Fast-cooling home prices remain high in Seattle

🏚️ Seattle’s housing prices are cooling faster than almost any other city's in the nation, but they’re still unaffordable for many, according to recently released real estate data.

What they’re saying: “Homes are very expensive here, and that has historically made housing in Seattle more interest-rate sensitive than in other markets,” said Jeff Tucker, senior economist at Zillow.

📉 Driving the news: Of the 20 metro areas tracked in the S&P CoreLogic Case-Shiller index, Seattle had the second-largest month-to-month price drop from July to August, 3.9%.

• Only San Francisco had a larger decline, 4.3%.
• Homes in Seattle were selling for around 2% less in August than in July, and in September the percentage of homes sold above list price dropped to 21.9, a nearly 18 point decrease year over year, according to Redfin.
• Interest rate hikes intended to curb inflation are having an impact on the housing market, with potential buyers pulling back as mortgage rates approach 7%.

💰 Yes, but: The median price of a single-family home in Seattle is still brushing up against a million bucks, with Zillow estimating it at $934,925.

• Deceleration of prices doesn’t mean houses cost less. It means the price is not going up as fast as before.
• Seattle-area prices were up nearly 9.9% year over year, according to the S&P CoreLogic Case-Shiller index.

• Coupled with mortgage rates that add about $1,100 to a $775,000 home, many would-be buyers have been shut out, while some sellers have retreated, Bloomberg reported.

The big picture: The monthly mortgage for a typical home in the Seattle area takes 42.9% of the median household income, according to a new Zillow affordability analysis. That’s way above the 30% threshold for households to be considered cost-burdened.

• To get back to affordability levels, home prices nationally would have to drop 24.7%, according to the analysis.

The bottom line: “A shock of this size is extremely unlikely, so buyers may need to reset their expectations,” the Zillow report said.