guess or informed opinion. So we probably shouldn’t get too wrapped up in the exact numbers being projected here.
It’s the broader point that’s important, and that is: Seattle could see steady home-price growth in 2021.
Forecast: Top 20 Metros for Price Growth in 2021
The full Realtor.com report offered home-price and sales forecasts for the nation’s top 100 metro areas. Seattle got positive marks for both of those metrics. But it shot to the top of the list when we sorted by home-price forecasts for 2021.
The table below shows Realtor.com’s predictions for home value appreciation. We truncated their larger table to show the top 20 metro areas in the U.S., in terms of 2021 home-price forecasts. The Seattle metro area took the number-two position, just behind San Jose, California.
|Metro Area||2021 Price Growth|
|San Jose-Sunnyvale-Santa Clara, Calif.||10.80%|
|Boise City, Idaho||9.10%|
|San Francisco-Oakland-Hayward, Calif.||8.40%|
|Tampa-St. Petersburg-Clearwater, Fla.||7.50%|
|Los Angeles-Long Beach-Anaheim, Calif.||7.30%|
|Miami-Fort Lauderdale-West Palm Beach, Fla.||7.10%|
|Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.||6.70%|
|North Port-Sarasota-Bradenton, Fla.||6.60%|
|El Paso, Texas||6.40%|
|Portland-South Portland, Maine||6.40%|
|Deltona-Daytona Beach-Ormond Beach, Fla.||6.30%|
|Atlanta-Sandy Springs-Roswell, Ga.||6.20%|
Analysts with the real estate data company Zillow also issued a favorable home-price forecast for the Seattle, Washington housing market, into 2021. In December, the company wrote: “Seattle home values have gone up 10.6% over the past year and Zillow predicts they will rise 8.7% in the next year.”
The median house value for the city was around $783,000, as of late November 2020. We expect the median price point to climb above $800,000 during the first quarter of 2021, for the first time ever.
Ranked as One of the ‘Top Housing Markets’ for 2021
A few days after issuing the housing forecast mentioned above, Realtor.com published another set of real estate market predictions. Their December 7 report was entitled: “Realtor.com® Top Housing Markets: Tech Hubs and State Capitals Will Dominate 2021.”
Essentially, it was a top-ten list of what they expect to be the strongest real estate markets in 2021, based on current trends. And Seattle showed up in the number-five position on this list.
According to that report:
“Coming in fifth is Seattle, which is home to some of America’s largest and most well known companies including: Amazon, Starbucks, Costco, Microsoft and Nordstrom. The area’s booming tech scene, high quality of life, and access to both the water and mountains draws a crowd from all over the country. … Driven by high home prices and the desire for more space, buyers are beginning to search for homes further from the downtown center. This is especially true for first time homebuyers.”
The latter part of this quote suggests that other suburbs, cities and towns around Seattle proper could see increased home-buyer demand in 2021. Generally speaking, homes tend to be more affordable in the “bedroom communities” that surround major cities.
And that’s the case here, as well. The median home price in nearby cities like Kent, Renton and Tacoma is well below the median price point for Seattle itself. Those housing markets will also remain highly competitive, as we move into 2021. First-time buyers with limited funds, in particular, will seek out homes in those more affordable areas.
Supply-and-Demand Imbalance Continues
Predictions for the Seattle, Washington real estate market in 2021 suggest more of the same, in terms of price growth and competition. And inventory levels have a lot to do with this.
Seattle is currently one of the most imbalanced housing markets in the country, from a supply and demand perspective. With a growing population and strong demand from home buyers, there’s just not enough supply to keep up.
According to the U.S. Census Bureau, Seattle’s population grew by a whopping 23.8% from 2010 to 2019. That’s miles above the national growth average of 6.3%, during that same nine-year period. The population for the broader Seattle-Tacoma-Bellevue metropolitan area — also growing steadily — will likely rise above 4 million in 2021.
And this growth comes at a time when housing market inventory in the area remains very low. As of early November 2020, Seattle had less than a 1-month supply of homes for sale. That was one of the lowest levels we’ve seen among similar-sized cities, indicating a severe inventory shortage.
The bottom line: Tight inventory and strong demand will continue to boost home prices in Seattle, throughout 2021. Home buyers in this real estate market should be prepared for stiff competition and a fast tempo.
Disclaimer: This article includes forecasts and outlooks for the Seattle-area housing market in 2021. Such predictions are the equivalent of an educated guess and should be treated as such. The Home Buying Institute makes no claims or assertions about future housing trends.