Home prices in Seattle have continued to go up over the past year as buyers were faced with low inventory and stiff competition.
For buyers with lower budgets, it has become even more difficult.
According to a new report from Zillow, home values have been rising the fastest among the most affordable homes in Seattle and in many metro areas across the country. Annual appreciation for homes in the lowest tier in Seattle rose 13.9% in February year over year, according to report. Homes in the middle tier rose 13.1% and homes in the top tier rose slightly less at 12.1%.
It’s a trend that’s being seen across the country.
“In a majority of U.S. metro areas, homes in the entry-level segment of the market most likely to be sought by first-time and/or lower-income home buyers have also grown the most in value over the past year,” the report said. “And in many areas, the gap in appreciation rates between the most- and least-affordable homes is widening, evidence of the intense competition between buyers on a budget.”
The Seattle area housing market has stayed strong throughout the pandemic. But low inventory and strong buyer demand has resulted in rising prices as buyers are forced to compete over fewer homes.
Some brokers in the region have worried about whether the rate of appreciation on homes is sustainable.
According to Zillow, experts are predicting the typical home value in the Seattle metro areas will go up another nearly 12% by February of next year.
“The U.S. market is hot in virtually every segment,” the report said.
Across the country, home values in the lowest tier rose by about 9.8% and homes in the highest tier went up by about 9.5%. In nearly all of the 50 largest markets across the country — 44 of 50 — more affordable home values grew faster than the middle and top tier homes.
“Rapid growth in the most-affordable segment of the market is not a particularly new phenomenon — these homes have long been in high demand from budget-conscious buyers, and it can be difficult for builders to profitably build in these segments, further restricting already-tight inventory,” the report said.
“But a widening gap between annual growth in the top and bottom segments of the market is illustrative of the intense heat specific to the bottom of an already generally hot market — particularly in a handful of typically more-affordable Midwestern metros.”
Here are the metro areas where home values grew the fastest among more affordable homes, out of the 100 largest markets, according to the study.
Home values for the bottom-third tier of homes in Boise grew about 27% year over year.
Home values for the bottom-third tier of homes in Phoenix grew about 19% year over year.
Home values for the bottom-third tier of homes in Spokane grew about 18% year over year.