River’s Edge, listed by Realogics Sotheby’s International Realty broker Jason Gibbons, is a Quintessential Pacific Northwest Lifestyle. The perfect private location, enjoy a locale just South of the Suncadia entrance and resting along the dam-controlled Cle Elum River. Discover a new life amongst towering evergreens in a park-like setting, with a custom built daylight basement home with high-end finishes in a contemporary Northwest style. The circular driveway sets the stage for grandeur and opens to a magnificent living area with the master suite to one side and library/office to the other. Step out onto the large deck and overlook the sprawling 2 acres and the Cle Elum River.
It’s official King County, we’ve recovered.
The Great Recession has been replaced by what seems like the Great Inflation, as year-over-year home prices in King County increased 10.3% in June 2015. Median home prices are now pegged at $500,000, according to a recent report by the Northwest Multiple Listing Service. This new peak surpasses the previous record set in 2007, which topped out at $481,000 before correcting. The difference this time around, however, is that we have a more robust and sustainable economy and only a fraction of the inventory for sale – down 23.2% in just one year, which drops our total supply to just 1.18 months. The larger looming issue is that new construction of for-sale housing, especially in the downtown Seattle and downtown Bellevue areas, is anemic at best. Greater still is the fact that thousands of would-be buyers are likely incubating in those shiny new apartment towers.
Dean Jones, President and CEO of Realogics Sotheby’s International Realty (RSIR), a top producing brokerage firm in downtown Seattle, points to a lack of supply, rising demand and the threat of increasing interest rates, which means a reduction in homebuyer’s purchasing power lies ahead. As the market moves away from renters who seek to purchase someday, Jones says that sudden realization will prompt many into action. Concurrently, other discretional buyer profiles are also entering the market, including downsizers, second homes, student housing, investors, and the like.
“It’s creating a perfect storm,” says Jones. “As the hurricane of the Great Recession passed through Seattle between 2008 and 2012 many consumers chose to rent apartments. We’ve been in the eye of that storm for a few years and now the winds are blowing in the other direction with equal force and influence. Buyers are back. We see this new storm wall approaching and there will be a steep climb in home prices before we find some smoother air and market stabilization.”
While it’s true that homeownership levels in the U.S. are at 25-year lows, hovering around 64%, that doesn’t explain the logic of building virtually all apartment buildings in downtown Seattle.
“Demand for new for-sale housing units hasn’t corrected by 95% but the construction of for-sale housing certainly has,” adds Jones. “That’s creating a supply and demand problem and buyers are feeling the pressure.”
According to RSIR research, only 5% of the new housing stock recently delivered or under construction is for sale. What’s going to happen when, statistically speaking, 64% or even 30% of current rental demand decides they want to buy? Will there be housing for them? Will they be able to afford it by then?
Jones and other real estate opinion leaders recently attended a round table discussion with The Puget Sound Business Journal, which published a feature section entitled “The Manhattanization of Seattle.” The think tank considered the market fundamentals, ultimately projecting that rising demand, dwindling supply and increasing home prices across Seattle will become omnipresent by mid-2015.
The buyer boom has dominated headlines in recent weeks in part because Seattle is now the top destination for techies fleeing California. Thus it’s no surprise that half of the most influential tech giants are setting up shop in the Seattle area. Many of these companies are competing for recruits by promising an enviable downtown “live, work, play” lifestyle to complement higher salaries. The other promise is wage growth, which is rising in 2015 faster than it has since 2007. Consider that Washington State witnessed annual average increases of 4.2%, but in the tech industry, it was more than 10%. Seattle is also the second best place to be a landlord and the third tightest housing market because many of these relocating workers are going to rent for a few years before buying.
It helps too that Washington has no state income tax. In fact, a study by the Bureau of Labor Statistics, the Council for Community and Economic Research and the Tax Foundation concluded that the State of Washington is the second best state in the U.S. to make a living.
More and more national media publications, including Bloomberg News, are citing the fundamentals and impact on the housing market and will likely continue to do so as we shift into a bull market for housing of all types. But as the tower cranes rise so will the cost to live in those towers.
Move over San Francisco and Vancouver, Seattle is on the map.
Issaquah has been ranked the second best suburb for millennials in the state of Washington, according to the website Niche.com. Niche.com provides reviews and insight from everyday experts, to help people choose a neighborhood, college or K-12 school in a more transparent process. Under its Local category, Niche.com studied each city's job opportunities, access to bars, restaurants and affordable housing for millennials, residents ages 25-34.
Under its ranking system, Niche.com ranked for Issaquah:
- Easiest commute grade: A+
- Residents 25-34 years old: 17.1%
- Crime & safety grade: B
- Millennial newcomers: 1.7%
- Unemployment rate: 4.4%
- Access to bars: B-
- Access to restaurants: A-
- Access to coffee shops: A
- Median rent: $1,408
- Percent change in employees (The percent change in the number of employed individuals from 2009 - end of the recession - to 2012): -1.3%
- Rent to income ratio: .3 to 1
- Higher education rate: 60.4%
- Resident diversity (most represented ethnicity): 74%
Wondering if you're one of only a few millennials thinking of buying a home? Well, as Donald Horneof of Mortgage Professional America Magazine points out, you're far from alone! In fact, more than half of millennials plan to purchase a home in the next two years, so now may be your time to get a jump start.
Quite a staggering number, in "Lower premiums attracting millennials to mortgages?," Horne writes that the biggest contribution to millennials' decision may be "triggered by the reduction in mortgage insurance premiums (MIPs) announced on January 8 by the Department of Housing and Urban Development." The lower insurance premiums are even beating the large fear of not having the down payment, so if you're worried you can't afford to purchase, know that you aren't alone!
Realogics Sotheby’s International Realty, the Pacific Northwest’s largest affiliate for the global real estate network, released several findings today from their internal Q1-2015 waterfront market report, which focused on the central Puget Sound region including King, Kitsap, Snohomish and Pierce counties. Their analysis measures trending through the first quarter year-over-year and weighs the results of April and May transaction activity to predict the likely results of the summer sales season from June 1st through September 31st.
“This is already shaping up to be a pivotal year for waterfront throughout the region,” said Dean Jones, President & CEO of Realogics Sotheby’s International Realty. “Both the values and sales velocity are likely to increase further as would-be sellers test their opportunity in an otherwise anemic marketplace – inventory is very low. At the same time, this is the most robust we’ve seen demand since before the 2008 market correction and the peak of the season is still ahead.”
Demand for waterfront in the Puget Sound region is rather seasonal – not only because buyers surface when the sun comes out but because brokers and sellers are more inclined to list properties during the sales season of April through September each year. Therefore sales activity trends in the first quarter lead into decision making in April, which provides a glimpse of how the following sales season will respond. The following matrix for April 2015 compares waterfront listing activity with the prior year, according to Trendgraphix research:
Four County Waterfront Homes For Sale in April 2015: 756 properties.
- Up 16.3% compared to the last month
- Down 10.3% compared to the last year
Four County Waterfront Closed in April 2015: 163 properties.
- Up 28.3% compared to the last month
- Up 53.8% compared to the last year
Four County Home Placed under Contract in April 2015: 235 properties.
- Up 23% compared to the last month
- Up 50.6% compared to the last year
For the central Puget Sound region including King, Kitsap, Snohomish and Pierce counties, the long term trend has been for fewer new listings, increasing sales and expanding demand since the market rebound began in 2012. From a macro perspective, median home prices along the water’s edge have increased at least 5-percent per annum but far more extraordinary trends can be found when exploring microclimates such as West Bellevue where demand for waterfront has reached a boiling point. The greater Eastside lakeside market, for example, has experienced an 87.5-percent increase in homes placed under contract in April compared to the prior year and that’s only what is published with the Northwest Multiple Listing Service – private and off-market transactions only add to the spectacle. By numerous accounts wealthy Chinese nationals are amongst the top consumer group. The robust local economy and surrounding single family home markets are also a factor, allowing move-up buyers to successfully sell their current houses and explore the waterfront lifestyle they’ve long desired.
“It seems like the proverbial blinking contest is over – many high profile properties that have been on and off the market for years have finally found their buyers,” suggests Jones. “We also note numerous custom home and speculative developments popping up along the shoreline.”
Jones also points to notable transactions including a $9.8M property on Bainbridge Island, which is now pending after more than a 1,000 days on the market and another $13.8M estate on Mercer Island, which recently closed after 773 days.
The most expensive waterfront remains the eastern shore of Lake Washington including North Mercer Island, Newport Shores, Enatai, West Bellevue, Medina, Hunts Point, Yarrow Point and Kirkland. Currently there are 19 available properties priced above $5M with 7 sales pending and 8 closings year to date. Home values range broadly depending on age and construction quality from below $700 per square foot to more than $3,000 per square foot. The typical value of a luxury waterfront home is $1,000 per square foot.
“That might sound pricey to a local resident but from a global perspective we are still considered a relative bargain – for now,” adds Jones. “Homes along Lake Washington, even in the most prestigious areas may be valued up to $25M but that same property would cost more than twice that along English Bay in Vancouver, BC; in Marin County in San Francisco; or along the Pacific Ocean coastline in Los Angeles or Orange County. The best part is that much of our waterfront is fresh water while still offering access to the Pacific Ocean. We also enjoy a favorable tax climate too. It’s no wonder we are seeing so much demand from out of State and out of the country.”
The rising tides of buyers are also driving waterfront demand elsewhere within Puget Sound. Savvy homebuyers are seeking out alternative markets to the Eastside’s luxury juggernaut. Take Bainbridge Island for instance – it has equally beautiful, if not even more dynamic waterfront landscapes, while boasting nationally ranked schools, an enviable lifestyle and remains a similar distance (albeit by a half hour ferry ride) from downtown Seattle’s expanding employment center. Yet the waterfront real estate on Bainbridge Island is roughly half the price, typically fetching $500 per square foot. That might explain a recent run on waterfront home sales that has dwindled active inventory to just 21 properties amongst the 53 miles of coastline. Furthermore, the demand spillover of Bainbridge Island has primed the market for Poulsbo, Port Ludlow and Sequim waterfront as well, where greater values can be found and residents enjoy a rain shadow affect from the Olympic Mountain Range. Similar trends can also be found in the South Sound regions, especially around Gig Harbor and Fox Island, which has become known as the Medina of Pierce County.
The Sotheby’s International Realty Luxury Lifestyle Report measures trends and preference for luxury real estate by surveying affluent consumers in the United States, Canada, the United Kingdom, Brazil and China and determined that overall waterfront was the top lifestyle search (42-percent) followed by mountain properties (21-percent), country living (13-percent), farm and ranch (5-percent) and historic properties (5-percent). To learn more click here >>
Meanwhile, on SIR.com – the leading world-wide website for luxury property searches – the global affiliate network confirms that waterfront is the top search in the US (47-percent) and in Canada (57-percent). Not only are more North Americans using SIR.com to explore new lifestyle property but so are international consumers, today SIR.com commands an average of 1 million unique visitors per year and 45-percent of this traffic is originated from international markets.