COVID-19: What does it mean for the 2020 Seattle housing market?
It’s been said, there is an opportunity in every crisis. This is true, especially in the real estate market. It’s true, even in the Seattle market where current median prices are upwards of $650,000 and selling for nearly $500 per square foot.
What’s the real estate opportunity when we’re facing a global crisis? Let’s explore.
Pandemic
Washington was the first state to report a confirmed case of COVID-19 on January 20, 2020. For several weeks, Washington state was the only state with confirmed deaths from the coronavirus disease. My how things have changed in just over two months.
In the early days of COVID-19, Washington life didn’t seem very different. The biggest change may have been that residents in other states now knew where Costco was based and why they call their store brand “Kirkland”.
Some were scared, others thought the reaction was ridiculous.
It didn’t take long for that to change. Finally, officials and residents realized this wasn’t just something happening abroad.
On March 24, 2020, Washington Governor, Jay Inslee issued a “stay at home” order to try to reduce the spread of coronavirus. Many had already been practicing social distancing, however, this order got the attention of the rest of Washington. The world and the United States are changing rapidly. News from just one day ago is suddenly, completely irrelevant as conditions are changing so fast.
So what does this mean for Seattle area real estate?
This chart, created from data provided by the NWMLS, shows the number of homes in King, Snohomish, and Pierce counties that went from “Pending” to “Back on the Market” this month. This represents real estate deals that were moving forward but ultimately didn’t become a finalized home purchase. Then, the owner placed the home for sale again.
| Back on Market | King County | Snohomish County | Pierce County | Entire NWMLS |
| March 1-7 | 28 | 7 | 18 | 122 |
| March 8-15 | 42 | 21 | 23 | 172 |
| March 16-23 | 96 | 48 | 47 | 324 |
| March 24-30 | 125 | 70 | 70 | 411 |
Obviously, there are a multitude of reasons for a sale not to close. It’s undeniable though, the trend is startling and coincides with worsening domestic and global news about the pandemic.
To say, we’ve “been here before” as we watched the real estate market crumble in 2008, would be a gross understatement. The pandemic is uncharted territory, especially as our economy is intertwined globally. This pandemic impacts every facet of the economy. Plus, the level of uncertainty is causing fear.
When people are afraid, major life questions like, “Should we buy our first home?”, take a back seat to, “Am I going to have a job next week?”
James Hsu, owner VerraTerra Real Estate and Property Management
Home sales are declining at a rapid rate. This will likely continue, not in a gentle downward trend, but a drop like we’ve never seen before.
You may be thinking “You said we were exploring opportunities. None of this sounds good to me! What gives?” Keep reading.
Seattle area homeowners looking to sell
Wait
Every homeowner’s circumstances are different. That said, the trend in the NWMLS of homes “back on the market”, shows, now is likely not a good time to sell your home for a reasonable price. Buyers will become more scarce. Inflated Seattle area home values will start to fall. If your move is not a necessity, it may be better to consider waiting out the storm.
Refinance
While you’re waiting, consider the opportunity to reduce your interest rate with historically low mortgage refinance rates. If you have to stay put for several months or longer, you may as well save money. You can save on overall interest and you may save money on your monthly payment.
Here’s an online calculator to compare your current mortgage to a potential refinance.
We don’t recommend a “cash out” refinance. You should be considering ways to save, not incur new debt during these turbulent times.
Make it look like a million bucks!
If a move isn’t optional and you must sell your house, it’ll be more important than ever to show your home in it’s best light. Perception is everything, so make it easy for your potential buyer to see the beauty and value of your home.
Here are a few resources we’ve published to help you prepare and maximize your home’s appeal inside and out.
Rent
If you can move and still afford to keep your home, renting is a great opportunity. As experienced property managers, VerraTerra can provide a free rental market analysis. We’re happy to answer questions and help you determine if renting your home is a better choice right now.
Seattle area real estate investors and would-be investors
Get ready
The fallout from the current crisis will spell big opportunities for investors, seasoned and newbies alike. No question, home values in the Pacific Northwest, will fall. How far and how quick, no one can say for certain.
Prices will drop on single family and multi-family properties. Put yourself in the best position to leverage this opportunity now (you know, while you are quarantined in your house!)
Establish a relationship with a real estate professional. Discuss what type of home or property you may be looking for and what cap rate (rate of return) would be most appealing to you.
VerraTerra is experienced in both sales and property management. Our team has a unique inside view to the Pacific Northwest rental market. As we go through this COVID-19 crisis, we’ll have a front seat view. Let us use that knowledge and experience to help you with your next (or first) investment when the storm subsides.
