Article written by Julie Barrows, owner of Windermere Real Estate / Mercer Island.
Seattle area real estate paid off big yet again in 2017 with a 14.1% median price increase to $708,000. In fact, over the past five years, prices are up 58.7%. A Seattle house that was $446,000 in 2013 would sell for a whopping $708,000 today, or $262,000 more.
Grappling with gridlock and buyer push-back over steeply escalating prices, Seattle saw the strongest price growth in neighborhoods further from the downtown core—namely South Seattle, Shoreline, and West Seattle. These more affordable regions offered home buyers more for their money than many of the core in-city hoods…although the quaint, inviting homes with signature “Seattle Charm” are pretty hard to pass up.
The median sale price on Mercer Island increased 17.1% (to $1,546,000) over 2016. Lack of available housing was the biggest contributor in driving prices up in this often-coveted island community nestled in the heart of the metro region between Seattle and Bellevue.
New residential development regulations implemented in November impacted the size and placement of new construction and remodeled homes. Given the current buyer demand in the Mercer Island market, the new restrictions generally only affected values where total building size was significantly diminished.
Median price appreciation on the Eastside fared even better than Seattle with year-over-year prices up 15.2% to $868,000. Over the past five years, prices are up 54.8%.
The entire Eastside—comprised primarily of the cities of Bellevue, Medina, Clyde Hill, Yarrow Point, Hunts Point, Kirkland, Issaquah, Redmond, Sammamish, Woodinville, Carnation and Duvall—grew at a frenzied pace as buyers competed for fewer and fewer homes in Seattle’s newer and more spacious neighboring Eastside region. Those communities closest to the metro core and I-90/520 arterials fared best but homeowners in more remote Eastside neighborhoods are hardly complaining.
Challenged by increasing building and shoreline restrictions, aging housing stock, and an extreme scheduling backlog for quality contractors, waterfront buyers found fewer modern turn-key homes, in ideal settings, to capture their interest. Waterfront that ‘checked all the boxes’ was in high demand—commanding top prices in 2017—while those requiring considerable renovation/rebuild sat stagnant on the market or sold at well below prior market prices. Don’t expect this to turn around until builders and remodelers become more readily available.
In desperately short supply, condos have become a favorite, or the only option, for buyers looking for walkability, convenience, and affordability in one nifty little package. Experiencing one of their best years in decades, condo prices flourished in 2017 and will likely see similar gains in 2018. Well-run buildings with reasonable monthly dues, those with all the bells and whistles, and good proximity to essential services are especially popular right now.
Seattle area real estate paid off big yet again in 2017 with a 14.1% median price increase to $708,000. The Eastside fared even better—up 15.2% to $868,000. In fact, over the past five years, prices are up 58.7% and 54.8% respectively. A Seattle house that was $446,000 in 2013 would sell for a whopping $708,000 today, or $262,000 more.
Stack that up against nearly any other investment—oh, and don’t forget that gain is based on the value of the entire asset and not just what you invested in it (i.e. down payment and closing costs). If you purchased said home in 2013 for $446,000, putting 20% ($89,200) down and financing the remainder with about $10,000 in loan fees, you would have invested about $100,000 for a gain of $262,000. A 262% return in five years assuming no major improvements were made.
While 2018 should be another good year for real estate, it might not see the hefty appreciation gains of 2017. Expect to see some slowing and a build-up of inventory in the luxury sector while the tight supply of entry-level homes steals the attention (and dollars) of would-be buyers. Other big winners will be highly coveted one-level homes that allow boomers to age in place, and communities with high walkability or those adjacent to highly-reliable rapid transit.
Seattle’s higher cost of living (and traffic) may push telecommuters and retirees alike further from the Seattle-Bellevue metro region as they cash-in their blooming equity for a lower-cost lifestyle in the burbs and beyond—leaving the costlier in-city abodes to high-income earners who want the hip urban life despite the cost.