It’s not just Seattle that’s seeing eye-popping housing costs: Across Washington, home prices are rising faster than in any state in the country — the first time that’s happened in a quarter-century.
Soaring costs from Bellingham to Spokane have propelled the state to a record for home prices, surpassing its pre-recession peak for the first time. Just in the last few years, Washington has zoomed up the list of priciest states in the nation and now sits in the top five overall.
“There’s no reason to believe that this is going to stop anytime soon,” said Peter Orser, director of the University of Washington’s Runstad Center for Real Estate Studies. “We’ve all talked about Seattle, but I’m starting to see the overflow — people are starting to make different decisions and trade-offs in pursuit of affordability.”
Washington home prices in April rose 10.6 percent compared with a year ago, the biggest jump of any state in the nation for the third month in a row, according to the data firm CoreLogic. Going back 40 years, the only other time Washington topped the list was a three-month stretch in the winter of 1989 and 1990.
Washington prices are growing at a rate nearly double the national average, and beating out second-place Oregon (up 10.3 percent) and third-place Colorado (up 9.5 percent), CoreLogic said.
Frank Nothaft, CoreLogic’s chief economist, pointed to Washington’s mix of urban and scenic outdoor activities as a big draw, especially for millennials.
He said the state has also been relatively slow to build more housing compared with the surging demand from buyers.
Rents and home prices are increasing at the same time now, and we’ve never seen that. Right now, there’s nowhere to live.
Eric Johnson, a designated real estate broker in Spokane
The Puget Sound region is still a big driver of the phenomenon — the Seattle metro area saw prices shoot up about 12 percent in the last year, and King County and its surrounding counties make up about half the state’s housing stock.
But the rest of Washington is becoming less affordable, too: Counties as disparate as San Juan, Stevens, Mason, Grays Harbor and Jefferson were among those that saw prices increase 20 percent or more in the first few months of 2016 compared with a year prior, according to the Runstad Center.
Overall, 37 of 39 Washington counties saw prices rise compared with a year ago, and even those regions lagging way behind Seattle’s economic boom are experiencing significantly higher home costs.
Bidding wars break out in Bellingham
Most parts of Washington still look cheap compared with Seattle and the Eastside. But those places tend to have lower wages and fewer job opportunities to go along with the rising housing prices, and part of their draw has long been affordability.
Consider two of the state’s most populous counties outside the Puget Sound region: Clark, which includes Vancouver at the southern end of the Interstate 5 corridor, and Bellingham’s Whatcom County at the northern end.
Both counties have seen median home prices hover around $300,000 so far this year. That might sound great to someone in Seattle, but both had prices around $200,000 just four years ago.
At the same time, compared with the typical $73,000 household income in King County, the median family income is about $20,000 a year less in Whatcom County and nearly $14,000 less in Clark.
Gragg Miller, a managing broker at the Coldwell Banker Bain office in Bellingham, remembers hearing from Seattle agents years ago about getting 10 or more offers on houses in Seattle, creating bidding wars that drive up prices.
“I thought, ‘I hope it never comes up to Bellingham,’?” Miller said. Now, “It’s starting to come up here.”
He’s seeing a steady flow of transplants from the Puget Sound region looking to escape the traffic and higher costs.
But Miller said the improving local economy also is generating more qualified homebuyers locally, competing over a declining supply of homes.
Rising prices in Bellingham have begun to push longtime residents to look at houses in neighboring, cheaper towns.
Failure to build one factor
Even in affordable Eastern Washington, Spokane County home prices are up 22 percent in the last four years, mirroring growth in Yakima, Benton, Franklin and Walla Walla counties, according to the Runstad Center.
Eric Johnson, designated broker of Coldwell Banker Tomlinson in Spokane, says that region has failed to build much housing over the last half-decade and now is being hit with a tsunami of demand.
Young adults who had been living with their parents, families who have been saving since the recession and those wanting to move up from their starter homes are all looking.
“Rents and home prices are increasing at the same time now, and we’ve never seen that,” said Johnson, whose family has been in the Spokane real-estate industry for half a century. “Right now, there’s nowhere to live.”
The counties seeing huge cost bumps vary dramatically: In San Juan, second-homes and luxury sales have pushed prices higher than anywhere else in the state, with the median house approaching $1 million.
But in coastal Grays Harbor County, home costs are now “only” $141,000 — but that’s way up from $88,000 four years ago. It’s among the regions seeing soaring housing costs despite remaining fairly economically depressed: The unemployment rate in Grays Harbor is 8.3 percent, third worst in the state and nearly double that of King County’s.
Only Wenatchee has price drop
So is there anywhere in Washington where housing is getting cheaper?
CoreLogic’s index shows the Wenatchee area did see home prices slip nearly 3 percent in the past year, the only area where that was the case. All other metro areas rose by at least 5 percent.
The median cost of all homes sold in Washington hit $307,658 in April, up 37 percent from four years prior, according to Zillow data on median home sales. It’s the first time the state has surpassed its old price record reached in summer 2007, before the housing market crashed.
The statewide surge has catapulted Washington further up the list of the nation’s most expensive states to buy a house, Zillow data shows.
In the last four years, Washington has surged past Virginia, Maryland, Massachusetts, New Jersey and Connecticut on the list of the priciest home markets and broke a virtual tie with Colorado.
Washington still sits well behind Hawaii, California and the District of Columbia, and data on several other states was not available.
Along with the surging local economy, the lack of available homes continues to drive up prices locally, much more so than around the country.
The Seattle metro area now has the lowest level of housing supply compared with demand of any region in the country, according to Redfin, meaning the scales are tipped dramatically in the favor of sellers.
The region’s total stock of homes for sale would sell out in one month, compared with the national average of more than three months.
“This part of the country,” Miller said, “is pretty hot right now.”
States with the highest home prices
1. Hawaii: $490,800
2. California: $430,000
3. Washington: $307,658
4. Massachusetts: $301,750
5. New Jersey: $301,000
Note: Data not available for several states, including New York and Texas. District of Columbia tops all the states, at $524,450. Source: Zillow data on median sales price for all homes in April.