2014 definitely played favorites to the sellers of Seattle. The average Seattle homeowner saw an increase of 6.1% [1] in their home’s value, with some neighborhoods experiencing double digit price increases. This increase was due to a combination of factors including extremely low inventory, historically low interest rates, rising rents, and an influx of individuals relocating to the Puget Sound area.
Inventory in 2014 was down 6.6% [2] . A market is considered “neutral” when available inventory based on closed sales is between 3 and 6 months. With levels hovering around 1.4 months of inventory throughout the majority of the year, buyers were forced to take an aggressive approach once they found a home they liked – often times waiving contingencies like inspections and utilizing escalation clauses, which would bid their sales price above and beyond their original offer and above the seller’s original asking price.
This chart shows the months of inventory based on closed sales of single family homes in Seattle that are not distressed or bank-owned as of November 2014.
Interest rates dropped steadily in 2014, starting out at 4.5 percent in January and ending just under 4 percent in December . These historically low rates made purchasing a home appealing, especially to long-time renters, who saw an average rent increase of 9% in the last year.
Check out our other blog post, Seattle Real Estate Outlook for 2015 for our take on what 2015 has in store for the real estate market.
[1] http://www.seattlepi.com/realestate/article/Housing-market-predictions-for-2015-5963477.php#photo-5061328
[2] Graph from TrendGraphix showing non-distressed SFR properties in Seattle
[3] http://www.hsh.com/mortgage_rate_trends/