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Best Cities to Invest in the Washington Housing Market 2020

by Eman HamedJul 25, 2020December 12, 2023

Washington State may be tucked away in the Pacific Northwest, but real estate investors haven’t forgotten the Evergreen State. There are many factors that attract those who want to buy rental properties to the Washington housing market. The main drivers are the state’s strong economy and its appeal to foreign buyers. But though real estate investment opportunities are thriving in WA, it’s important to remember that certain areas are better than others for buying Washington State real estate.

For example, markets like Bellevue and Seattle real estate have seen big gains in recent years, so you might be interested in buying there. It is easy to see what draws people to large metro areas, but some of the more laid-back communities in Washington State may have just as much potential upside when it comes to real estate investments in 2020. And fortunately, there are many markets in Washington State that are currently good bets for investors. In this article, we list the best cities for investing in the Washington State housing market according to Mashvisor’s data.

But first, let’s quickly give you a better understanding of how the housing market in Washington State is doing. Here are the top Washington State real estate market trends and forecasts.

Washington State Economy

As mentioned, the strength of Washington State’s economy is one of the key drivers of its thriving real estate market. According to WalletHub, the state ranks 1^st in terms of economic activity, 4^th in terms of economic health, and 2^nd in terms of innovation potential. Overall, Washington is the best state in the nation for economic growth! The strength of the state’s economy lies in its diverse economic base from business and finance, aerospace, military/defense, architecture and engineering, and tech jobs. Therefore, it’s not surprising that the state tops the list when it comes to GDP growth. This diverse and strong economy is a positive indicator for Washington real estate investors.

Washington State Population

Due to its strong economy and the availability of high paying jobs, it’s also not surprising that the state attracts and retains a skilled workforce (wages here are higher than the national average!). Another reason that attracts people to move and live in Washington State is that it’s one of the few states that don’t impose a state income tax on residents. The state also does not collect corporate income tax which attracts more businesses and startups to Washington. The Washington housing market forecast suggests that the state’s stable economy will continue to attract a new population in 2020, meaning there’ll be a huge pool of potential tenants for your rental properties.

Washington Housing Market Prices

While the rise in home prices have leveled off due to the coronavirus outbreak, the Washington housing market is expected to remain strong for the foreseeable future. According to Mashvisor’s data, the current median price of Washington State homes for sale is $449,433 ($231 price per square foot). According to Zillow, Washington State home values went up 6.6% over the past year. They predict values will remain stable or fall slightly (by 0.5%) within the next year. These housing market predictions indicate that the Washington State real estate market is starting to rebound from the effect of the coronavirus, which is great news for investors.

Despite the fact that home prices here are higher than the national average, interest rates are in your favor as an investor. Mortgage rates have already been on a decline over the past year or so, but they have plummeted even further as a result of the coronavirus. As of this writing, mortgage interest rates are 3.18% for 30-year fixed-rate mortgages. Such low rates can save investors tens or even hundreds of thousands of dollars over the life of a loan. As bad as COVID-29 is affecting many aspects of life, it brought interest rates lower, which made buying a Washington investment property more affordable.

Washington State Home Sales

One of the main reasons for high prices in the Washington housing market is the tight supply of housing inventory. In addition, the surge of population growth is increasing the demand which is sending both asking prices and rent prices higher. These real estate market trends in Washington State explain why home sales have slowed rapidly. Plus, the general uncertainty created by the spread of COVID-19 has also contributed to the drop in Washington State real estate sales in 2020.

What does this exactly mean to real estate investors? The fact that not many people are buying real estate in Washington State indicates that these people will keep renting. In addition, the high price to rent ratio of 23 in Washington tells us that renting is cheaper than buying a home. Thus, our Washington State housing market forecast is for rental demand to be strong in 2020. This is great news for investors looking to buy Washington State traditional, long term rentals.

Find a Profitable Traditional Rental Property

What About Airbnb Washington State?

Many investors in the US housing market prefer buying investment properties and renting them out on a short-term basis on sites like Airbnb. With plenty of popular destinations including Seattle and Olympic National Park, the Evergreen State offers short-term rental hosts the opportunity to bring in extra income. Hence, investing in Airbnb Washington State can be a profitable real estate investment opportunity in 2020 as well. However, there are a number of Airbnb regulations that you need to comply with in order to operate legally in Washington State. Most importantly is that Airbnb hosts are required to:

Apply for and obtain a state business license
Register with the Department of Revenue
Collect and pay local, state, and federal taxes like the state business and occupation tax
Collect and pay short-term rental and lodging taxes

Furthermore, before investing in Airbnb in the Washington housing market, you should know that cities and local communities may have their own requirements for short-term rental properties. Different cities may have different Airbnb rules covering zoning, advertising, building & housing standards, as well as neighborhood notification. So, make sure to understand and follow the rules and regulations in your city of choice before renting out a house on Airbnb in WA.

Where to Invest in the Washington Housing Market 2020

Now that we covered why Washington is one of the best states to invest in real estate 2020, let’s explore the best cities here for owning a rental property. Below you’ll find a list of the best cities to invest in traditional and Airbnb rentals according to Mashvisor’s real estate data and predictive analytics. You can use our Investment Property Calculator to analyze homes for sale in each city and neighborhood until you find the best one to invest in! To learn more about how we’ll help you make faster and smarter real estate investment decisions, click here.

10 Best Cities for Traditional Rentals in Washington State

#1 Kent, King County

Median Property Price: $428,654
Price Per Square Foot: $243
Price to Rent Ratio: 13
Average Days on Market: 50
Traditional Rental Income: $2,756
Traditional Cash on Cash Return: 3%

#2 Federal Way, King County

Median Property Price: $449,450
Price Per Square Foot: $237
Price to Rent Ratio: 15
Average Days on Market: 46
Traditional Rental Income: $2,536
Traditional Cash on Cash Return: 3%

#3 Stanwood, Snohomish County

Median Property Price: $488,388
Price Per Square Foot: $293
Price to Rent Ratio: 16
Average Days on Market: 51
Traditional Rental Income: $2,547
Traditional Cash on Cash Return: 2.8%

#4 Des Moines, King County

Median Property Price: $480,994
Price Per Square Foot: $359
Price to Rent Ratio: 15
Average Days on Market: 36
Traditional Rental Income: $2,628
Traditional Cash on Cash Return: 2.8%

#5 Shoreline, King County

Median Property Price: $507,600
Price Per Square Foot: $387
Price to Rent Ratio: 14
Average Days on Market: 43
Traditional Rental Income: $2,964
Traditional Cash on Cash Return: 2.8%

#6 Marysville, Snohomish County

Median Property Price: $414,510
Price Per Square Foot: $260
Price to Rent Ratio: 15
Average Days on Market: 45
Traditional Rental Income: $2,313
Traditional Cash on Cash Return: 2.6%

#7 Arlington, Snohomish County

Median Property Price: $476,516
Price Per Square Foot: $219
Price to Rent Ratio: 17
Average Days on Market: 58
Traditional Rental Income: $2,283
Traditional Cash on Cash Return: 2.6%

#8 Woodinville, King County

Median Property Price: $647,278
Price Per Square Foot: $325
Price to Rent Ratio: 18
Average Days on Market: 52
Traditional Rental Income: $3,042
Traditional Cash on Cash Return: 2.4%

#9 Renton, King County

Median Property Price: $546,433
Price Per Square Foot: $304
Price to Rent Ratio: 18
Average Days on Market: 42
Traditional Rental Income: $2,559
Traditional Cash on Cash Return: 2.3%

#10 Port Angeles, Clallam County

Median Property Price: $397,103
Price Per Square Foot: $218
Price to Rent Ratio: 18
Average Days on Market: 29
Traditional Rental Income: $1,818
Traditional Cash on Cash Return: 2.3%

10 Best Cities for Airbnb Rentals in Washington State

#1 Shoreline, King County

Median Property Price: $507,600
Price Per Square Foot: $387
Airbnb Occupancy Rate: 45%
Average Airbnb Daily Rate: $195
Airbnb Rental Income: $4,146
Airbnb Cash on Cash Return: 7.8%

#2 Marysville, Snohomish County

Median Property Price: $414,510
Price Per Square Foot: $260
Airbnb Occupancy Rate: 43%
Average Airbnb Daily Rate: $187
Airbnb Rental Income: $4,887
Airbnb Cash on Cash Return: 7.2%

#3 Lakewood, Pierce County

Median Property Price: $446,153
Price Per Square Foot: $237
Airbnb Occupancy Rate: 61%
Average Airbnb Daily Rate: $122
Airbnb Rental Income: $4,243
Airbnb Cash on Cash Return: 6.2%

#4 Everett, Snohomish County

Median Property Price: $472,461
Price Per Square Foot: $269
Airbnb Occupancy Rate: 65%
Average Airbnb Daily Rate: $105
Airbnb Rental Income: $2,656
Airbnb Cash on Cash Return: 3.1%

#5 Kent, King County County

Median Property Price: $428,654
Price Per Square Foot: $243
Airbnb Occupancy Rate: 56%
Average Airbnb Daily Rate: $164
Airbnb Rental Income: $2,883
Airbnb Cash on Cash Return: 3.1%

#6 Tacoma, Pierce County

Median Property Price: $393,880
Price Per Square Foot: $264
Airbnb Occupancy Rate: 63%
Average Airbnb Daily Rate: $117
Airbnb Rental Income: $2,837
Airbnb Cash on Cash Return: 3%

#7 Spokane, Spokane County

Median Property Price: $343,136
Price Per Square Foot: $166
Airbnb Occupancy Rate: 57%
Average Airbnb Daily Rate: $103
Airbnb Rental Income: $2,241
Airbnb Cash on Cash Return: 3%

#8 Longview, Cowlitz County

Median Property Price: $325,645
Price Per Square Foot: $213
Airbnb Occupancy Rate: 63%
Average Airbnb Daily Rate: $82
Airbnb Rental Income: $2,011
Airbnb Cash on Cash Return: 2.7%

#9 Olympia, Thurston County

Median Property Price: $409,401
Price Per Square Foot: $232
Airbnb Occupancy Rate: 66%
Average Airbnb Daily Rate: $101
Airbnb Rental Income: $2,531
Airbnb Cash on Cash Return: 2.7%

# 10 Issaquah, King County

Median Property Price: $831,587
Price Per Square Foot: $382
Airbnb Occupancy Rate: 68%
Average Airbnb Daily Rate: $172
Airbnb Rental Income: $5,338
Airbnb Cash on Cash Return: 2.6%

Are you ready to start your investment property search in the Washington housing market? Don’t forget to use Mashvisor’s tools to analyze, compare, and find lucrative opportunities in your city and neighborhood of choice. Mashvisor turns 3 months of research into 15 minutes and allows you to see what kind of returns a rental property will provide. Click here to start your 7-day free trial with Mashvisor now to see for yourself.

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