In October 2021, we saw pretty much the same thing we’ve been seeing all year: It’s a hot time for the suburbs. Closing prices in Pierce County and Snohomish County grew by the same rate last month, at around 20 percent compared to the same time last year, according to data from the Northwest Multiple Listing Service.
There’s the obvious explanation—that with flexible work-from-home policies and a greater desire for space spurred by the pandemic, buyers looked farther away from the city for their home bases. But it gets a little more complicated. According to James Young, director of the Washington Center for Real Estate Research at the University of Washington, baby boomers and millennial first-time buyers are both eyeing the outer regions as their work circumstances continue to change.
Remote work fuels younger buyers
For millennials, the question is whether they’ll be going back into an office and how often. Much of this depends on what employers decide, but Young notes “the extent to which employees are going to be willing to come back to the city all the time” is a factor, too. Although that doesn’t extend to everyone who could work in an office (and certainly not to those whose work is reliant on showing up, like nurses or service-industry workers).
Either way, Young suggests that uncertainty doesn’t factor in as much as one might think: “Covid has forced people to think about what they want work to look like and what kind of work life they want to have.”
Windermere Chief Economist Matthew Gardner sees a boost coming to those markets as work expectations become clearer. He predicts a blend of remote and office work, meaning living further out can be more feasible with a long commute only a couple of days a week rather than every weekday.
“Once those decisions are made, hopefully at the start of next year, we could see demand starting to increase significantly because [of] would-be buyers who are just waiting,” says Gardner. “Now they know what's going on, then they'll start pulling the trigger…. I think likely we'll see a lot of demand coming in at the start of next year and not necessarily those traditional areas that you'd normally expect to see.”
Young is already noticing unexpected hot spots. “You're seeing some really strange movement there in terms of where millennials are going,” he says. “North Bend has just completely taken off.” The sample size is pretty small in that area, and the number of homes on the market each month varies wildly, so it’s hard to judge from NWMLS statistics. But the numbers are consistent: Median sales prices have jumped more than 20 percent from the previous year the last few months and, in two recent months with lots of activity, broke $1 million. It ended October with the lowest remaining inventory it’s had all year. Maybe it’s the Twin Peaks connection?
Gardner points to Lake Forest Park and Mountlake Terrace as other areas in flux as more people move outside city limits. He also predicts Burien will likely continue to pick up pace: “Even before the bridge debacle, you could get downtown quicker from Burien than you could West Seattle on any day of the week.”
Another major growth area is Southeast King County, especially areas where home prices are historically lower like Skyway and parts of Renton. Lower costs typically translate to a faster price hike—which isn't always a boon for people who already live there.
Beach vibes for boomers
This is all less of a concern for boomers, who were either already retiring or sped up their retirement process during the past couple of years. “With the Great Resignation and everything else, a lot of the baby boomers are saying, 'Forget it, we're not going to work anymore' [or] 'We're going to work on our own terms,'” Young says. “'We're going to go self-employed [or] we're going to do whatever and stay out by the beach.'”
These two generations are vying for some of the same locations, but Young sees boomers driving hot markets farther outside commuting range, including Grays Harbor County, Port Angeles, Anacortes, and, away from the coast, Spokane County and even a little bump in Lewis County. Millennials are the main drivers of other markets, like Tacoma. The overlap is those spaces in-between.
So who’s living in the city?
With all these reasons to move to the ’burbs, you’d think demand for in-city homes would be lagging. But as much as in-office uncertainty is helping drive the suburban market, there are plenty of people that know without a shadow of a doubt that they’re working here—many never stopped. Young says that those who can afford to buy and know they have obligations in the city are taking advantage of a slightly less chaotic market while they can.
“When people thought everybody's going to go back to work in [the late summer and fall], everybody started filtering back and I think that a lot of people took the opportunity to buy while prices weren't going crazy,” says Young. “Prices didn't come down in Seattle…they just kind of flattened. They really went up, but they're not moving up as quickly as everywhere else.”
He notes that Seattle rent “inched up a little” in late summer in anticipation of remote workers returning to in-person work. Downtown condos are still crawling toward normalcy, although Gardner says the window is still open for some buyers typically priced out of downtown to get a deal since demand hasn’t fully recovered. He sees a few obstacles keeping the market from returning to its previous levels, including proximity to work being a low priority and amenities that haven’t fully returned. There are also concerns about safety—and although the reality of downtown crime is more complicated when you compare 2021 crime stats to what was happening before the pandemic, it is adding another layer of uncertainty among some potential buyers .
We’re not going to see a lot of opportunities for a way into the market with brand-new condos, which are often unshakably high-end: For example, one amenity for future occupants of the Spire is a car elevator that acts like a kind of robot valet, delivering your vehicle straight to its spot. But the resale market, which includes any condo that has had a previous owner, is still making room price-wise: Median list prices for resale condos are down 12 percent year over year, according to Gardner. Median sale prices, which include both new and resale condos, were up about 8 percent year over year.
“The bottom line is I think that we’re seeing the same thing in San Francisco,” says Gardner. “I'm seeing the same thing in Manhattan as well. For a brief time, [downtown] got hammered with the view in the early part of Covid that everyone's going to be fleeing downtown because of Covid [and] because of the ability to work from home. So we saw that initially. However, it certainly is recovering.”