Sellers & Buyers optimistic about 2021

As the economy reopens, vaccinations continue to roll out and stimulus checks reach bank accounts across America, home sellers are increasingly optimistic.

And despite fierce bidding wars, competition from institutional investors and sore wrists from writing dozens of heartfelt letters to home sellers, even buyers are growing in courage these days.

Fannie Mae’s Home Purchase Sentiment Index (HPSI), a composite index designed to track the housing market and consumer confidence to sell or buy a home, increased in March by 5.2 points to 81.7.

Four of the HPSI’s six components increased month over month, including the components related to home buying and home selling conditions, household income, and home prices. The mortgage rate outlook component experienced the only decline in March’s HPSI, with the latest results indicating that only 6% of consumers believe that mortgage rates will decrease over the next 12 months.

Fannie Mae Senior Vice President and Chief Economist Doug Duncan said the March HPSI increase reflects consumer optimism toward the housing market and the economy in general.

“There might even more intensity this year, since 2020’s spring home buying season was limited by virus-related lockdowns,” Duncan said. “Home selling sentiment experienced positive momentum across most consumer segments, nearly reaching pre-pandemic levels and generally indicative of a strong home seller’s market.”

Duncan added that home sellers are citing high home prices and tight inventory as primary reasons why it’s a good time to sell.

“Alternatively, while the net ‘good time to buy’ component increased month over month, it has not recovered to pre-pandemic levels, as the home buying experience continues to prove difficult for many of the same reasons,” he said.

(The percentage of respondents who say it is a good time to buy a home increased from 48% to 53%, while the percentage who say it is a bad time to buy decreased from 43% to 40%.)

Mortgage applications decreased 2.2%, according to the March 31 report from the Mortgage Bankers Association. However, purchase activity during the last week of March was up 6% year-over-year, with the unadjusted purchase index 39% higher than the same week one year prior.

That’s largely reflected in the HPSI. The percentage of respondents who believe it is a good time to sell a home increased from 55% to 61%, while the percentage who say it’s a bad time to sell decreased from 35% to 28%.

The percentage of respondents who believe home prices will go up in the next 12 months increased from 47% to 50%, while the percentage who say home prices will go down decreased from 18% to 14%. The share who think home prices will stay the same remained unchanged at 29%.

Only a handful of people thought mortgage rates would tick down in the next year, at 6%, a decrease from 8% the prior month. Mortgage rates are officially out of the 2% range homebuyers were taking advantage of in 2020, with the most recent report showing rates at 3.27% for a vanilla 30-year fixed mortgage.

Higher rates aside, consumers seem to be feeling better about the economy, as the percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17% to 25%, while the percentage who say their household income is significantly lower decreased from 19% to 15%. The percentage who say their household income is about the same decreased from 61% to 56%.

Likewise, the percentage of respondents who are not concerned about losing their job in the next 12 months remained unchanged at 82%, while the percentage who say they are concerned also remained unchanged at 17%.

~Tim Gaze, HousingWire

Home prices at all-time high

Home prices are sky-high, and a recent report from Redfin underlines that point with some staggering data.

Median home-sale prices increased 17% year-over-year to $335,613 – a record high, per data taken from more than 400 metro areas during the four-week period ending March 28, 2021. And asking prices of newly listed homes rose 14% year-over-year to $353,500, another all-time high.

Pending home sales were up 38% from the same period in 2020 — and up 28% from the same period 2019 — but pending sales grew just 0.9% from Redfin’s previous four-week report.

Sales in general are still high, per Redfin Chief Economist Daryl Fairweather — 59% of homes that went under contract in the current four-week period had an accepted offer within the first two weeks on the market — but the recent low numbers suggest some homebuyers have reached their limit on high home prices and bidding wars.

“Add to the mix a dwindling number of homes for sale and rising mortgage rates, and the typical family that is still searching for an affordable house may have missed the boat,” Fairweather said. “First-time homebuyers who were already stretching their budgets will have to make bigger compromises on size and location or resign to renting for another year.”

Active listings fell 42% according to the report, spurring would-be buyers to submit offers that are significantly over asking price and making the market difficult to navigate for first-time homebuyers and other price-conscious buyers. Redfin reported that 47% of homes that went under contract in the current four-week period had an accepted offer within one week of hitting the market – yet another all-time high. And 41% of homes sold for more than their listed home price, which was 16 percentage points higher year-over-year.

Fairweather’s suggestion for those would-be buyers: look at condominiums and other more realistic purchases, build some equity, and wait this out.

“[President Joseph Biden’s] infrastructure plan aims to incentivize zoning for multifamily homes, which could increase the supply of affordable homes and provide even more people a path to homeownership,” Fairweather said. “But, there is no guarantee the incentives would be enough for local governments to change their zoning practices.”

The aforementioned infrastructure plan, dubbed the American Jobs Plan, aims to inject $213 billion into housing with the building of 500,000 homes in low- and middle-income areas. And two million affordable homes and commercial buildings would be built and renovated over the next decade as part of the initiative.

~Tim Gaze, HousingWire

All-time record for home sale prices

The median home sale price increased 16% year-over-year to $331,590 – an all-time high, per a report this week from Redfin. But that’s not stopping buyers from snatching up homes days after they’re listed.

During a four-week period ending March 21 and covering 400 metros, 58% of homes that went under contract had an accepted offer within the first two weeks on the market. And between March 14 and March 21, 61% of homes sold in that timeframe had been on the market two weeks or less, and 48% had sold in one week or less.

And offers are coming in well-above asking price, too. Nearly 40% of homes sold above their list price – another all-time high – and 15 percentage points higher year-over-year. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.2%.

This is concerning for experts, though, many of whom believe home prices will remain high even after mortgage rates, inventory, and building material costs recover to pre-pandemic levels. Rates are already above 3% – after falling into the 2% range during the majority of 2020 – but construction companies are still struggling to keep up with insane lumber prices, stifling new builds.

National Association of Home Builders Chairman Chuck Fowke recently noted that supply shortages and high demand have caused lumber prices to jump “about 200%” since April 2020, and the elevated price of lumber is adding approximately $24,000 to the price of a new home.

When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans,” said Daryl Fairweather, Redfin chief economist. “That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society.”

Fairweather noted that President Joseph Biden’s hopeful $3 trillion infrastructure plan includes building 1.5 million sustainable homes, but there is no guarantee the bill will be “passed with every policy proposal intact.”

“America needs an audacious goal to increase the housing supply, given the U.S. is short 2.5 million homes,” she said. “It may be expensive to build millions of homes, but ignoring the problem would only cause housing to become more unaffordable and worsen housing insecurity.”

The best chance at home prices lowering is the continued rollout of the COVID-19 vaccine, experts said, which will allow lumber mills to reopen and material prices to lower. Builders will then be spending less on new builds, which will help the backlogging of inventory.

~ Housing Wire

Rates sharply higher; homebuyer competition fiercer than ever

  • Mortgage rates bounced higher again this week, making homebuying even more expensive at the start of the all-important spring market.
  • With home prices skyrocketing, any rise in rates knocks even more potential buyers out of the running, and yet somehow the housing market is more competitive than ever.

Mortgage rates bounced higher again this week, making homebuying even more expensive at the start of the all-important spring market.

With home prices skyrocketing, any rise in rates knocks even more potential buyers out of the running, and yet somehow the housing market is more competitive than ever.

The average rate on the 30-year fixed mortgage hit its last low of 2.75% at the end of January, and has since climbed pretty steadily, according to Mortgage News Daily. After a sizeable move overnight, it now stands at 3.45%.

“Since the beginning of February, the total damage is nearly 3/4ths of a percent, making it one of the biggest moves in any 6 weeks, ever,” said Matthew Graham, chief operating officer at Mortgage News Daily.

“The purchase market always weathers these storms, and the ultra-tight supply situation coupled with still-ravenous demand in many metro areas may keep the housing market surprisingly buoyant. The bigger question is when rising rates will ultimately impact prices.”

The rate is the same now as it was a year ago. The difference from a year ago, however, is that home prices are soaring.

Prices are now up over 10% from this time in 2020, according to CoreLogic, and there appears to be no letup in the gains. This is due to the record low supply of homes for sale. 

Homebuilders are not stepping up as much as hoped, because they are facing higher costs for land, labor and materials. They also continue to experience delays in getting materials to job sites, due to Covid. Single-family housing starts came in much lower than expected in February, and the backlog of unbuilt homes is rising.

“There has been a 36% gain over the last 12 month of single-family homes permitted but not started as some projects have paused due to cost and availability of materials,” said Robert Dietz, chief economist of the National Association of Home Builders.

“Single-family home building is forecasted to expand in 2021, but at a slower rate as housing affordability is challenged by higher mortgage rates and rising construction costs.”

New homes already come at a price premium to existing homes, so rates are particularly important to that market.

For a new home with an estimated median price of $346,757 in 2021 and the recent 30-year fixed-rate mortgage rate of 3%, a quarter percentage point increase in the interest rate would price out approximately 1.3 million households, according to a new calculation by the NAHB. 

The supply crunch of existing homes is only exacerbated by higher mortgage rates. Homeowners who sell would likely have to buy their next home at a higher interest rate, so that’s a significant deterrent to moving.

The number of newly listed homes for sale for the week ended March 13 was 24% lower year over year, according to realtor.com. The total number of homes for sale is now half of what it was a year ago.

While this situation makes it harder for buyers, it also shows that buyer demand has not fallen off much, even in today’s higher rate environment. If buyers had fallen back, the supply would be rising.

Buyers are in fact, “flooding the housing market early this year, eager to find a home of their own,” according to Danielle Hale, realtor.com’s chief economist. On average, homes are selling seven days faster than last year.

Housing demand was pulled forward last year. The pandemic created an emotional need to nest, not to mention a practical need for more space, given the work- and school-from-home environment. Even as vaccinations rise and more people go back to offices and schools, homebuyers are still not only out in force but are increasingly competitive.

Just over a third of homes sold in February went for more than their original asking price. That is the largest share on record, according to Redfin, a real estate brokerage.

Diana Olick, CNBC

Despite snowstorms, Puget Sound housing market stayed strong


February saw one of the snowiest days on record in the Seattle area, with people in some areas waking up during Valentine’s Day weekend to nearly a foot outside their windows.
But, even with the weather, the Puget Sound region housing market didn’t let up, according to the February report from Northwest Multiple Listing Service.

“It’s amazing how close the February numbers are when compared to February 2020, which was, of course, right before our world changed,” said Mike Grady, president and CEO of Coldwell Banker Bain. “Despite our similarly lousy February weather, the data shows that the market continues to be hot, with residential inventory very tight and median prices rising by double digits across most of our counties.”

In King County in February, there were 2,893 new listings added to the market, slightly lower than in February of last year. Total active inventory in the county was down nearly 18% year-over-year, reflecting the limited inventory that has marked the region’s housing market over the past year.

For residential listings, total active inventory was down nearly 41% compared to the same time last year. The total number of active listings for condos, however, was up more than 50% compared to February of 2020.

Pending sales overall were down slightly year over year, but were up compared to last month, the report found.

“This tells me that neither the snowstorm that hit the region nor the jump in mortgage rates deterred buyers who were still out in force last month,” Windermere Chief Economist Matthew Gardner said.

Gardner added even though pending condo sales also decreased compared to the same time last year, several neighborhoods in Seattle, including Queen Anne, downtown Seattle and Ballard, “performed better than expected.”

“That suggests to me that there may not be the mass exodus from the core urban areas that many have been predicting,” Gardner said.

Closed sales in King County were up about 13.5% compared to the same time last year, with 2,146 closed sales over the course of the month. Home prices were also up more than 10% year over year, with the median price for closed sales in February coming in at $679,075.

Prices were also up from last month, when the median closed sale price was $644,950. Among residential homes, prices rose even more steeply in February, up more than 11% year over year. For condos, prices rose only about 1% compared to the same time last year.

“Like last year, before we knew what was just around the corner, buyer demand is high. There continues to be opportunities for buyers seeking condos, and median prices are more stable, so that’s also good news for buyers,” Northwest MLS Director John Deely, executive vice president of operations at Coldwell Banker Bain, said.

For buyers looking for residential homes, though, they face a more difficult market.
“Our brokers are working hard to help prepare buyers both emotionally and financially for the realities they face, and to help position them as the winning purchaser,” he said.


“With things opening up, and open house restrictions eased to allow more people at one time, brokers are also spending a good amount of time preparing their sellers to get comfortable with having people in their homes and to safely facilitate viewings, as well as managing and analyzing all the offers.”

Moving forward, brokers said they were optimistic more homes would be added to the market and the region’s housing market would stay strong.

“After an intense winter in the local real estate market, more new resale listings are on the horizon this month. March historically marks the beginning of the eight month prime-time real estate market,” said J. Lennox Scott, Chairman and CEO of John L. Scott Real Estate. “The intensity we’re seeing in the market should come down slightly as more available homes enter the market, but we have to play catch up with pent-up buyer demand first.”

~Becca Savransky, Seattle P-I

Bidding wars increase as listings at record low

Presidents Day weekend marks the unofficial start of the spring housing market, but if you’re looking to get in this year, hold onto your wallet. Bidding wars are off the charts, even as home prices are rising rapidly.

The primary reason longtime home searchers haven’t bought a house yet is because they keep getting outbid. About 40% of potential buyers cited that in a new survey by the National Association of Home Builders. The reasons are flipped from a year earlier, when 44% said unaffordable prices were the biggest reason they hadn’t bought yet, and 19% cited getting outbid.

Well over half of all buyers, 56%, faced bidding wars on their offers in January, according to a Redfin survey. That is up from 52% in December. More than half of homes are now going under contract in less than two weeks.

“With so few new listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season,” said Daryl Fairweather, chief economist at Redfin.

She advises buyers to be ready to go see properties the moment they hit the market and to get preapproved for a mortgage.

“But know when to back away if the price escalates more than you’re willing to pay,” Fairweather added.

Competition is fierce across the nation, but worst in Salt Lake City, where 9 out of 10 offers faced competition, according to Redfin’s survey of 24 major markets. It was followed by San Diego (78.9%), the Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).

The problem is supply, or lack thereof — record low supply. Sudden strong demand, driven by the stay-at-home culture of the Covid pandemic, swiftly smacked into already low inventory, due to lackluster homebuilding. Record-low mortgage rates only fueled demand even more.

Paul Legere is a buyer’s agent with the Joel Nelson Group in Washington, D.C. He says his job is only getting tougher.

“The low cost of money now has buyers able to be more aggressive and willing to overpay for properties. As a buyer’s agent, tasked with trying to help clients find value, that piece of the equation is nearly impossible to do,” said Legere. “It is a constant struggle and scramble to find desirable targets.”

Sellers have also pulled back, not wanting to go through the ordeal of putting their homes on the market during Covid. The number of newly listed homes in January was down 29% year over year, pushing the total inventory down 47%, according to realtor.com.

Home prices had appreciated at a double-digit rate each week for 26 straight weeks leading into January. The median listing price for a home was up nearly 13% compared with January 2020.

“Lower mortgage rates are making monthly payments for higher priced homes more manageable,” said realtor.com’s chief economist, Danielle Hale. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”

~Diana Click, CNBC

Real Estate Market gains more in 2020 than any year since 2005

After a record-setting year of home sales in 2020, the housing market still shows no sign of cooling off.

U.S. housing gained about $2.5 trillion in value in 2020 — the most in a single year since 2005, according to a new Zillow analysis. The full stock of U.S. housing is now worth $36.2 trillion.

Strong demand drove intense competition among buyers, causing homes to fly off the market at the fastest pace Zillow has recorded and pushing prices higher. 

Housing demand was already strong coming into the year with the large Millennial generation aging into prime first-time home-buying age and mortgage rates hovering near record lows. The widespread shift to remote work during the COVID-19 pandemic prompted many buyers to re-evaluate their housing options and supercharged demand. 

While many potential buyers faced unprecedented economic hardship because of the pandemic, others with stable income were eager to enter the housing market.

Zillow expects 2021 to be even stronger, possibly exceeding last year’s $2.5 trillion gain. “Builder confidence, perhaps in reaction to the boosted demand, hit record highs and more homes are being built as a result,” said Zillow economist Treh Manhertz. “Add that together and you see why the housing market gained more than in any year since the Great Recession.”

According to the CoreLogic Buyer/Seller Market Indicator, which measures the ratio between sold price and list price, buyer competition reached a new peak nationally in October and November when the ratio climbed to 0.996 – the highest level since 2008, when the data series began. 

The high indicator suggests sellers were generally getting their asking price. With buyer demand continuing to outpace the previous year’s levels amid historically lowest inventory of for-sale homes, the pressure on home prices is expected to fuel home price growth in the first half of 2021.

More than a fifth (21.4%) of the nation’s housing value resides in California, according to Zillow. Homes in California are worth a cumulative $7.8 trillion, more than the next three states combined, and the state boasts four of the 10 metro areas with the highest total housing value — Los Angeles, San Francisco, San Jose and San Diego. 

Zillow found that over the past decade, the total value of the housing stock has more than doubled in six states. 

Idaho leads the way, gaining 149% since 2011. Most of that growth comes from the Boise metro, where the total housing stock has more than tripled in value during that time, the most of any of the 100 largest U.S. metros. Nevada (146.3%), Utah (126.2%), Arizona (116.5%), Colorado (111.6%) and Washington (108%) also saw their total housing market value double over the past decade.

Although the pandemic continues to upend the housing market in many ways, Selma Hepp, deputy chief economist at data analytics provider CoreLogic, predicts competition among buyers will continue to drive home prices up.

“The housing market continued to hold stronger than expected throughout the last months of 2020 and despite increases in infection rates across the country,” she said. “With mortgage rates steadily falling through the end of the year and buyers realizing that the pandemic is still far from over, robust demand was not fazed by traditional seasonal slowdown. And given that we are unsure of when social interaction will be safe again, homebuyers will continue to compete for fewer and fewer homes available for sale, which will drive home prices higher.”

~ Brenda Richardson

Listings are at a record low; existing sales highest since 2006

Pandemic-driven demand sent total 2020 home sales to the highest level since 2006.

Still, even the most avid buyers are bumping up against barriers in today’s housing market. Record low supply and record high prices are limiting the exceptionally high demand.

Closed sales of existing homes in December increased just 0.7% from November to a seasonally adjusted annualized rate of 6.76 million units, according to the National Association of Realtors. Sales were 22% stronger than in December 2019.

As unexpected as a global pandemic was, so too was the reaction of homebuyers. After plummeting in March and April, sales suddenly began to climb. Total year-end sales volume ended at 5.64 million units, the highest level since 2006 and far stronger than predicted before the pandemic. Buyers were driven by a desire for larger, suburban homes with dedicated spaces for working and schooling.

“Home sales could possibly reach 8 million if we had more inventory,” said Lawrence Yun, chief economist for the Realtors. “Mortgage rates should remain very low throughout 2021, although we may have seen the lowest already.”

Strong demand exacerbated what was already low inventory of homes for sale at the start of the year. At the end of December, inventory stood at just 1.07 million homes for sale, down 23% year over year. At the current sales place, that represents a 1.9-month supply. That is the lowest number of homes since the Realtors began tracking this metric in 1982.

Low supply and strong demand continued to raise the heat under home prices. The median price of an existing home sold in December was $309,800, a 12.9% increase compared with December 2019 and the highest December median price on record.

Part of the sharp increase in the median price is that home sales are stronger on the higher end of the market, where there is more supply. Sales of homes priced below $100,000 were down 15% annually in December, while sales of homes priced between $500,000 and $750,000 were up 65% annually. Sales of million-dollar-plus homes were up 94% from one year ago.

Steep competition for homes also has more buyers making all-cash offers.

First-time buyers made up 31% of sales. They usually make up about 40% historically.

It also took just 21 days on average to sell a home in December.

“It is unusual, because every year during the holiday season we would see days on market increase, but not this year,” said Yun.

~by Diana Olick, CNBC

Extraordinary Market Conditions

Latest NWMLS press release:

“Insatiable buyer demand” is keeping inventory scarce as house hunters try to outmaneuver and outbid each other, according to reports from Northwest Multiple Listing Service (NWMLS). Its statistical summary for December showed strong activity throughout the holiday season with double-digit increases in new listings, pending sales, closed sales, and prices.

Northwest MLS brokers added 5,260 new listings to inventory during December, a hefty 39.3% increase over the same month a year ago. Last month’s additions fell short of meeting demand as members reported 6,883 pending sales (mutually accepted offers). That number surpassed the year-ago volume by 940 transactions for an increase of 15.8%.

Pending sales were especially robust in several counties where year-over-year (YOY) gains of 25% or greater were notched, notably Grant (up 133%), Kittitas (up 55%) and Pacific (up nearly 43%).

“As more people are working from home, they are also purchasing properties further afield from Seattle,” observed James Young, director of the Washington Center for Real Estate Research at the University of Washington. He singled out Chelan, Clallam, Grays Harbor, Kittitas, and Mason as counties that had year-over-year price growth of 20% or more. The MLS report also shows Pacific and Whatcom counties with 20% or higher price gains.

At month end, there were 4,732 total active listings system-wide in the MLS database, which encompasses 25 counties. That’s down 44% from a year ago when the selection included 8,469 listings. Measured by months of inventory, there is only about two weeks of supply (0.53 months) overall. Only five counties had more than a month of supply, well below the four-to-six months of supply used by housing analysts as a gauge of a balanced market.

Home prices continue to rise. For the 9,008 sales of single family homes and condos that closed last month, prices jumped nearly 12.2% from a year ago, increasing from $435,000 to $488,000. Only three counties (Ferry, Okanogan, and San Juan) reported year-over-year price drops, while nearly all other counties had double-digit gains, according to the NWMLS report.

Single family homes accounted for most of the price escalation. For the 7,848 closed sales of this property type, prices increased nearly 12.9%. YOY prices on the 1,160 closed sales of condos rose about 1.8%.

“The 2020 housing market was remarkable for many reasons, not the least of which was its extraordinary resolve through the COVID-19 pandemic,” stated Windermere Chief Economist Matthew Gardner, adding, “Who would’ve thought back in April that we would be ending the year with strong increases in both sales and prices?”

Real Estate Agents expect activity in 2021 to resemble 2020:
• “Demand driven by the continued growth of the tech and biomedical sectors and our high quality of life with access to vast marine and alpine activities will continue to drive prices up and growth toward the suburbs.” ~ John Deely
• “So much of what is driving the market is interest rates and I don’t see the Fed raising rates in the foreseeable future. I expect 2021 to be much like 2020.” ~ Mike Larson
• “2020 real estate activity ended with a bang, indicating that 2021 will be an explosive year for listings and sales.” ~ Dean Rebhuhn
• “I expect the first half of 2021 will be very similar to last year: low interest rates combined with low housing inventory resulting in a very active and competitive market. Multiple offers and waived contingencies will likely be the norm as we roll into the new year.” ~ Jason Wall

Economist Gardner echoed some of those sentiments, saying, “As we move into 2021, I expect continued strong demand from buyers, but unfortunately, the likelihood that there will be any significant increase in inventory is slim. As a result, I believe prices will continue to rise, which is good news for sellers, but raises concerns about affordability. This, combined with modestly rising mortgage rates, could end up taking some steam out of the market but overall, I expect housing to continue being a very bright spot in the Puget Sound economy.”

What Will Seattle’s Real Estate Market Look Like in 2021?

The coronavirus pandemic upended nearly every part of life throughout the year — but the Seattle-area housing market stayed strong. Low inventory, high buyer demand and rising prices continued throughout the year, creating a competitive market even through the holidays, which normally marks a slowdown. But, will it continue into 2021?

Experts say it’s likely the Seattle-area housing market won’t cool down over the next year. Prices will continue to rise, though somewhat slower than they did year over year in 2020. And the market will stay competitive, with homes likely continuing to receive multiple offers, especially if interest rates remain low.

As employers adopt more flexible work-from-home policies, people will likely be looking for more space in their homes to have room for a home office, and could look farther out of the city without having to worry about their commutes.

Here’s what else experts are predicting about what the 2021 housing market will look like in Seattle:

Jeff Tucker, senior economist, Zillow

Tucker said through November 2021, the projections show home prices rising nearly 9% in Seattle, which he called “robust” price growth. Seattle has had some of the fastest price appreciation among major metro areas in the country over the last several months.
Tucker said he’s expecting that price growth to continue — but not quite as fast as it has been recently.

Throughout 2020, home prices in Seattle rose drastically year over year. Part of that, Tucker said, is because much of 2019 was a bit of a “soft patch” for the Seattle real estate market. But low interest rates have expanded the number of buyers that could afford the monthly payments, and has opened up the market more to first-time home buyers.

Tucker said he expects low inventory to continue into 2021 as well. But he said the inventory shortage in the city might not be as “acute” in the Seattle region in the spring and summer.  A lot of homeowners, he said, who were thinking about selling had put if off for one reason or another this year during the pandemic.”They could come out of the woodwork,” Tucker said.

“But in the meantime, it makes it a really attractive time to sell, if you’re cashing out and moving … this would probably be a good time,” Tucker added. “I think there will be more listings next year which could bring a bit more balance to the market.”

In the spring when the pandemic hit, a lot of activity was put on hold and the number of completed transactions and pace of price appreciation slowed down. So, Tucker said, compared to spring of 2020, the pace of home sales and the number of listings in 2021 will be higher.

“I think a lot of that kind of traditional spring home shopping activity will come warring back,” Tucker said. “We still seem to have some pent up demand for people who have been unable to finish buying a house.”

Seattle still has many high paying jobs and employment is strong in many of the industries driving employment in Seattle, despite the pandemic. Those jobs pay high incomes, meaning a certain segment of the workforce in the Seattle region is still able to buy homes, Tucker said.

But because of the pandemic, a lot of spring buyers were bumped into the summer. The market was so competitive and homes were selling so fast, that a lot of summer buyers were still unable to buy homes, Tucker said.

That’s why the city has been seeing homes staying on the market for a very short period of time before getting offers.

“Homes are selling very very quickly,” he said. “It suggests to me that the spring market is going to hit the ground running.”

Into 2021, people will likely be looking for certain features that are a little different than what people may have wanted in the past. Tucker said the pandemic has expanded the size preference buyers are looking for, with many buyers searching for one more bedroom to be used as a potential home office.

“A lot of people are still working from home and will be well in 2021…so we have seen the demand shift a little,” Tucker said.

People are also looking more so for detached single family homes as opposed to condos.

“We saw more price pressure on the detached single family homes,” Tucker said.
Tucker said he also expects the market to remain “really hot” in other parts of the Seattle metro areas such as South King County and Pierce County. Some of those areas are seeing very fast price appreciation, he said. And it’s likely there won’t be a huge wave of people moving out of the city, Tucker said.

Buyers in 2021 should be ready to move quickly, Tucker said. Overall, Tucker said, the Seattle area housing market will stay hot into 2021.

Daryl Fairweather, chief economist, Redfin

Fairweather said she is expecting an increase in sales both nationally and in Seattle starting off the new  year.
People are moving to Seattle from more expensive places, such as San Francisco and Los Angeles, and people are also looking to move from Seattle to the suburbs, or out of town entirely, she said.

Fairweather said most people are looking for a move to an area with more space, since many people aren’t as tied to the office anymore and won’t necessarily have to commute through traffic. They could be more open to moving somewhere like Snohomish County or Tacoma.

Fairweather said she expects the market in the Seattle area to continue to be competitive into 2021.

Currently in Seattle, new listings are up during a time of year that is normally slower, but the total number of active homes is down. Even though new listings are up, people are snatching up homes off the market incredibly quickly. “It’s a really fast market,” Fairweather said. “People understand the market is competitive.”She said it’s hard to imagine the market getting faster, but it will remain fast-moving and competitive.

The adoption of virtual tools is likely here to stay as well, Fairweather said. At the beginning of the pandemic, agencies quickly adapted to using new tools such as virtual tours to more safely and efficiently let people see and list homes — even when coronavirus restrictions were at their strictest. These tools now mean people can spend less time actually looking at the homes in person. The pandemic has also resulted in more people being more open now to making offers on homes sight unseen — a trend Fairweather said will likely continue.

As far as prices, Fairweather said she expects they will still be high in the Seattle area going in 2021, but the city could see a stabilization in home prices. Part of that is because prices went up so significantly in 2020, and 2019 was a relatively slow year for the Seattle area housing market.

“2021 is going to be more comparable to 2020, so it’s not like prices are going to speed up any, but we will continue to see price growth,” she said.
Bidding wars will also likely continue into 2021. Fairweather said she thinks the reason people are so eager to get into bidding wars is because of how low mortgage rates are, which makes it a desirable time to buy a home.

Mortgage rates could start to creep up halfway through 2021, Fairweather predicted, but there’s a “window of opportunity” for people when rates are still at their record lows.
That could push the buying season up. Fairweather said she expects the city will continue to see strong sales in January and February, and it will be unseasonably busy.
After that, the growth rate could level off and the summer months and into the fall may look more like a normal  year.

“If the world looks a little bit back to normal, and kids are back to school, the fall will go back to being a much slower time for the housing market than it was this fall,” she said.
She does expect there will be more listings next year. A lot of people this year were nervous to list because of the pandemic. Now, people are seeing prices going up and are eager to cash in on their home values. That’s going to lead to new listing growth, she said.

People are also looking for some specific features in their new homes, including seeking out more space. Home offices are going to be very popular, especially for people who don’t think they’re going to be going back to the office anytime soon — or won’t be going back as often as they used to. People are also looking for single-family homes and bigger yards.

The suburbs of Seattle, which are already very competitive, will likely continue to be seriously competitive next year, she said. But, it could look a little more balanced in the months to come, especially if restaurants and bars start to open back up, making people want to be closer to the city.

“I think the suburbs would be more competitive, but I wouldn’t count out downtown Seattle either,” Fairweather said. When might the Seattle area housing market cool down? “Not in 2021,” she said. “I would put that out to 2022 or later.”

J. Lennox Scott, chairman and CEO, John L. Scott Real Estate. 

Scott said he expects there to be a surge of new buyers at the start of the new year, but that inventory in the Puget Sound region will remain low until March 2021.

“We anticipate the ‘cyclone’ of housing market sales activity intensity will continue at extreme frenzy-level velocity (where about 90 percent of sales activity takes place) through April 2021,” he wrote in 2021 projections. “Then, sales activity intensity will probably go down one level of hotness to frenzy or surge over the summer as more listings come on the market for potential purchasers.”

The luxury market in the region will also likely stay strong, he said.

“The strong price appreciation we saw in 2020 will continue in 2021 as the biggest price boost will occur within the first four months of the year,” he said.

In 2021, buyers and sellers could see prices becoming out of reach for some, as well as an increase in interest rates when the economy starts to get better.

His recommendation for buyers and sellers: be ready on day one.

by Becca Savransky, Seattle P-I