Five takeaways from Seattle’s red-hot 2021 housing market

It’s getting harder to find a home for less than $500,000 and easier to find one with a price tag of more than $1 million.

That’s just one takeaway from year-end data on Western Washington home sales, released Wednesday by the Northwest Multiple Listing Service. The figures also chart the ongoing rise of the suburbs, the shortage of homes for sale and which luxury tower had the priciest condo sale of the year.

Here are five big takeaways from last year’s housing market:

Seattle lags the suburbs

Price growth is steepest farther from Seattle.

In King County, the median home sold for $828,111, up 14.2% from 2020.

Prices shot up even faster in Snohomish County, where the $680,000 median was up 23.6%, and in Pierce County, where the $502,500 median was up 19.6%.

San Juan County recorded the highest median sale price: $860,000, up 26.8% from a year earlier.

The median price in Seattle hit $859,000, up 7.4% from 2020. Other parts of the county saw bigger jumps. In Southeast King County, which includes Enumclaw, Auburn and other areas, the median home sold for $650,000, up 22.6%.

Condos are a somewhat more affordable option: The median condo in King County sold for $459,000, up 6.7%.

Twin trends are boosting suburban home sales: Home prices in cities such as Seattle continue to climb out of the reach of many buyers. And work-from-home policies are allowing white-collar workers to worry less about commuting. That all means increased competition in once-affordable areas, putting pressure on home shoppers with less to spend.

Pierce and Whatcom counties prices tip past $500,000 

Both counties blew past the $500,000 threshold in 2021.

The median home in Pierce County sold last year for $502,500, up from $420,000 the year before. Tacoma, Spanaway and other Pierce County areas have grappled with a flood of buyers priced out of areas farther north, gentrification and other affordability challenges.

In Whatcom County, where buyers have flocked to Bellingham, the median hit $549,000, up from $445,000 in 2020.

Finding a single-family home under $600,000 is essentially “impossible in Seattle,” said Matt Goyer, a Seattle broker at Urban Living.

“You push farther and farther out,” Goyer said. “And you find that you were getting outbid in Seattle, but you’re also getting outbid in Tacoma.”

There still aren’t enough homes

Buyers found a little good news in 2021. The number of new listings ticked up from 2020, offering more homes for sale.

But listings went off the market quickly. Throughout the year, it would have taken less than three weeks on average to sell the inventory available across all 26 counties the MLS tracks, a measure known as months of inventory. That’s far below the four to six months the listing service considers “balanced.”

Many factors are driving the shortage. While developers are building some new homes in outlying areas, Seattle has little buildable land for additional single-family homes (and zoning restrictions limit town homes and condos in many areas). Homebuilders are facing supply chain issues. And would-be sellers worry about being able to buy a new house themselves. 

“We’ve got buyers writing six, seven, 10 offers. Sellers hear about this and say, ‘I could sell my house and even afford to buy a more expensive house, but am I going to be able to get into one? Am I going to win the bidding?’” said Laurie Way, managing broker for three Seattle Coldwell Banker Bain offices. 

Across the 26 counties, 11.5% of all single-family and condo sales were new construction, down slightly from 13% in 2020.

“There is still a lot of pent-up buyer demand,” Goyer said. A four-bedroom Greenwood Craftsman he listed for about $1.1 million this month drew 150 showings and 20 offers, he said. “I’m really worried we’re going into a situation where there are not going to be enough sellers but there will still be tons of eager buyers.”

For more buyers, a million-dollar home is the norm

The number of million-dollar homes sold in the Seattle area has been steadily rising since the immediate aftermath of the 2008 housing crash.

In 2017, more than 4,900 King County homes, most on the Eastside, sold for at least $1 million. In 2021, that number hit nearly 10,500. That was up 61% from 2020, with sharp increases in South King County.

In Snohomish County, 1,900 homes sold for $1 million or more, more than triple the number in 2020. In Pierce County, 564 homes sold for $1 million or more, roughly double the year before. 

The most expensive house sold in Western Washington was a gated waterfront estate in Seattle that sold for $30.75 million, according to the NWMLS. The most expensive condo was a penthouse in Seattle’s Escala tower topping the list at $7 million.

Many buyers have equity from selling another house, but brokers say the million-dollar norm is also driven by highly paid tech workers who tap into stocks to help fund their home buys.

“We have lots of first time buyers at a million-plus,” Way said.

2022 could cool off

Some brokers say 2018 could provide a hint of what the market might see in 2022. 

That year, prices climbed in the early months of the year, then fell at the sharpest rate in years during the second half of the year because of interest rate hikes, rents leveling off and other factors. The Ballard and Green Lake area lost more than $110,000 in the median price from spring 2018 to the end of that year. 

“I think it’s going to feel a lot like 2018,” Goyer predicted about 2022. Interest rates and sky-high prices could “cause a lot of buyers to hit the brakes in the back half of the year,” he said.