Seattle’s booming tech sector helped push the city to the title of the nation’s hottest housing market for close to two years — for better or worse — but now Seattle isn’t even in the top 10, thanks to a recent real estate slowdown that has hit several West Coast markets.
Seattle real estate heavyweight Zillow gave its predictions for the top 10 hottest housing markets for 2019 and left Seattle off the list after ranking it number three to start 2018. This year, Seattle ranked 14th, ahead of Miami and behind Austin.
“Seattle, once the hottest housing market in the country, fell from its lofty heights fast,” Skylar Olsen, Zillow’s director of economic research and outreach, told GeekWire. “As early as May the Seattle metro home values were appreciating in the double digits. Market appreciation has halved in a little over seven months.”
This year, the nation’s hottest housing market will be another tech hotbed — San Jose, Calif. Southern cities with cheaper housing and the beginnings of strong tech ecosystems making up a good chunk of the list.
Here are Zillow’s predictions for the hottest housing markets in 2019: San Jose, Orlando, Denver, Atlanta, Minneapolis, San Francisco, Dallas, Nashville, Jacksonville and San Diego.
Zillow measured six factors for its list, including home values, apartment rents, job openings, population growth, income and unemployment.
Seattle compares with the top few markets favorably on a number of metrics, specifically those that measure the strength of the local economy. Zillow forecasts a median home value spike of 5.2 percent in 2019 for Seattle, which ranks 25th among markets surveyed and lower than all but one of the top 10 cities.
It’s an interesting time in the Seattle housing market. A years-long run of huge home value increases driven by the influx of thousands of well-payed techies is over, at least for now. But there is plenty of value to be had for savvy buyers and sellers, brokers say, even as the local economy continues to hum.
According to the Northwest Multiple Listing Service, activity on all sides of the real estate market has slowed. The number of new listings, pending sales, and closed sales all declined in December over the prior year.
“There’s lots of speculation as to the reasons why,” all these metrics are down, said Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma, Wash. “One thing is for sure: this situation can make for a deliciously deceptive market for either buyers or sellers.”
The number of houses and condos on the market at the end of the year is up 43 percent over the end of 2017. Members reported a decline in total closed sales for the year of 6.8 percent, though the prices of those sales were up 8.6 percent over the year prior.
Zillow’s Olsen noted that jobs and the economy don’t appear to be the culprit behind the slowing housing market. Instead, “for Seattle, the story is much more about expectations coming back down to earth.”
Redfin CEO Glenn Kelman foreshadowed the switch in the housing market last summer, when he told investors that frustrated buyers in hot West Coast markets like Seattle were sitting out, and for the first time in years, demand was beginning to wane.
NWMLS brokers agreed, calling the skyrocketing home values of the last couple years unsustainable and pointing to the end of 2018 into this year as a time for the market to balance out. But with rising interest rates, and fears of recession starting to crop up, there are a few unknowns at both local and national levels.
However, the slowdown could be a blessing in disguise for some potential buyers who have been pushed out of the housing market by rising prices and bidding wars. Millennials in particular will start to show up in the housing market this year in a way that they haven’t in recent years, one broker said, potentially adding more depth to the pool of buyers.
“Although many of them will face significant obstacles to buying due to student debt, lack of down payments, and Seattle’s high-priced housing, this group is likely to buy more homes in 2019 than any other demographic,” predicted OB Jacobi, president of Windermere Real Estate.