Located just south of I-90, and running south to Genesse Park, Mount Baker is a neighborhood that is definitely reaping the benefits of a booming real estate market. Taking their name from the sweeping views of Mount Baker to the north, this neighborhood is a great cross section of what Seattle has to offer. On the water side it boasts the sprawling mansions that once typified Seattle following the turn of the last century, but as you move west toward Rainier Avenue, older single-family homes are giving way to town homes and modern architecture. The rising cost of housing continues to force a surge of new construction, and with easy access to the new light rail, commuting from Mount Baker has never been easier.
Given the relative affordability and continued growth, Mount Baker has seen a 13% increase in home prices over the past year and currently has a median home price of $568,800.
Home sales in Mount Baker over the past two months by listing brokerage:
For more than 100 years, floating homes have helped define Seattle’s social culture and maintain its reputation as a place where unconventional modes of living are enjoyed. The thriving houseboat colony on Lake Union, made famous in the 1993 film Sleepless In Seattle, attests to the continuing desirability of this unique lifestyle.
House boats have come a long way since their inception as affordable alternatives to traditional homes and vacation rentals. Currently there is a floating home available for $3.2 million dollars, however most sell for well under that. In the past six months, there have been 21 floating home sales with a median sale price of $635,000. Pack lightly however, those same 21 homes average a tidy 777 square feet. For those who love them, they wouldn’t live anywhere else, but bring your sea legs. Life on the water isn’t everyone’s cup of chowder.
What keeps Windermere’s Chief Economist, Matthew Gardner, up at night? Housing affordability. As the U.S. Population moves towards both coasts and the Southwest, putting upward pressure on land prices and the value of homes, we will see a greater cost of living, which could directly impact the work force and economies in those areas. Gardner weighs in on how West Coast cities can improve housing affordability through policy and infrastructure changes.
Today, the Puget Sound Business Journal exclusively announced the launch of Windermere’s new ultra-luxury brand, W Collection. Spearheading the W Collection is Leigh Canlis, Vice President, Luxury Division of Windermere, who joined the company in February.
Canlis said, “W Collection is much more than a luxury marketing program, it is like the American Express Black Card of real estate. “W” is a high-touch concierge service that not only markets luxury listings, but connects Windermere brokers and their clients to every aspect of the luxury industry.”
The new division will focus on homes priced at $2.5 million and above in Seattle and $3 million and above on the Eastside, and the top tier brokers who work in this arena.
Historically low inventory levels, how we got here, and what to expect in the coming year
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.
The supply of homes for sale in April was up over March, indicating that more sellers are deciding to list their homes. But with less than a month of inventory available in the area, it’s still a seller’s market. While prices were up over last year, the increases aren’t as lofty as they were in the first quarter of this year. Buyers looking for affordable housing continue to push their search outside the more expensive urban cores.
After breaking records for home prices in February and March, King County reached a new record-high in April. The median price of a single-family home was $540,000, a 12 percent increase over the same time last year. The more affordable areas in the south and north ends of the county saw the greatest increases, with home prices climbing almost 20 percent in these outlying areas.
Seattle continues to have the tightest inventory of homes in King County. An influx of young, well-paid technology workers has fueled demand for homes close to the city. The median price of a single-family home increased 15 percent over a year ago to $637,250. But like the Eastside, that number was down slightly from February and March.
At $730,000, the median price of a home on the Eastside was up 11 percent over last year. That figure was down slightly from February and March, suggesting that prices may be moderating. Competition for homes has not moderated. Brokers continue to report homes on the Eastside selling very quickly and often for over asking price.
Home prices in King County hit new highs last month. The median price of a single family home sold in King County in February was $514,975, a whopping 20% increase over a year ago. The median price in Seattle was up 24% to $644,950. The Eastside’s median price was up 20% to $739,975. You may be surprised at how much your home is worth today.
2) Competition among buyers is driving prices even higher.
Despite increasing prices, there is intense competition among buyers because inventory is at all-time lows. That means multiple offer and bidding wars, increasing the likelihood that your home will sell above your asking price.
3) Homes are selling fast.
With such limited inventory, homes in King County are selling rapidly – sometimes in days. If you list your house now, chances are you’ll get a buyer quickly.
4) You can make the sale work to your needs.
With competition for homes so fierce, you have the freedom to make the deal that works best for you. Many buyers are paying cash. They’ll also make concessions. Do you want stay in the home a few months after the sale? Want a large earnest money payment? You’re in the driver’s seat, and many buyers are willing to do what it takes to get the home they want.
It’s a seller’s market.
Are you ready to take advantage of it?
A severe lack of inventory has led home prices to reach an all-time high. With the supply of properties at its lowest level since 2003, the market is in dire need of more homes to meet buyer demand. That is excellent news for those thinking about selling their home. Sellers can expect a quick sale, favorable terms and a historically high sale price. Buyers will need patience and a strategy for competing with multiple offers.
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The median price of a single-family home sold in February hit an all-time high of $514,975, a whopping 20 percent increase over the same time last year. The number of homes sold exceeded the number that were listed, depleting inventory at a rate that is unsustainable. For the market to remain healthy, more people need to make the decision to list their homes.
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The continued boom in tech company hiring helped propel home prices to peak levels in Seattle. The median price of a single-family home jumped 24 percent over a year ago to $644,950, a new high. Inventory is at critical levels. In the hot Ballard neighborhood there are currently only 17 homes on the market.
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The Eastside, already the most expensive area in King County, saw home prices set a new record in February. The median price soared 20 percent over last year to $739,975. Inventory here is particularly tight, and the area remains a very strong market for sellers. Homes are selling quickly, even at the higher end. A $3.2 million home in Yarrow Point sold last month in just 14 days.
The Washington State economy has added almost 370,000 jobs since the lowest point of the recession at the start of 2010. Additionally, total employment is 176,000 jobs higher than seen at the 2008 peak. With a vast majority of our metropolitan areas having fully recovered from the job losses seen during the recession, I expect to see somewhat more modest job growth in the coming year. That being said, our economy will continue to expand, which will be a benefit to our region’s housing market.
HOME SALES ACTIVITY
There were 16,895 home sales during the fourth quarter of 2015, up by 4.6% from the same period in 2014. Sales activity is starting to slow somewhat but this is due to inventory constraints.
The growth in sales was most pronounced in Cowlitz and Lewis Counties and double-digit growth was also seen in Thurston County. Sales declines were seen in Grays Harbor County and Skagit County, but only minimally.
The number of home sales grew in all but two counties, with the average number of sales up by almost 6% from the same period in 2014.
I am not surprised to see some decline in sales start to appear. Listing activity was down by 28% compared to the fourth quarter of 2014, and there were no counties where there were more homes for sale in Q4-2015 versus Q4-2014.
Prices in the region rose by an average of 9.3% on a year-over-year basis but were
0.4% lower than seen in the third quarter of 2015.
Unsurprisingly, no counties saw a drop in average home prices compared to fourth quarter last year.
When compared to the fourth quarter of 2014, San Juan County again saw the fastest price growth with an increase of 37.6%. However, this county is notorious for extreme swings given the huge variations in prices in the San Juan Islands. Double-digit percentage gains were also seen in five other counties.
As long as inventory constraints persist, it is likely that price growth will continue.
That said, modest increases in interest rates, in combination with declining affordability conditions in several markets, will likely slow price appreciation.
DAYS ON MARKET
The average number of days it took to sell a home dropped by nine days when compared to the third quarter of 2014.
It took an average of 78 days to sell a home in the fourth quarter of this year—down from the 91 days it took to sell a home in fourth quarter of last year.
There were just two markets where the length of time it took to sell a home did rise, but the increases were minimal. Jefferson County saw an increase of eight days while Mason County rose by two days.
King County remains the only market where it takes less than a month to sell a home.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the fourth quarter of 2015, I have left the needle at the same position as the previous quarter. In as much as the market is still very heavily in favor of sellers, I fear that some markets are reaching price points that will test affordability. Furthermore, while inventory levels are likely to see some growth in 2016, it will not be enough to satisfy demand, adding further upward pressure to prices.
Overall, 2015 was a stellar year with sales volumes and home prices moving higher across the board. In 2016, I believe we’ll see some growth in sales activity, as well as continued price growth – just at more modest levels than last year. Interest rates are going to rise moderately through the year, but still remain very competitive when compared to historic averages. In other words, any increase in interest rates should not be a major obstacle for home buyers.
Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.
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.