A few months ago it was reported that King County actually lost a net of 4,868 residents to other US Counties. To be clear, after accounting for births/deaths and international immigrants moving in, King County actually gained a total of 28,934 net new residents in the latest 12-month data-set according to the latest census data – good enough to be the 6th largest gain in the nation. Regardless, King County lost a net of 4,868 residents to other US counties. Which counties, we don’t know.
But what we do know is that Snohomish County gained 4,404 from other US counties; Pierce County gained 8,189 from other US counties, and Kitsap gained 2,392 from other US counties. I would have to imagine that a majority of those relocating to Snohomish, Pierce, and Kitsap Counties came from King County – but that’s purely an anecdotal guess
If you read Seattle Times’ latest real estate market report (which focuses primarily on King County), please remember that our overall Puget Sound Housing market is not only represented by Seattle and King County. We had our time in the sun. It’s looking more and more like it’s our neighboring counties who will be enjoying their time in the sun with nice year over year appreciation gains. That said, the backbone of King County’s economy is strong, so I wouldn’t worry too much about any sort of bubble bursting, just read on below.
Tech and Amazon
Amazon is moving forward with its HQ2 in Crystal City, Virginia. But I wouldn’t be fearful of Amazon reducing their growth trajectory here in Puget Sound. Despite concerns stemming from headlines a few months back when Amazon backed out of leasing the entire Rainier Square building in downtown Seattle (700,000+ sqft of office space in total), Amazon is still very much growing their Northwest footprint.
It is true that Amazon has leased 45,500 square feet of temp office space in Crystal City, and eventually plans to grow that site to about 25,000 employees by 2030. But compare that to what they’re already doing over in Bellevue: they just released building plans for a building which would not only be the tallest building in Bellevue, but would also have about one million square feet of office space. Add that to the leases and other plans they already have over there, and there’s enough room in the near(ish) future for up to 11,000 employees! Furthermore, their preliminary planning docs show the potential for a second, similarly gigantic office tower in Bellevue, but they have no immediate plans to build that one…yet. Indeed currently has 10,888 full-time jobs listed for Amazon within 10 miles of Seattle, 9,381 of which pay over $95,000 per year.
Apple just leased two big buildings on Dexter, and plans to “turn Seattle into ‘key engineering hub’ with 2,000 new workers”. The new office space as a whole could house up to 3,000 new employees using general square footage metrics. According to Geekwire, Seattle is now number two in the nation for highest average tech salary, at $138,000 per year (trailing only the Bay Area).
What This Tells Us
Regardless of whatever is happening week to week, or even month to month in Seattle, King County, or Puget Sound Real Estate, the fundamental economics supporting Puget Sound’s real estate market just keeps getting stronger. So despite seasonal ups and downs in median house price, and increase/decreases in inventory, ultimately there is no bubble-bursting on the horizon so long as our economy keeps doing what it’s doing.
Absorption Rates per NWMLS Real-Time Data:
- SFR Pending Sales in Seattle: 730
- SFR Active Listings in Seattle: 1,492 homes
o Alex Black Absorption Rate for SFR in Seattle: 32.85%
o Absorption rate on July 3rd was 34.11%. Thus, buyer activity is slightly declining in relation to seller activity = deteriorating median house prices likely
- Condo Pending Sales in Seattle: 247
- Condo Active Listings in Seattle: 714
o Alex Black Absorption Rate for Condos in Seattle: 25.70%
o Absorption rate on July 3rd was 25.85%. Thus, buyer and seller activity have essentially remained constant = likely stable median condo price
Alex Black Absorption Rate is calculated as: (Pending Sales) / (Active + Pending Sales)
Per Bankrate.com, the 30 Year Mortgage interest rate rose to 3.97%, with .32 in discount and origination points.
Furthermore, rates had a horrendous day yesterday…rising about .125% throughout the course of the day due to a poor bond auction and losing technical support. This isn’t reflected in the latest Bankrate survey but will show up in next week’s survey. If nothing changes between now and next week’s survey, expect the headline interest rate number to be closer to 4.1(ish) percent with .32 in points. Rates are still near 31-month lows
Mortgage rates this week
The benchmark 30-year fixed-rate mortgage rose this week to 3.97 percent from 3.95 percent a week ago, according to Bankrate’s weekly survey of the nation’s largest lenders.
A year ago, it was 4.70 percent. Four weeks ago, the rate was 4.04 percent. The 30-year fixed-rate average for this week is 1.13 percentage points below the 52-week high of 5.10 percent, and is 0.03 percentage points greater than the 52-week low of 3.94 percent.
The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points.
Over the past 52 weeks, the 30-year fixed has averaged 4.58 percent. This week’s rate is 0.61 percentage points lower than the 52-week average.
- The 15-year fixed-rate mortgage rose to 3.30 percent from 3.27 percent.
- The 5/1 adjustable-rate mortgage rose to 3.90 percent from 3.82 percent.
- The 30-year fixed-rate jumbo mortgage rose to 3.85 percent from 3.81 percent.
- At the current 30-year fixed rate, you’ll pay $475.69 each month for every $100,000 you borrow, up from $474.54 last week.
- At the current 15-year fixed rate, you’ll pay $705.10 each month for every $100,000 you borrow, up from $703.64 last week.
- At the current 5/1 ARM rate, you’ll pay $471.67 each month for every $100,000 you borrow, up from $467.10 last week.
Results of Bankrate.com’s weekly national survey of large lenders conducted July 10, 2019 and the effect on monthly payments for a $165,000 loan:
The “Bankrate.com National Average,” or “national survey of large lenders,” is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. https://www.bankrate.com/mortgages/analysis/
These charts are Seattle Specific, but the Puget Sound Real Estate Market mirrors the Seattle market.
Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc. Being in the mortgage industry for three years, Scott brings a fresh millennial flair to the industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. Scott combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer. You can follow Scott’s weekly market updates on his PRMI