The days are warming up, but will Seattle’s housing market recapture its status as the nation’s hottest? For at least one group, it’s still not easy to get in on the housing game.
A new report from real estate technology company Zillow shows the city to be the second toughest market in the nation for first-time home buyers. Only San Francisco eclipses Seattle in a ranking that examined the 35 largest U.S. housing markets.
New buyers make up 46 percent of all buyers, and more than six in 10 of them are millennials, Zillow says.
In searching for markets with low prices, high inventory, more frequent price cuts and strong forecasted appreciation, Zillow’s analysis found that new buyers would have the best luck on the other side of the country, in Tampa, Fla.
Ten best markets for first-time homebuyers:
- Tampa, Fla.
- Las Vegas
- Orlando, Fla.
- Nashville, Tenn.
- Charlotte, N.C.
Ten most challenging markets for first-time homebuyers:
- San Francisco
- Washington, D.C.
- Los Angeles
- Sacramento, Calif.
- San Diego
- San Jose, Calif.
Zillow reported that the U.S. housing market has cooled recently and inventory is up 1 percent year-over-year, after being down 8.7 percent last year. It’s the first time inventory has been up heading into home-shopping season in at least five years.
Zillow also said the median home value in the Seattle metro area is $491,500, and is expected to rise 3.1 percent in the next year. The company said there are about 5,800 homes for sale.
“The Seattle slowdown is visible in the relatively low forecasted appreciation — 3.1 percent over the next year, which is 10th lowest if you’re looking at the biggest markets in the country,” Skylar Olsen, Zillow’s director of economic research, told GeekWire. “That means that today’s first-time buyers can’t expect the same rapid home value appreciation — and therefore, growth in their overall wealth — as someone who bought a year ago.”
Olsen said that the good news for Seattle buyers is that inventory, however limited, is growing, which should continue to ease competition.
“Homes aren’t selling above their list prices as often anymore,” Olsen said. “The high prices are likely here to stay though, creating a high entry price point for prospective buyers.”
After years of relying on a hot tech job market and seeing massive population growth, it may have started to feel like Seattle is running out of room for newcomers, or that perhaps Amazon, the city’s top employer, had cooled on its own growth plans in the city. But Olsen said the numbers are consistent.
“Seattle jobs numbers haven’t really begun to slow. We’re still adding jobs at a year-over-year rate around 2.5 percent, a pace we’ve held consistently since mid-2017,” she said. “So any impact tech jobs or jobs in general are having on Seattle housing markets is more about expectations. But expectations can be powerful. Seattle home values and rents both grew so fast for so long without income growth to match. Housing demand simply can’t keep that up for long. It’s harder still to justify outbidding your competition if you don’t think Seattle will continue to add high income jobs at the same pace it did in say 2015 and 2016.”