Bellevue, Washington — one-third of the Seattle-Tacoma-Bellevue metropolitan statistical area — certainly took a hit from higher mortgage rates last year, as did most of the country. But the latest data paints a picture of recovery — one where prices, demand, consumer sentiment and more are bouncing back, and then some.
“Despite concerns about interest rates impacting the market, reduced inventory and lower days-on-market show that the Bellevue market remains robust,” says Kevin Zellmer, owner and managing broker of Realty ONE Group Enterprise in Bellevue and Lake Chelan, Washington. In fact, Zellmer says, “Bellevue is the highest city in demand in the Seattle metro area.”
Will that trend of high demand and low inventory continue on through 2023, though? Here’s what data from the U.S. News Housing Market Index tells us.
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How the Bellevue Housing Market Changed in 2022
Single-family housing permits fell steeply in the Seattle-Tacoma-Bellevue market in 2022, dipping from a high point of 788 in May to 357 by November. Since the start of 2023, however, conditions have begun to improve steadily.
January 2023 kicked off with just 359 single-family permits approved, but by June, it was nearly 600. Still, permit approval is down compared to 2022. Over the last three months (April through June), 1,712 permits were approved in total. For that same period in 2022, it was 2,083 — a decrease of about 18%.
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On the multifamily side, permits also fell significantly across 2022. And this year, they’ve fared no better. At the start of 2022, the MSA saw over 2,100 multifamily permits approved. But those numbers steadily declined and by June of this year, had fallen to just 1,049.
Between April and June of 2023, a mere 3,352 multifamily permits were approved in Seattle-Tacoma-Bellevue. A year earlier, it was a whopping 5,500. That’s a nearly 40% decline year over year.
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This could change, though. Just last year, Amazon, which is headquartered in Seattle and Bellevue, created the Amazon Housing Equity Fund and committed over $2 billion to increasing multifamily housing in Bellevue and the Eastside. The goal is to add at least 20,000 new homes to the community — all for low- and moderate-income earners.
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Bellevue Housing Supply and Demand
Housing supply is low nationwide, and the Seattle and Bellevue housing markets are no outlier. In fact, the metro had a mere 1.1-month supply in June 2023. That’s down about 2 weeks compared with a year ago and is a big dip from just March, when the area had a two-month supply of homes.
It’s also lower than national supply levels, which sit at 1.81 months, and is significantly below the 6.5 months generally considered a balanced market.
The combination of low housing supply and growing population is putting a crunch on the market: Bellevue’s population increased 0.6% year over year from June 2022 to June 2023, and marked a 24% population increase between the 2010 and 2020 Census reports. And mortgage rates are keeping a lid on housing inventory countrywide.
“A lot of people have interest rates of 3% to 4% on their current mortgage,” says Laura Townsend, a real estate agent at Re/Max Metro Realty in Seattle. “They are reluctant to give up that low mortgage rate to buy a larger home at current rates. That is going to translate into fewer houses coming on the market and keep inventory low.”
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Because of this consistently low inventory, Zellmer says Bellevue homes are flying off the shelves.
“Currently, Bellevue boasts an impressive days-on-market of only seven days for sales,” Zellmer says. “Comparing this to the period from July 2022 to January 2023, where the average days-on-market ranged from 20 to 40 days, it’s evident the market has improved significantly.”
It’s not just for-sale homes that are in low supply. Rental units are hard to come by, too. As of March, the rental vacancy rate in the Bellevue area was just 3.3%, according to Census data. That’s down from almost a full percentage point compared to last year and is well below the national vacancy rate of 6.4%.
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Despite the low inventory on both for-sale homes and rentals keeping things afloat, demand from consumers isn’t quite where it used to be — and high mortgage rates, which were at an average of 6.93% as of Aug. 2, are likely to blame.
According to the Mortgage Bankers Association, applications to purchase a home decreased 3% compared with the previous week and were down 26% year over year as of Aug. 2. And while consumer sentiment has improved 14 points since last year, per a University of Michigan survey, it’s still well below pre-pandemic (and even early pandemic) numbers.
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Median Home Price in Bellevue
Home prices in the Seattle, Tacoma and Bellevue markets are down 1.8% compared with one year ago. Still, they’ve improved quite a bit — at least on a monthly basis — since the end of 2022, when the median price sat at $716,000. Now, it’s up to $800,000 for the MSA, according to Redfin — nearly double the national median — and has remained there for two months straight. Meanwhile, Zillow tags Bellevue’s average home value at nearly $1.3 million, down 11% year over year.
“Home prices had a slight decline at the beginning of the year when interest rates took a steep jump and many of our tech companies were laying off,” Townsend says. “The market has really leveled out and become stable.”
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Rents, on the other hand, are actually up monthly and over the year. The current median rent clocks in at $2,262, up 1.4% compared with one year ago. Rents are also above the national median, which sits at $2,054 per month.
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Unemployment Trends in Bellevue
Employment in the Bellevue area has jumped by over 69,000 in the last year, with nearly 2.2 million workers in the MSA. While unemployment is technically up 0.5% in the last year, the area’s 3.3% unemployment rate is near its lowest point in recent history and is below the nation’s 3.7% rate.
This strong job market in Seattle-Tacoma-Bellevue comes down to its booming tech scene, according to agents.
“We now have all of the big tech companies here: Microsoft, Google, Meta,” Townsend says. “We also have Amazon and Space X.”
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Jobs in the local construction industry are up, too. Employment in this sector has increased by 2,600 in just the last year.
The area’s strong job market is likely why foreclosures have remained fairly rare in the metro area. According to Black Knight, the current foreclosure rate in the area is 0.2% — a slight 0.1% increase over the year but well below the nation’s 0.4% rate.
Builder Confidence in Bellevue Improves
Construction costs nationally may be up 0.5% compared to last year, but they’ve been declining since November 2022. This could play a role in why builder sentiment — as measured by the National Association of Home Builders and Wells Fargo Housing Market Index — has increased considerably this year. Currently, builder sentiment sits at a 54 – more than double the 25 score seen at the close of last year.
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Nonresidential construction is falling in the region, notching a 9.2% decrease over the last year, according to the Architecture Billings Index. Total architectural billings are slightly below national numbers.
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Bellevue Real Estate Market: Predictions
With a strong job market, improving consumer sentiment and rising builder confidence, the Seattle and Bellevue housing markets are standing strong and stable. When you throw in the area’s ultra-low inventory — not to mention the decline in single-family permits that our forecasts currently predict this fall — conditions are likely to remain that way for some time.
“As for Bellevue, this city will always be high in demand,” Zellmer says. “And it’s expected that prices will further rise as interest rates ease over the next six to 18 months.”
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Bellevue, Washington, Housing Market Forecast originally appeared on usnews.com
