With a year having passed since the onset of COVID-19 and the government’s restrictive measures to contain it, we might expect to see the continuation of high year-over-year increases on the Case-Shiller Home Price Index, as well as new statistical milestones from the Northwest Multiple Listing Service (NWMLS). The strong base formed by last year’s surge of buyers weighs against this conclusion, yet little else has changed since last fall. The Case-Shiller report from January showed the same three metropolitan regions leading the nation, with Phoenix still out in front, followed in series by Seattle and San Diego. Price growth in third-place San Diego has been within one percentage point of Seattle since September 2020. That month, in which Governor Inslee relieved the most onerous restrictions on real estate selling activity, saw the first of five double-digit increases in the Seattle index.
The CoreLogic Case-Shiller index results published by S&P Dow Jones on 30 March showed year-over-year residential price growth edging upward to 14.3 percent from 13.6 percent at Seattle, still ahead of San Diego prices, which rose to 14.2 percent from 13.0 percent in December. Other West Coast prices likewise quickened the pace of their increases: to 10.8 percent from 10.0 percent at Los Angeles; to 10.6 percent from 9.9 percent at Portland, Oregon; and to 9.5 percent from 8.9 percent at San Francisco (Charts A and B).
Since last November, Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, has reported observing a trend of buyers migrating from urban neighborhoods to the suburbs, a trend that RSIR has observed locally since mid-2017. Lazzara has speculated whether the shift might be structural; but until further data show otherwise, he has steadfastly attributed any such migration to COVID-19:
January’s performance is particularly impressive in historical context. The National Composite’s 11.2 percent gain is the highest recorded since February 2006, just one month shy of 15 years ago. In more than 30 years of S&P CoreLogic Case-Shiller data, January’s year-over-year change is comfortably in the top decile. That strength is reflected across all 20 cities. January’s price gains in every city are above that city’s median level, and rank in the top quartile of all reports in 18 cities.
January’s data remain consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a shift in the demand curve for housing. Future data will be required to analyze this question.
Maybe faster- or slower-rising, but certainly unpredictable
Whether it was COVID-19 itself, the state government’s restrictive response, the coincident political unrest last summer and fall, or the combination of all three, conditions in the metropolitan region influenced 2020 home-selling markets in unexpected ways. Outside of Seattle, residential prices in the three-county region fell initially in the spring, then rebounded—from a low median price of $499,000 in May, to a steady average of $552,000 from July through the end of the year. Inside the city of Seattle, prices were more irregular; but there too, prices were markedly higher than historic norms from August through December. (See Charts C through E.)
With such unseasonably strong prices in the second half of 2020, it seems unlikely that the current high rates of year-over-year price growth can be sustained through the end of 2021. The best opportunities for strong price growth appear to be those areas that saw outflows of residents in 2020. In any case, with so many of the underlying issues and challenges left unresolved from last year, the safest bet is that uncertainty will continue to shape these markets.
For more details on the January 2021 Case-Shiller Index results, download the S&P Dow Jones Case-Shiller summary report. For details on the market implications of our reports for homes in your neighborhood, contact a local RSIR broker.
 Published by S&P Dow Jones, the Case Shiller Index surveys resales of residential homes in the Seattle MSA. The index notably does not account for condominium sales. “S&P CoreLogic Case-Shiller Index Reports 11.2% Annual Home Price Gain to Start 2021,” S&P Dow Jones, New York, 30 March 2021.