How COVID-19 changed Washington's housing market
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The pandemic upended America's housing market, delivering wins for homeowners and roadblocks for those still dreaming.
Why it matters: Sky-high home prices, elevated mortgage rates and a shortage of houses for sale are pushing homeownership out of reach for many.
Zoom in: This week marks the five-year anniversary of when former Gov. Jay Inslee announced orders closing schools across Washington, which were followed by additional stay-home orders.
Since then, here are five ways the housing market transformed and what could come next.
1. Home prices skyrocketed
Cheap borrowing costs and remote work unleashed a homebuying frenzy early in the pandemic — and sent prices soaring.
By the numbers: The median home price in Washington in January was $604,200, according to Redfin.
- That's up about 43% from January 2020, when the median home price statewide was $422,900, per the Seattle-based real estate company.
- Nationwide, prices increased by about 45% in the same timeframe, hitting $418,000 in January.
The big picture: A stubborn housing shortfall is keeping prices high, even as buyers have retreated, with 2024 sales hitting a nearly 30-year low.
2. Rates surged, buyers stalled
Mortgage rates surged after falling to the lowest levels on record in 2021.
- Higher monthly payments are sidelining many home shoppers, especially first-timers.
What we're hearing: "It's very sad to be priced out of our communities," says Kylie Carpenter, a Seattle teacher who tells Axios it feels almost impossible to buy a house nearby.
Between the lines: Rates are now hovering near 7% and are unlikely to drop much soon, experts say.
3. Inventory dried up
Those who scored ultra-low mortgage rates during the pandemic are hesitant to sell, locking up supply.
- Some feel stuck. The benefit "of having an affordable mortgage has locked us out of even considering selling and moving closer to where we both work" in Seattle, says Sean Bucknam, who moved to Tacoma with his wife as remote setups took off.
- Now, she's being called back into the office.
4. Builders ramped up, then pulled back
Buyers flocked to newly built homes, searching for options and deals, too.
- Construction boomed in parts of the South and Sunbelt, helping to cool competition and runaway prices.
Reality check: Homebuilding has slowed since then, partly due to elevated interest rates and steep construction costs.
What we're hearing: "The big concern in the housing market today is cooling new construction," Zillow senior economist Orphe Divounguy tells Axios.
5. Cash-rich people jumped in
Cash buyers, many of them investors, snapped up homes at record speeds during the pandemic.
The latest: They've taken a step back, though the share of purchases made in cash remains historically high.
- It fell to just under one-third in 2024, the lowest since 2021, Redfin research shows.
The bottom line: Wealthier people are those most likely to buy homes in this expensive housing market.
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