Q1 prices in the Seattle-Eastside region have escalated yet again with no sign of slowing in the immediate future. An unprecedented lack of inventory for sale coupled with rising interest rates has prompted buyers to compete with reckless abandon to win the prize of their very own home, albeit with a steep price tag.
Overall median prices in Seattle rose 16.1% to $770,000, while the Eastside rose 13.0% to $944,000. Those regional numbers certainly don’t tell the whole story, especially when you consider the highest change in median sale price was nearly 46% and the lowest was a -4%. New construction sales, or lack thereof, made the biggest impact on home sale prices. Existing homes, offering good walkability or commute options, and those that were on the more affordable end of the pricing spectrum saw the strongest appreciation overall.
Rising mortgage interest rates, now up a full percentage point from their lows, are adding fuel to the fire. While not dampening buyer demand yet, further increases will likely begin to price home buyers out of the core Seattle-Eastside region. Homebuyer fear of being priced out of the market is at least partly to blame for the crazed demand at more modest price points.
As predicted, many who don’t have a need to be close in to the metro region are choosing to sell at a high and buy more affordably outside of the Seattle-Eastside area. The rate of tear-down new construction infill has escalated at staggering numbers as builders capitalize on the market’s appetite for fresh and new.
Buyers today should consider their purchase thoughtfully as buying at or near the peak of the market can limit their resale options when the market corrects. Planning to stay put for five to seven years is a good strategy at this time.
West Seattle leads the pack in median home price growth on the Seattle side of the lake. With its vibrant, hip vibe and convenient access to the city, West Seattle has benefited from Seattle’s commute gridlock—maintaining status quo while other Seattle neighborhoods have come to a halt (literally).
Queen Anne saw a nice rebound in Q1 after lagging the Seattle averages for some time. South Seattle, with its light rail access, affordable prices, and new vitality, continues to see its real estate market thrive.
Click here to view the complete report for a neighborhood by neighborhood breakdown of Average Sale Price, size, and number of homes sold.
Significant new home development at higher price points has led the market in West Bellevue and Kirkland and brought up everything else along with it.
With land values alone higher than average home sale prices in surrounding communities, this growth will have long-lasting impacts that will forever change the flavor of these communities–for better (fresh new housing stock) and worse (the lack of affordable options). Kirkland led this charge with a median sale price 45.9% higher than Q1 last year, followed by West Bellevue at 23.1%.
Click here for the full report and neighborhood-by-neighborhood statistics!
Overall, a much higher percentage of mid-range homes sold in the first quarter than in quarters past, giving the appearance of falling prices. In reality, however, it was actually a downward shift of the segment of the market that is selling.
Don’t let the negative number for Q1 fool you. The market below the two-million-dollar mark is vastly different than the market above it. With the most severe shortage of available homes in mid-range price points Mercer Island has seen, especially early in Q1 this year, the sub $2 million market has been brisk and competitive with strong price escalation. The $2 million and above market has been a different story altogether. While highly desirable homes in that bracket have transacted quickly, many other less notable homes have languished on the market.
Click here to view the complete report for a neighborhood by neighborhood breakdown of Average Sale Price, size, and number of homes sold.
CONDOS – SEATTLE & EASTSIDE
Still the only affordable option for many home buyers today, condos have continued to escalate in value with appreciation rates above those of residential homes in many areas.
On the Eastside, new condo and townhome developments in Crossroads and Rose Hill drove prices up to new highs in those communities. Richmond Beach and Shoreline benefited from an infusion of new construction standalone condominium ‘homes’ on very small lots.
Check out all of these factoids and more in the full condo report.
Several significant sales accented an otherwise unremarkable quarter. A $26.8 million iconic Medina estate on 2.5 acres with 150 feet of waterfront set a new benchmark on the Eastside. Two $8+ million homes on the north end of Mercer Island–both newer construction with over 7,000 square feet–set the tone for the Island in 2018. Lake Sammamish, with a $4.2 million sale in Q1, is still in hot demand, while Seattle saw only three modest waterfront sales.
Check out the full Waterfront Report for a complete list of waterfront home sales by address and community.
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Matthew Gardner, chief economist for Windermere Real Estate, was one of the presenters at this year’s Eastside Windermere Real Estate Kick Off I attended. I eagerly look forward to his forecast, because it is always so packed with useful information. And I love sharing it with you!
He covered our local economy – which is experiencing remarkable growth. The economies of the metros located in the western United States have been strong, and Washington State metro areas are currently at the top of this group. Mr. Gardner expects this economic trend to continue in 2017, along with low unemployment. The Seattle region should maintain a robust influx of people relocating here during 2017 to fill jobs in the tech sector, and escape higher priced real estate in California, especially the Bay area.
Mr. Gardner showed an interesting chart detailing the most successful spin-off companies that derived from Microsoft. He expects the same thing to occur from the talent being hired by Amazon. He said that Amazon hires more MBAs than any other company in the world, which translates into positive economic implications for our regional business environment.
Any slowdowns reported on the employment front have been due to everyone who wants a job are already employed, a trend that will continue this year with the projected generation of new jobs. Post-recession sectors in our area seeing noteworthy growth, in addition to the tech industry, are retail and leisure. With our low unemployment numbers, Mr. Gardner said that when unemployment drops under 4% (King County’s unemployment rate in November 2016 was at 3.9%), we start seeing pay increase to retain employees. He projected a 4.5% growth in income during 2017.
Two sectors he noted as slower growing are manufacturing and construction. We’re seeing that trend play out in lower numbers of single family residential permits being issued. The lack of new construction places pressure on our regional resale market, which will contribute to our housing market’s continued low inventory in 2017.
Western Washington home prices will experience continued growth this year. Mr. Gardner did stress that housing affordability is an issue that needs to be addressed. King County homes are not affordable for many first time home buyers, which is driving homebuyers to purchase outside of larger King Country cities. He mentioned the trend of people communting from bedroom communities like Marysville and Cle Elum to their jobs in Seattle and Bellevue. Some commuters are even opting to purchase homes in Spokane, where real estate is much more affordable than in Western Washington, and then bulk buying airplane tickets to fly back and forth weekly from their jobs on the west side of the mountains to their homes in Spokane.
The change in the presidential administration was also discussed. Mr. Gardner forecast that this change won’t affect our housing market in 2017. He stated it takes time for rhetoric to become policy. In the Seattle area we should see a seller’s market persist this year, increases in home prices, and continual job growth in the next 12 months.
Photo credit: Frances Gaul
With the continued low inventory around Seattle and the Greater Eastside, how do our regional housing sales continue to grow? In his recently released 3rd quarter report, Windermere Real Estate’s chief economist, Matthew Gardner, pointed out that there has been an uptick in the number of 1st time home buyers purchasing homes. Svenja Gudell, Zillow’s chief economist, stated in her 3rd quarter report that during 2016 almost half of all U.S. buyers were first time home buyers.
However, we’re also seeing the prices of starter homes skyrocket in our area. The recently released S&P Case-Shiller Home Price Index pinpointed that the Seattle area has the 2nd fastest-rising home prices in the nation. In fact, since 2012 the starter home prices have jumped 75% compared the overall housing market increases at 59% for the same time period. Millennial home buyers are ready to purchase their first homes, but starter homes are not what they used to be.
Additionally, homes in the luxury price points are seeing a slowing in their price gain in our region. According to the Case-Shiller Home Price Index report Seattle area luxury homes had a price gain of 10.9%, compared to the least expensive homes that experienced a 12.9% gain during the same report time period.
With so many differing factors working to shape our regional housing market conditions, it can be confusing to keep track of what is going on in your neighborhood, or how to make comparisons between communities that you may want to call home. I work diligently to maintain a pulse on the workings of our real estate market, to be an educated resource for you to utilize. Please give me a call with any questions you may have regarding home pricing, real estate investment, or making your first home purchase.
According to two recent surveys that took industry watchers by surprise, many family homeowners are putting frugality aside and upsizing to new houses that average as large as 2,480 square feet (an increase of as much as 13 percent from the year before), and sometimes exceed 3,500 square feet in size.
Meanwhile, millions of baby boomer homeowners are rushing to downsize—with some 40 percent of Americans between the ages of 50 and 64 saying they’re planning to make a move within the next five years.
It’s a tale of two very different segments of the population making dramatic shifts in their living accommodations to find the housing solutions that best suit their needs: one upsizing while the other downsizes.
With so many baby boomers now nearing retirement age (8,000 Americans turn 65 every day), it should come as no surprise that the number of prospective “downsizers” exceed the number of “upsizers” by three to one. With their children gone, these aging homeowners are interested in reducing the amount of house they need to care for, and are eager to bulk up their retirement savings with any home-sale profits.
As for why many families are choosing to upsize so substantially after years of downsizing or staying put, experts point to the extremely low interest rates and discounted home prices available today, and theorize that many families now feel confident enough about the economy to move out of homes they outgrew years ago.
If you’re considering upsizing or downsizing, here are some facts to consider:
How such a move can impact your life
The most common benefits of downsizing:
- Lower mortgage payments
- Lower tax bills
- Lower utility bills
- Less maintenance (and lower maintenance expenses)
- More time/money for travel, hobbies, etc.
- More money to put toward retirement, debts, etc. (the profits from selling your current home)
The most common benefits of upsizing
- More living space
- More storage space
- More yard/garden space
- More room for entertaining/hosting friends and family
- Upsizing will likely increase your living expenses, so it’s important to factor into any financial forecasts
- Downsizing will require that you make some hard choices about what belongings will need to be stored or sold
Other impacts to consider:
- The loss of good neighbors
- Lifestyle changes (walking, neighborhood shopping, etc.)
- The effect on your work commute
- Public transit options
Buy first, or sell first?
Homeowners considering this transition almost always have the same initial question: “Should I buy the new home now, or wait and sell my current place first?” The answer is dependent on your personal circumstances. However, experts generally recommend selling first.
Selling your current home before buying a new one could mean you have to move to temporary quarters for some period of time—or rush to buy a new home. That could prove stressful and upsetting. However, if you instead buy first, you could be stuck with two mortgages, plus double property tax and insurance payments, which could quickly add up to lasting financial troubles.
If you need to sell in order to qualify for a loan, there’s no choice: You’ll have to sell first.
You could make the purchase of the new house contingent on selling your current home. However, this approach can put you in a weak bargaining position with the seller (if you can even find a seller willing to seriously consider a contingency offer). Plus, you may be forced to accept a low-ball offer for your current house in order to sell it in time to meet the contingency agreement timing.
The truth is, most home sales tend to take longer than the owners imagine, so it’s almost always best to finalize the sale, and do whatever is necessary to reap the biggest profit, before embarking on the purchase of your new home.
When to make the transition
Ideally, when you’re selling your home, you want to wait until the demand from potential buyers is high (to maximize your selling price). But in this case, because you’re also buying, you’ll also want to take advantage of any discounted interest rates and reduced home prices (both of which will fade away as the demand for homes grows).
How will you know when the timing is right to both sell and buy? Ask an industry expert: your real estate agent. As someone who has their finger on the pulse of the housing market every day, they can help you evaluate the current market and try to predict what changes could be coming in the near future.
Even if you’ve been through it before, the act of upsizing or downsizing can be complex. For tips, as well as answers to any questions, contact a Windermere agent any time.
If you are trying to decide on paving or decking materials for a new outdoor space, or a refresh on an existing patio or deck, Houzz shared this comprehensive material guide that could be very helpful. The author compiled the pros and cons of popular and trendy paving stones, paving techniques, and decking materials so you can make an informed choice on what components you would like to include in your outdoor space. The slide show below give you a taste of the materials discussed. Click on the link below to view the whole Houzz ideabook.
The decision of the British public to leave the European Union is a historic one for many reasons, not least of which was the almost uniform belief that there was absolutely no way that the public would vote to dissolve a partnership that had been in existence since the UK became a member nation back in 1973. However, rightly or not, the people decided that it was time to leave.
As both an economist, and native of the UK, I’ve been bombarded with questions from people about what impact Brexit will have on the global economy and U.S. housing market. I’ll start with the economy.
Since last Thursday’s announcement, there have been exceptional ripples around the global economy that were felt here in the U.S. too. This isn’t all that surprising given that the vast majority of us believed that the UK would vote to remain in the EU; however, I believe things will start to settle down as soon as the smoke clears. The only problem is that the smoke remains remarkably dense.
The British government does not appear to be in any hurry to invoke Article 50 of the Lisbon Treaty, which allows a member country to leave the conglomerate. Additionally, nobody appears able to provide any definitive data as to what the effect of the UK leaving will really have on the European or global economies.
As a result, you have those who suggest that it will lead to a “modest” recession in the UK, as well as extremists who are forecasting a return of the 4-horsemen of the apocalypse. But in reality, no one really knows, and it is that type of uncertainty that feeds on itself and can cause wild fluctuations in the market.
It’s important to understand that last Thursday’s vote does not confirm an actual exit from the European Union. There is a prolonged process of leaving that is set out in the EU Treaty which requires a “cooling off” period. And during this time, even confident political leaders, such as Boris Johnson who championed the exit campaign, might be tempted by reforms that would see Great Britain actually remaining in the EU.
The EU itself has been shaken by the vote, and there are already signs that many of its leaders are talking about moving away from the Federal structure of the Union in favor of a looser, intergovernmental agreement, that would allow greater sovereignty for its member states.
This is clearly an obvious attempt to accommodate what is already a groundswell of opposition to the Union that is much wider than just Britain, and now includes France, Spain, Greece and Portugal, all of whom are considering their own exits.
So what does this mean for the U.S.?
As far as any direct impact of the Brexit on the U.S. economy is concerned, I foresee a continued period of volatility given the aforementioned uncertainty. That said, any predictable effects on the U.S. will be limited to a “headwind” to growth, but not enough to drive us into a recession. Our financial system is solid and U.S. exposure to European debt is still limited. I wouldn’t be surprised to see a slowdown in U.S. exports as the dollar continues to gain strength against European currencies, but those effects will be fairly modest.
As for the impact on housing, U.S. real estate markets could actually benefit. Uncertain economic times almost always lead to a “flight to safety”, which means global capital could pour into the United States bond market at an aggressive rate. With this capital injection, the interest rate on bonds would be driven down, resulting in a drop on mortgage rates. And a drop in mortgage rates makes it cheaper to borrow money to buy a home.
On the flip side, one thing that concerns me about lower interest rates is that it could draw more buyers into the market, compounding already competitive conditions, and driving up home prices. And housing affordability would inevitably take yet another hit.
Let’s not fool ourselves; what we’re seeing is a divorce between the UK and a majority of Europe. And like most divorces, there are no good decisions that will make everybody happy. We need to be prepared for the fact that it is going to be a very ugly, nasty, brutal, lawyer-riddled, expensive divorce.
My biggest concern for the U.S. is that the Federal Reserve must now pause in its desire to raise interest rates (I now believe that we will not see another increase this year as a result of Brexit). This is troubling because we need to normalize rates in preparation for a recession that is surely on the way in the next couple of years. The longer we put that off, the less prepared we will be when our economy eventually turns down.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.
Originally posted on Windermere Blog
The housing market is performing remarkably well, with the exception of incredibly low inventory levels in many areas throughout the country. Why is this happening? Windermere’s Chief Economist, Matthew Gardner, explains why and offers his predictions for what we can expect in the future.
Being a Windermere Premier Director has its benefits. I am able to provide you concierge level services with ease, through the tools provided by Premier Properties. It also affords me the ability to stay current on the trends in luxury living. And seeing the latest and greatest is one of the most fun parts of my job. I thoroughly enjoy exceptional design and it makes me happy to be able to share this passion of mine with you.
One of the educational tools at my disposal is the monthly Premier Networking Breakfast I attend. At the March breakfast, brokers from around our region received noteworthy information regarding the latest interior trends for luxury homes. Ranging from classic to tech-savvy, all these trends have one thing in common- they exude a feeling of relaxation and joy, perfect for facing your day in style.
The hottest neutral is classic white. You are probably seeing a lot of white upon white in rooms featured on designer blogs and in decor magazines. The varying textures of the white accessories and furniture offer a unique profile against creamy white walls. Gray is a close second for walls, especially those hues with just a touch of gray in them.
Rubbed bronze and brushed or polished chrome are still highly sought after metals for fixtures. But gold tones are definitely making a comeback! And polished nickel is also a nice choice for fixtures in your baths and kitchens. Pendant lighting is so on-trend right now, especially for the kitchen.
Adding smart home technology to enhance your morning is highly desirable in luxury remodels and new construction. Imagine how nice it would be to turn on the shower from bed, set the temperature and be alerted when the water is warmed to the desired temperature. Including a Miele coffee system in the master bedroom is a popular suite feature. What a fantastic way to start your day!
Family rooms are starting to be referred to club rooms, a space where families can gather for casual evenings of board games, an afternoon of reading or lively after-dinner conversation. You may be noticing that these club rooms are tech free zones, perfect for spending quality time together.
Luxury homes are including dedicated space for the family pet. Not only do these special pet rooms include cozy accommodations for your pet to enjoy while you are out running errands or during a dinner party, but they often include doggy spa amenities like a dog washing sink sized for Spot to make bath time smoother.
The state of quality kitchen appliances, for both indoor and outdoors, has changed dramatically in the last 10 years. The gold standard for appliances is Aga, from the UK. It's often said in England that one has not arrived until they install Aga in their kitchens! It's projected that the way we do laundry will change dramatically in the next 20 years and that the traditional dryer will be phased out. We're seeing the advent of dryers that use less amps to run, and ventless systems.
If you have questions about home trends when considering updates for your house, I would love to be a resource for you. Please give me a call, or send me an email, so we can schedule a meeting to discuss your ideas and current interior design trends.
During 2015, Windermere Real Estate came out on top representing both sellers and buyers on Mercer Island. 37% of the sellers on the island opted to work with a Windermere agent last year, while 27% of those who bought island homes worked with Windermere brokers. The median sale price for a single-family home on Mercer Island during 2015 was $1,199,500, which is on the cusp of the luxury real estate market in the Puget Sound Region.
In Seattle, Windermere Real Estate had a significant share in representing buyers and sellers in the $1M+ price range during 2015. 44% of the Seattle metro sellers in this price point opted to work with a Windermere broker, while 35% of buyers who purchased a home for $1million plus used a Windermere agent. Windermere’s share of the market was 20-30% higher than other real estate companies in Seattle for the same year.
At the $1million+ price point, Windermere Real Estate represented the most sellers and buyers on the Eastside on Lake Washington during 2015. 41% of sellers, and 29% of buyers, who conducted transactions of $1million+ used Windermere agents. The Eastside cities included in this market share report include Bellevue, Bothell, Duvall, Issaquah, Kenmore, Kirkland, Mercer Island, Newcastle, North Bend, Redmond, Sammamish, Snoqualmie, Woodinville, and surrounding neighborhoods.
I recently attended two highly informative events where Windermere’s Chief Economist, Matthew Gardner, covered the economic and housing outlook for our region. Mr. Gardner shared that the economic landscape for the greater Seattle area is quite good. Our unemployment and rate of inflation are both low. He stated that we need to see more diversification in the job offerings in our region – we’re a bit too reliant on Amazon, which is the leading company creating jobs and our need for more housing inventory. Wage discrepancy and the level of part time employees searching for full time work is also an issue. Add in the current home pricing in King County plus the rapid rise of rents, and there is a segment of Seattle Metro buyers who are priced out the market and are looking in other counties for housing. The Tacoma area is increasingly where buyers are choosing to make home purchases. Home pricing and local economics are also affecting the number of 1st time move-up buyers. They are opting to remain in place for now, which has definitely made an impact on the number of homes being listed for sale.
The flip side of the current price of homes is the positive equity being generated for today’s Seattle Metro homeowners. This positive equity should motivate more sellers to enter the housing market, and give us the desperately needed housing inventory our market needs. Fixed rate mortgages will remain low during 2016, although there is a misconception among 1st time home buyers that a 4% 30 year fixed mortgage rate is too high. Think back to 1982 when buyers faced an 18% mortgage rate! 4% is a dream in comparison.
Supply in the high end real estate market is tight in our region and will remain so during 2016. Luxury real estate buyers are able to take advantage of fantastic jumbo loan options currently, as long as they can find the home of their dreams to purchase. There is definitely some good news in the horizon that may increase the inventory of luxury real estate in the greater Seattle area. It is projected more high end spec builders will experience improved access to financing options from lenders this year.
With 2016 being an election year, Mr. Gardner projected no large surprises in housing or economics looming. Typically, election years are fairly benign and 2016 promises to follow in a similar vein. If you have any questions on our regional housing market, or about your home’s current value, please give me a call at 206-412-0038 or send me an email at firstname.lastname@example.org so I can answer your questions.