Smoky skies may have kept us from seeing this one coming, but during the hottest time of the year in Seattle — in the nation’s hottest market — the housing situation has cooled a bit.
According to Seattle-based Zillow Group’s Real Estate Market Report for July, Seattle is among U.S. cities showing the greatest slowdown in home value appreciation over the past year. It’s relative, of course, since values are still rising — it’s just not happening at the blistering pace set in 2017.
According to Zillow, Seattle metro home values rose 9.1 percent over the past year, down from 14.2 percent a year ago. Over time, the average rate of home value growth in the city is 5.6 percent, so values are still rising faster than average.
Zillow also said the median home value in Seattle is $487,600, which easily eclipses the nationwide number of $218,000 — the highest value ever reported for the U.S. Home values rose 8 percent across the country in the past year, 0.7 percentage points faster than the year before.
Seattle went from the leading market in terms of home value appreciation, to 12th fastest, joining Portland, Sacramento, Calif., and Tampa, Fla., among cities with the biggest dips. There are 13.2 percent more homes on the market to choose from than a year ago.
The situation in a city that has been booming in recent years, especially with tech jobs and related construction, was even forecast by a Zillow competitor in the real estate/technology space — Redfin.
Redfin CEO Glenn Kelman warned just last week of a slowing national real estate market, especially in hot markets such as Seattle and San Francisco where frustrated home shoppers will choose to sit out rather than get repeatedly beat out.
“As U.S. home prices have increased faster than wages for 70 straight months, buyers in markets like these have finally had enough, at least for now,” Kelman said during a quarterly earnings call.
Indeed, Zillow said buyers are beginning to balk at the “sustained, rapid rise in prices that have followed the strong job growth and high housing demand of the past half-decade.”
Zillow senior economist Aaron Terrazas said in a news release that “despite the slowdown, home values are still growing faster than their historic pace in almost all large markets, and it’s far too soon to call it a buyer’s market.”
Terrazas added, “But it’s clear that the winds that have boosted sellers over the past few years are ever-so-slightly starting to shift.”
Seattle’s biggest employer could also serve as an indicator of what’s happening in the city’s real estate market.
Amazon reported its first decline in headcount in nine years during the first quarter of this year, when its overall figure dropped by 2,900 employees. During an earnings call in July, the tech giant again said it was slowing external hiring in favor of shuffling employees internally.
The housing slowdown applies to the rental market as well, where Seattle saw a significant drop in median rent appreciation, thanks to the fact that more units have become available in the booming city.
Median rent rose 0.3 percent over the past year to $2,173. Last year at this time, rents were appreciating 5.3 percent annually. Median rent across the U.S. rose 0.5 percent over the past year to $1,440, down from 1.6 percent growth a year ago.
Along with Seattle, Portland and Kansas City led the slowdown, as 21 of the 35 largest housing markets reported slower rent appreciation in July compared to a year ago.