The Impact of the Coronavirus on Washington State Real Estate

As the novel coronavirus disease, COVID-19, continues to spread throughout the United States, real estate markets are also continuing to feel the impact of quarantines and safety concerns. We can see this impact especially in the Washington State real estate market 2020. As of this writing, there are 4,896 confirmed cases of coronavirus in Washington State according to state health officials. King County – the state’s hot spot and where major cities like Seattle, Bellevue, and Kirkland are located – has been hit the hardest by COVID-19 with 2,161 cases and 144 deaths. And while spring is known to be the beginning of the prime house-hunting season, a cloud of uncertainty sits over the Washington housing market. This leads us to ask: How is the strong Washington State real estate market fairing in the wake of the recent coronavirus outbreak? Here are the latest Washing State real estate market trends to answer this question.

1. COVID-19 vs the Washington State Economy

As coronavirus cases and deaths continue to rise across the US, President Donald Trump backed down on plans to re-open the country by Easter. Instead, he announced extending strict social distancing guidelines like avoiding nonessential travel and gathering in groups of 10 or more until April 30. On the same day, the Washington State governor, Jay Inslee, announced similar guidelines saying that it’s very likely the two-week “stay home, stay healthy” order (which began on March 25^th in the state) is “going to have to be extended just because of the epidemiological evidence.” He also said that if the order didn’t extend, then the disease would “continue to spread like wildfire to every single corner of my state”.

Of course, this stay-at-home order also applies to many small businesses in the state which means it’ll affect local economic activity. The order restricts all business activities except those deemed essential. For instance, grocery stores, pharmacies, gas stations, food supply chains, and others that provide people with basic, crucial needs will remain open. However, all non-essential businesses like retail, restaurants, bars, and cafes were shut down and hard hit by the state’s preventative measures. A study by the Seattle Metropolitan Chamber of Commerce shows that over 336,000 workers in Washington State are directly affected by the restrictions.

Governor Inslee told CNN “We are seeing some very modest success in bending that curve just a little bit, but that’s very unpredictable”. However, no one can ignore the economic impact this is going to have. When businesses suffer from a pandemic like this, it’ll cause an economic slowdown which causes people to worry as unemployment rates climb up. Last week, Washington State announced that unemployment claims increased by 843% compared to just two weeks ago. As you can expect, this is going to affect the Washington State real estate market.

2. Real Estate Activity in the Market

The Washington State governor also announced on Sunday additional guidelines for real estate transactions which specify which activities can and can’t continue. He said that real estate and mortgage activities have been approved as essential business and are allowed to continue under the stay-at-home order – but, there are some limitations. Inslee sent out a letter in which he provides further instructions on real estate transactions. In the letter, he says that Washington State real estate activities shall only be allowed under the following restrictions and limitations:

• In-person meetings with customers are prohibited except when necessary for a customer to view the property or sign necessary documents
• No real estate open houses shall be permitted
• Property viewings, home inspections, appraisals, and final walk-throughs shall be arranged by appointment and limited to no more than two people on-site at any one time, exercising social distancing at all times
• Except for the limited exceptions authorized above, all new real estate listings shall be facilitated remotely

Real estate professionals have contrasting opinions on the impact of the above limitations on Washington State home sales. Redfin reported that homebuying activity has already slowed rapidly in the Seattle housing market. According to the National Association of Realtors, Washington State real estate agents have seen a significant drop in demand in the past week, just after pending home sales hit the second-highest level in two years only a week prior. When it comes to condos, however, real estate agents in the area haven’t noticed any slowdown yet. In fact, it seems that record-low mortgage rates gave some buyers a sense of urgency to get the deal done quickly. In a market as competitive as the Seattle real estate market, some buyers will take advantage of anything keeping competing buyers on the sidelines.

These contrasting reports represent the general uncertainty created by the spread of COVID-19 in Washington State and across the nation.

3. Seattle Real Estate Construction

The biggest impact of the coronavirus pandemic on the Washington State real estate market 2020 is on the construction industry. The new guidelines by governor Inslee stopped almost all construction as it was considered a nonessential activity. To help stop the spread of COVID-19, workers on most commercial as well as residential real estate construction sites should stay home and stop their work for two weeks. This includes construction projects in Seattle, one of the busiest cities for building in the nation. Seattle has a number of large-scale real estate projects in the works, including a $1.8 billion expansion of the Washington State Convention Center and Amazon’s ever-growing campus.

Some real estate projects in Washington State are allowed to continue, however. The only exceptions are constructions related to essential activities like health care, critical manufacturing, transportation, energy, defense, publicly-funded affordable housing, and emergency maintenance work. Moreover, contractors can resume work if they meet a handful of safety guidelines. However, it’s likely that the majority of Washington State’s 222,000 construction industry employees will be staying home for the near future.

So far, this halt on real estate construction hasn’t affected Washington State home prices and values. New data from Zillow shows that the value of Washington State real estate has gone up 5.7% over the past year and one of their Washington State housing market predictions 2020 is that it will rise 4.9% within the next year. According to Mashvisor’s real estate data, the median price of currently listed Washington State homes for sale is $440,213 ($225 price per square foot).

4. Airbnb Rentals in Washington State

As the spread of the coronavirus pandemic and travel bans continue, Airbnb hosts are hit the hardest. Data shows that numerous cities in Washington State have proven to be profitable locations for Airbnb investing. However, recent Airbnb data from Mashvisor also shows that hosts in these cities (especially Airbnb Seattle hosts) were affected by the virus in terms of Airbnb daily rate, Airbnb rental income, and Airbnb occupancy rate. The two tables below show Airbnb data to compare the performance of Washington State real estate short-term rentals in March 2019 vs the same period in 2020.

Table #1: 2019 Airbnb Data for Top Cities in Washington State

Table #2: 2020 Airbnb Data for Top Cities in Washington State

Note: All Airbnb data in the above tables are generated by Mashvisor’s Airbnb Profitability Calculator and based on nationwide real estate data as well as historical and predictive analytics.

To learn more about Mashvisor and our investment tools that help real estate investors and Airbnb hosts make faster and smarter investment decisions, click here.

The Bottom Line

As of this writing, Washington State real estate market trends suggest that buyers are still buying homes and sellers are still selling. Uncertainty over the spread and length of the coronavirus pandemic is making it difficult to estimate the exact impact on the Washington housing market. However, economists predict that growth is likely to be slower this year than what was previously expected. It’s unlikely that we’ll see a Washington State housing market crash in 2020, but investors should still keep a close eye on COVID-19 developments and its impact on the housing market in Washington State as things are rapidly changing.

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