Another year has passed, as have many pivotal milestones for Realogics Sotheby’s International Realty (RSIR), our brand, and the local housing market that we serve. RSIR has analyzed the data and presented a report with a 2018 retrospective and look at Seattle’s performance on the S&P CoreLogic / Case-Shiller Home Price Index, a review of market activity in 8 key counties and 31 communities around Western Washington, and a Look Ahead at trends for 2019. Below I’ve compiled key insights for King and Snohomish counties, in addition to some of the most coveted Eastside enclaves, and what to watch as we continue through 2019. I offer these thoughts, as a conversation starter with you.Read More
Real Estate Market
Realogics Sotheby’s International Realty presents a look at the housing market trends for the third quarter of 2018, from the shores of Bainbridge Island’s waterfront homes and in-city living opportunities to the Eastside’s most distinguished residences.
Seattle | Single-Family Homes
Inventory continues to remain at the center of real estate conversations in Seattle, as the frenetic market of recent years has given way to a more balanced one that reflects typical seasonal trends. In Q3-2018 we saw 2.7 months of inventory, up nearly 75% compared to last quarter (at 1.2 months) and a staggering 156.5% on a yearly basis. View report>>
Eastside | Single-Family Homes
Record-breaking home price growth for single-family homes on the Eastside moderated from Q3-2017 to Q3-2018 with a 7.11% gain, a stark difference from last year’s report, which showed a 14.80% increase in median home prices from Q3-2016 to Q3-2017. View report >>
Bainbridge Island | Single-Family Homes
While Seattle and the Eastside saw slight decreases in the average median sales price from the second to third quarter of 2018, home prices on Bainbridge Island increased on a quarter-by-quarter basis, from $865,000 in Q2 to $912,000 in Q2, representing a 5.4 percent increase (larger than the 2.3% year-over-year gain). View report >>
Seattle | Condominiums
As was the case in Seattle’s single-family market, the number of homes available for sale is dominating real estate discussions, as the condominium market in Seattle saw 2.7 months of inventory in the third quarter of 2018, the highest number reported since the third quarter of 2012, when we nearly reached a balanced market at 2.9 months. Since that time, inventory has continued to dip, maintaining numbers well below 1 month in every quarter since the start of 2015. View report >>
Realogics Sotheby’s International Realty presents a look at the housing market trends for the second quarter of 2018, from the shores of Bainbridge Island’s waterfront homes and in-city living opportunities to the Eastside’s most distinguished residences.
Seattle | Single-Family Homes
Seattle continues its red-hot housing market streak, as the median sales price of a single-family home hit $857K, up 13.1% compared to Q2-2017, which averaged $758K. View report>>
Eastside | Single-Family Homes
Home prices on the Eastside continued their upward climb, increasing 12% year-over-year, while days on market decreased to just over two weeks. View report >>
Bainbridge Island | Single-Family Homes
Though other areas experienced increased inventory, Bainbridge Island saw a decrease of homes for sale with just 1.8 months of inventory, as the days on market fell 40%. View report >>
Seattle | Condominiums
Condominiums in Seattle continue to draw buyers, as the average days on market in Q2-2018 was 14 days and the average sales price reached $514,000. View report >>
Following a record apartment construction surge that delivered more than 12,000 new rental housing units in downtown Seattle, it’s curious that, since 2011, only 866 condominiums were added. What’s more extraordinary is that so few of those new condominiums remain available to purchase today. Simply put, 99-percent of what was built for sale in the last five years has been sold and more than two-thirds of what’s planned for delivery by 2019 is already reserved through priority pre-sale.
Among the few planned condominium buildings in the downtown area is NEXUS – a 41-story, 382-unit high-rise, located at 1200 Howell Street, is slated to break ground in January 2017 with occupancy by mid-2019. Its developer, Vancouver-based Burrard Group, took a unique stance on the market by choosing to build for sale, while 94-percent of the historic supply was built for rent. A demand to own was clearly underscored by hundreds of pre-sale buyers lining up on June 4th, some of which slept overnight, in order to secure a reservation for priority pre-sales. Reservations are offered for a $5,000 refundable deposit and provide prospective home buyers with a unit specific and first right of opportunity to purchase when the homes are officially released for sale in the New Year.
NEXUS reservation holders are savvy and now enjoy a preferred position in the next development cycle, according to Michael Cannon, Sales Director for the development.
“Our buyers realize the market is rising and see the value of securing an option to purchase without fear of multiple offers, price escalation or worse – missing out on the opportunity to purchase a home in one of the few developments likely to deliver before 2020,” said Cannon. “NEXUS isn’t quite like anything that has been offered before in downtown Seattle – progressive architecture, flexible floor plans, robust amenities, and high-tech features – NEXUS has become an exclamation point on the buy vs. rent debate.”
Cannon believes an unprecedented number of apartment dwellers are considering their options with ownership, especially at more attainable price points below $600,000, as down payments require are set at 5-percent of the purchase price and mortgage payments are typically the same as prevailing rents in comparable apartments.
Eager homebuyers rallied during the first half of 2016 increasing unit absorption and median home prices by 48% and 28%, respectively according to analysis of Northwest Multiple Listing Service data released as of June 30th. The typical condominium is selling in just over a month with a median home value of $575,000. However, a closer look reveals that 135 of the 381 condominium closings so far this year were in the INSIGNIA condominium tower, a new construction development (and one remaining developer-owned unit in the Four Seasons Private Residences) whereas there were effectively no new construction deliveries or closings during the same term in 2015. When removing this spike of higher-priced, new inventory in the overall resale market still expanded by 22% year-over-year but total resale closings actually decreased 5% with 246 homes in 2016 (including a few resales at INSIGNIA) against closings of 258 units in the first half of 2015.
“These market results were anticipated given the rising demand and relatively anemic supply being added to the skyline,” said Dean Jones, President and CEO of Realogics Sotheby’s International Realty. “I wish I could point to a cure for homebuyers hoping for greater affordability but the answer is supply and that can take years to develop.”
Below are a collection of graphs illustrating the changing market that compare the first half of 2015 with the first half of 2016, both with new construction and resale (All) as well as exclusively resale homes (Resale).
To be sure, much of what’s occurring in the development of downtown Seattle has been a common discussion about supply and demand. In 2013, Jones prognosticated on this very topic in an interview with Seattle Magazine’s Publisher’s Series in which he mentioned the northern migration of downtown Seattle and a condominium comeback, although nearly three years ago the housing market was still very much in recovery mode.
Then, earlier this year 425 Business Magazine tapped Jones about the trends for urbanization, this time with a focus on the Eastside. He notes that the rising trend for foreign direct investment in the region and a propensity for in-fill development will have even the much smaller Eastside urban landscape soon looking more like a skyscraper city before long.
Most recently the state of the in-city housing market has less to do with projections but evidenced by consumer response. Among the newly constructed in-fill condominiums in the region (either in development or planned), which includes INSIGNIA, LUMA, Gridiron and now NEXUS, 80% of the homes have already been reserved, pending or closed.
“That’s just one of the reasons we’ve been so successful with NEXUS,” said Michael Cannon, Director of Sales for NEXUS. “We’re well positioned both in our geographic location as well as our time in the development cycle. Buyers have clearly been waiting for the next generation of high-rise living and at NEXUS, ‘X’ marks the spot.”
Cannon says homebuyers have a remarkably clear view of the future as downtown Seattle is moving north and NEXUS is in the heart of a new multi-billion dollar vertical village.
*Information gained from sources deemed reliable but cannot be guaranteed.
According to the most recent report by the Downtown Seattle Association, development throughout the Emerald City is setting new records with 65 active projects either under construction or expected to start shortly.
This is significantly more than any time prior, with every real estate segment represented, including high-rise offices, residential, hotels, medical centers and major technology campuses represented by Amazon,Facebook and Google to name a few. Residential development is among the most active product segments with 10,000 housing units delivered in the past five years and another 10,000 currently under construction or in site preparation including recent land use permits issued. Nearly 19,000 additional housing units are in pre-development stages in the high-density neighborhoods that comprise downtown Seattle.
That may sound like a lot of housing, but experts say construction is still lagging behind demand and as a result, both median home prices and rents continue to rise. The fact is that people keep moving into downtown Seattle. Conway Pedersen recently adjusted their 2016 Puget Sound job forecast up by 12,400 (35%) to total 47,900. From a macro perspective, residents of Washington enjoyed personal income growth increases of 1.5% for the first quarter of 2016 topping the rest of the nation in wealth generation. Among the 961 new construction condominiums currently in development, 786 (or 82%) have already been presold. Meanwhile, another 374 units that are soon to break ground at NEXUS have already posted 80% presale reservations. Interestingly, each of these new condominium projects are in distinct urban neighborhoods as downtown Seattle is expanding its residential footprint.
Those who move to the Seattle area are faced with a market in which the cost of renting and buying are comparable and, as of late, both increasing. The Puget Sound Business Journal reported yesterday that “if you thought the Puget Sound region’s flurry of apartment construction would drive rents down, you were wrong,” given that rents have increased over 10% in the past year alone. Average rents have risen in the downtown area by 41.7% since 2010, according to O’Conner Consulting Group, yet the median home price of condominiums have grown as much (42%) in the last year alone as of May 2016 (NWMLS), spiked in part by the new construction inventory. Homebuyers across the state are seeing increases in prices, as The Seattle Times reported this week that “Washington’s escalating prices have sent it zooming past several other states toward the top of the list of priciest places in the nation to own a home.” The Times says statewide home prices rose nearly 11% in the month of April when compared to last year’s numbers, representing “the biggest jump of any state in the nation for the third month in a row.” The lack of inventory paired with a strong economy has caused home prices to increase in nearly all (37 of 39) counties in Washington state year-over-year.
It’s ironic that what was once Denny Hill, a mass of earth that used to run between 1st Avenue to Denny Way between Pike Street and 5th Avenue, is effectively filling in again with high-rise developments including the urban campus for Amazon. In the late 1800’s, city planner R.H. Thomson convinced property owners a tenfold increase in value if they allowed the City of Seattle to blast away the hills using water cannons that used more than twenty million gallons of water per day. After several phases and several decades, the hill was gone leaving flat, developable land. Now more than a century later, residents are again enjoying the view from this hilltop, albeit in the form of a high-rise condominium, apartment or office building.
The epicenter of this construction boom is the “Amazone” – nicknamed for the major urban campus being developed by Amazon.com. The tech and retail giant now leases and owns over 8 million SF of office space and will have over 10 million SF when planned projects are complete. This represents 14% of Seattle’s current Class A office space and will be 18% when they are finished. Amazon took up 2.6 million SF in 2015, 60% of all Class A absorption. Revenue in 2015 was $107 billion. In 2015 it grew its worldwide headcount by 50%, going from 154,000 to 231,000.
The Denny Regrade area and a northern migration of downtown Seattle is similar to the development trends of South of Market (SOMA) and Mission Bay in San Francisco. This 303-acre neighborhood on the outskirts of downtown San Francisco became the epicenter of a real estate bonanza that has rocked the Bay Area more than its 1906 earthquake. What’s different however, is Seattle is generally much more affordable, higher density and lacks the state income tax of California so it’s no wonder so many major companies, including tech firms like Google and Facebook, are opening major urban campuses in the Silicon Forest instead of the Silicon Valley.
Reservations could represent more than $200 million in presales; median home prices rise in downtown Seattle.
The Burrard Group has accepted 244 first-position, unit-specific reservations for priority presales at NEXUS, a new 374-unit high-rise condominium tower located at 1200 Howell Street in downtown Seattle. Project representatives at Realogics Sotheby’s International Realty report that more than 500 prospective homebuyers were processed through the NEXUS Preview Center at 2715 1st Avenue on June 4 and 5th. Several groups camped out overnight to ensure a first place in line while a crowd of approximately 130 were queued up by 11am on June 4th when the reservation event commenced. Prospective homebuyers were offered an individual home for priority presale with a price range for a $5,000 fully-refundable deposit to be held in escrow. Reservations will convert to a Purchase and Sale Agreement during the Fall of 2016, commensurate with the opening of a formal sales center and the ground-breaking of the development. NEXUS is scheduled for occupancy by mid-2019.
“Our opening weekend results suggest a growing preference for condominium ownership after an unprecedented apartment cycle that added nearly 10,000 new rental units to our skyline,” says Dean Jones, President and CEO of RSIR, the firm representing NEXUS. “Those apartment towers have been incubating future homebuyers who are increasingly recognizing the investment potential and benefits offered by homeownership. NEXUS provides an opportunity to own a slice of this fast-growing metropolis.”
Jones refers to this northeast corner of downtown Seattle as the “East Village” where he’s tracking more than 25 new development projects representing investment in excess of $6 billion – comprising 10,000 new housing units (mostly apartments), 2 million square feet of office space, 185,000 square feet of retail, 1,900 new hotel units and the $1.4 billion expansion of the Washington State Convention Center. A virtual tour of the future skyline called Cityscape 2020 can be experienced online at www.NEXUSseattle.com.
“NEXUS is turning heads and changing mindsets at the same time,” says Michael Cannon, Community Sales Director for NEXUS and a broker with RSIR. “Our reservation holders are current renters, move up buyers from other condominiums, as well as downsizing empty nesters and families setting up a second home, student housing, investments and retirement plans. It’s a diverse mix.”
Cannon says all buyers are drawn to the development’s front and center location within a walkable neighborhood on the rise with immediate access to I-5 and the expanding light rail system by Sound Transit. He says consumers recognize how traffic-congested Seattle is becoming and they desire the flexibility of commuting options.
According to Cannon, the 244 unit reservations included all 60 units that did not include parking stalls as well as 32 units that will share unassigned “Flex Parking“ (shared parking coordinated by a custom app). Every other home reservation included at least one parking stall with a second stall available for larger homes. Reserved homes were distributed across product type, from efficiently planned studios and open one bedrooms priced from the low $300,000s, up to expansive two-story Skylofts and penthouse unit combinations valued at more than $3 million.
“Our tremendous market response to date suggests that NEXUS is exposing some pent up demand for high-design, attainably priced homes,” said Christian Chan, Executive Vice President of Burrard Group, the developer of NEXUS. “Seattle is truly becoming more and more like the Manhattan of the West Coast, where consumers can live, work and play within an urban context and many will prefer a lifestyle without the burden or expense of a car.”