Seattle tops the nation in home-price growth for first time in 9 years

Portland had been the nation’s hottest housing market all year, with Seattle second, but the rankings flipped in September.

Article from The Seattle Times:

After trailing Portland all year, the Seattle area has finally reached a dubious distinction as the hottest housing market in the country.

It marks the first time in nine years that Seattle has led the country in home-price growth.

All other areas saw single-digit growth, with Denver, Dallas and Tampa, Fla., again rounding out the top five.

Overall, Seattle prices are rising twice as fast as in the rest of the country, as they have for most of this year.

In a big moment for the nationwide housing recovery, the data showed that for the first time, national home prices in September surpassed their pre-recession peak. But homes are still cheaper than they were a decade ago when factoring in inflation.

The Seattle area had already broken its record earlier this year after seeing prices rise for more than four straight years. The region has seen home values jump nearly 60 percent since early 2012.

Seattle’s time atop the price rankings comes after it was named the region with the fastest-growing rents just a few months ago. Zillow on Tuesday reported that Seattle-area rents grew 9.1 percent in October compared with a year prior, again the most of any major metro area in the country.

The real-estate price increases are starting to have a big effect, as the Seattle area is moving up the ranks of the most expensive regions in the country to live in. 

Seattle-area home values are the fifth-priciest among the 50 biggest metro areas, up from eighth a year ago, according to a Zillow analysis.

In the past year, Greater Seattle surpassed the Boston, New York and Washington, D.C., metro areas on the list of most expensive regions to buy a house.

Seattle remains far behind four regions in California with home values that have topped half a million dollars: San Jose, San Francisco, Los Angeles and San Diego.

The Zillow data shows that home values across the Seattle metro area — King, Pierce and Snohomish counties — topped $400,000 for the first time a few months ago, up from $300,000 just three years prior.

The latest sales figures from the Northwest Multiple Listing Service showed the median single-family house in October cost $550,000 in King County, $387,000 in Snohomish County and $280,000 in Pierce County.

The biggest price increases are hitting starter homes. Case-Shiller reported a 12.7 percent annual price increase among the cheapest houses in the Seattle area, compared with 10.2 percent for luxury homes.

Despite the big year-over-year increase, Seattle home prices typically peak in spring and early summer and slow down this time of year.

Indeed, the Case-Shiller data showed that prices remained flat compared with a month earlier, even as national home prices gained slightly from the prior month.

But that’s mostly a function of how Seattle’s housing market typically works; when adjusted for normal seasonal changes, Seattle’s monthly home-price change looks about the same as the nationwide increase.

What’s more, the annual home-price increase is actually starting to slow slightly. Last month, the index for Seattle reported its biggest annual gain in more than two years, with home values rising 11.3 percent, but that figure has since dropped to 11 percent.

Ralph McLaughlin, chief economist at Trulia, noted that September was the first time Seattle had led the Case-Shiller index in annual home-price growth since August 2007. That was during a much slower time for home prices: At that point, Seattle’s 5.7 percent increase narrowly beat out Charlotte, N.C.

McLaughlin said Seattle overtaking Portland atop the housing price-growth standings “is about as symbolic as an old-school SuperSonics victory over the Trail Blazers.”

“Seattle leading the country in house-price growth is a testament to how attractive the region has become,” McLaughlin said. “The Pacific Northwest is now to the U.S. housing market what California was at the beginning of the recovery: a beacon of strong gains in employment, income and quality of life.”

Zillow on Tuesday also released a survey of about 100 national housing experts, and more than half predicted the U.S. housing market would finally swing back in favor of buyers by 2018, with rising inventory and less competition for homes. Still, 27 percent of panelists said it wouldn’t happen until the 2020s.

Fastest-rising home prices compared with a year ago

1. Seattle: +11%

2. Portland: +10.9%

3. Denver: +8.7%

4. Dallas: +8%

5. Tampa: +7.5%

Source: Case-Shiller home price index