Seattle's hot housing market means more competition for renters

Washington's spring and summer housing forecast is bright — for sellers anyway. But if you're looking to buy, the news is neither good nor particularly surprising.

The average price of a single-family home in the Seattle area continues to rise. That means some buyers are getting priced out of the market. Still, with limited inventory, this remains one of the most competitive markets in the country.

According to data from Redfin, 59% of homes nationwide are selling within two weeks; in Seattle, that number is more like 92%. The difference is even more striking when you consider the median amount of time homes spend on the market. Nationally, the median is 20 days; in Seattle, it's just five.

Not surprisingly, some prospective buyers are simply getting priced out of the area. Others, though, are turning to condos or apartments, adding to the strain renters are experiencing more frequently, too.

Redfin Chief Economist Daryl Fairweather breaks down what to expect with KUOW's Angela King.

This interview has been edited for clarity.

Angela King: Let's start with those folks who seem to be getting priced out. As I understand it, you can measure that, in part, using online search data. What are you noticing?

Daryl Fairweather: We're seeing some early signs that demand is slowing down. Google searches for buying a home are down. We're also seeing a decline in touring activity. But when I talk to our agents on the ground, they say that the housing market is still very competitive. Mortgage rates are significantly higher than they were just a month ago, and that alone is going to make home-buying more expensive. So, the typical home-buyer out there may not feel like these higher rates are making it any easier for them. It's just making it more expensive.

And remind us of the median home price right now in the Seattle area and how much that's increased.

The median sale price for homes in Seattle stands at $751,000. That's up 15% from last year.

What is happening to those potential buyers who feel like they're getting priced out?

Some homebuyers are increasingly looking towards condos because single-family homes have gotten so expensive. They're looking to leave the Seattle-metro area. We're seeing more migration now than at the peak of the pandemic. People are still very motivated to move somewhere more affordable. So, they may be looking to the exurbs of Seattle or to the surrounding counties. They may even be looking toward a more affordable area like Phoenix or Nashville. And the last alternative is to rent, but rents are going up very quickly all across the country, too.

So, are renters dealing with more competition as well, in terms of finding an affordable rate?

Yes. There is a very low vacancy rate, which means that there aren't a whole lot of apartments or homes out there available to rent. And that means that renters are scrambling to get whatever lease they can, and landlords have the power to raise their rent. It's really tough out there for renters as well as homebuyers.

Getting back to homebuyers: Homes are selling very fast here in Seattle. What is it about Seattle that contributes to this high rate of turnaround?

People nowadays will do a lot of their home-touring online. So, they go into an [in-person] tour of a pretty sure of whether they're going to make an offer or not on that home. And then, they make an offer that same day. People here have plenty of cash to spend and are willing to do what it takes. Tech adoption is also high in the area. They know how to use these tools. So, I think Seattle, especially, is a market where people know what it takes to win and are willing to act as quickly as they need to.

Do you see any real solutions out there for people who are having a hard time competing in this market? Or, do they just kind of have to wait it out?

It is a tough market for buyers. The silver lining is that the [single-family] housing market will likely be less competitive come summer when these higher mortgage rates start to fully affect the market. I think more buyers will start to bow out of the market, and we'll see less competition for every home that's available for sale.

But at the same time, it's not going to be a more affordable market necessarily; it'll just be slightly less competitive. The only real way to come out of this housing market with lower housing costs and more disposable income is to move somewhere more affordable or choose a more affordable style of home. So, I think a lot of people are just going to have to make that compromise.

Listen to the interview by clicking the play button above.