The November Case-Shiller Home Price Index reported that for a tenth consecutive month, the Seattle metro area remained second in the nation for residential price growth year over year, following nationwide leader Phoenix. San Diego remained in third place for a fourth month, first outranking Tampa in August. Residential price indices in all three of these top cities rose at rates between 12 and 14 percent year over year. No other West Coast cities saw prices rise at greater than 10 percent over the same period.
The CoreLogic Case-Shiller index results published by S&P Dow Jones on 26 January showed year-over-year growth on the West Coast residential price indices advancing to 12.7 percent from 11.7 percent at Seattle; to 12.3 percent from 11.6 percent at San Diego; to 9.5 percent from 8.8 percent at Portland, Oregon; to 9.1 percent from 8.4 percent at Los Angeles; and to 8.3 percent from 7.9 percent at San Francisco (Charts A and B).
Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices noted the shift that RSIR has reported from urban locations to those further out, studiously avoiding the question of whether these moves were COVID-induced or rather an acceleration of trends already underway.
As COVID-related restrictions began to grip the economy last spring, their effect on housing prices was unclear. Price growth decelerated in May and June before beginning a steady climb upward. November’s report continues that acceleration in a particularly impressive manner. The National Composite last matched this month’s 9.5 percent growth rate in February 2014, more than six and a half years ago. From the perspective of more than 30 years of S&P CoreLogic Case-Shiller data, November’s 9.5 percent year-over-year change ranks near the top decile of all monthly reports.
Recent data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This may represent a true secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway. Future data will be required to address that question.
These remarks by Lazzara were consistent with trends we at RSIR have observed for years. We first noted them in 2016, when “the proportional increases in annual selling volumes in Snohomish and even Skagit Counties began to outpace those of King County.” We described these trends most recently in our coverage of the October 2020 Case-Shiller results (“Home Price Growth In Seattle’s Satellite Metros Rockets Past That Of Jet City”).
While inventories might now seem especially tight in King County, they still are far more of a challenge to buyers shopping in the exurbs. Let’s look at January months in inventory for sixteen counties in the past seven years:
Table 1: Months in residential inventory for sixteen counties (January only), 2014-21
Among all sixteen counties, King had the least months in inventory until 2017. That January and the January after, Snohomish had the least. They were joined by Pierce, Thurston, and Kitsap Counties in 2019 and 2020. In the first month of 2021, Island, Mason, and Grays Harbor Counties joined the other four in having fewer months in residential inventory than King County.
Next, let’s look at the annual median selling prices for each county in 2016—the year we first observed the spillover of demand into the exurbs—and each year through 2020, as well as the four-year compound annual growth rate (CAGR).
Table 2: Annual median selling prices and their compound annual growth rates for sixteen counties, 2016-20
So as quickly as prices have risen in King County, ranked by the CAGR of the median selling price, those in the surrounding counties have risen even faster.
Nevertheless, January 2021 saw a few milestones set for home transaction volumes in King County and the city of Seattle, as the numbers of both residential and condominium sales set record highs (Charts C and D).
As illustrated above, the selling volumes of condominium units in January 2021 have posted their highest levels, both in King County and in the City of Seattle, since the boom times of 2007 (before the credit crisis and impending Great Recession clipped the sales trajectory). It is likely that consumers are increasingly viewing condominiums as an affordable alternative to the rising costs of single-family and townhomes, while many renters are taking advantage of historically-low interest rates.
“While the region is experiencing upward pressure on prices we know that supply and demand is not distributed equally and the market varies from neighborhood to neighborhood, by product categories and at different price points,” said Dean Jones, President and CEO of Realogics Sotheby’s International Realty.
Jones points to downtown Seattle condominiums as being a particular opportunity, given that developers are sharpening prices, offering unprecedented incentives, and competing with spiking resale inventory.
“I think we’re witnessing an inflection point in downtown Seattle, which is noted for savvy homebuyers that know how to time the market,” adds Jones. “We’ll look back a few years from now and realize that was the opportunity for the most preferred properties.”
For more details on the November 2020 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 Shows Annual Home Price Gains Climbed to 9.5% in November,” S&P Dow Jones, New York, 26 January 2021.
 Hillis, “Seattle Residential Prices Trend Higher, But Demand Shifts Are Imminent,” RSIR blog, 5 October 2020.
 Hillis, RSIR blog, 30 December 2020.