Seattle home prices continue to shoot upward faster than a luxury condo building in South Lake Union. In May, the region’s single-family home prices increased by 13.3 percent year-over-year, more than double the national average gains of 5.6 percent.
That’s according to the most recent Case-Shiller National Home Price report, which takes the temperature of the nation’s housing market each month.
May was the ninth month in a row in which Seattle experienced the biggest year-over-year increase in home prices. The numbers suggest a correlation between cities with booming tech industries and hot housing markets, which probably comes as no surprise to any Seattle or San Francisco resident.
Portland came after Seattle in the May report, with price gains of 8.9 percent. Denver pushed passed Dallas for third place, with home price increases of 7.9 percent. Both Portland and Denver are emerging tech hubs.
Since 2012, the nation’s tech capital, the San Francisco Bay Area, has experienced the biggest gain in home prices, according to the Case-Shiller report.
Seattle, Portland, and San Francisco share more than booming technology industries. The three cities have much lower percentages of owner-occupied homes than the national average. In Seattle, just 46 percent of property owners live in the units they own; in other words, the Emerald City is heavy on renters. In San Francisco, that number is 36 percent and in Portland, it is 52 percent. Nationally, the figure is 64 percent.
Each city is also experiencing a population boom, driven largely by job growth in the technology sector.
“The key factor for the rise in home prices is population growth from 2010 to 2016: the national increase is 4.7 percent, but for these cities, it is 8.2 percent in San Francisco, 9.6 percent in Portland and 15.7 percent in Seattle” David Blitzer, managing director of the Index Committee at S&P Dow Jones Indices said in a statement. “A larger population combined with more people working leads to higher home prices.”
According to Blitzer, U.S. home prices continue to climb and are outpacing both inflation and wages. Does that mean we’re headed toward a bubble? No, says Blitzer. He blames populations growing faster than housing supply.
“Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal … The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”
In other words, despite the countless cranes you see dotting the downtown skyline, Seattle can’t build fast enough.