Best Neighborhoods 2009: 110 Hot Spots

Location, location, location. The old mantra rings true even in tough times, with some Seattle-area neighborhoods weathering the real estate storm better than others: What neighborhoods have held value? Where are the really great deals? What’s likely to be the next hot spot (the minute our economy warms up again)? Where's the walkable neighborhood—with shops, restaurants and amenities in easy reach—and the one that fosters a lot of local pride? Though times are still tough in our real estate market, there are glimmers of an upturn—and for those with some extra money (and really good credit) it’s an opportune time to find the neighborhood of your dreams—and buy.

Real estate gurus may be debating the big question: Have we hit bottom yet? But whether at bottom, near bottom, or slowly climbing up, the recent shift in the local real estate market is creating opportunities for buyers. Yes, the mortgage industry was—and remains—tight, but with mortgages at near-historic low rates, if you have good credit, your dollar is going to buy more than it did a very short time ago.

Making for an even better market for buyers is an ample supply of homes for sale. And while you may not want to profit from someone else’s misery, there’s no denying that there are a good number of foreclosed homes on the market. Adding to the good news for house seekers is a decision by the Federal Housing Administration to permit its lenders to allow qualified first-time home buyers to use an $8,000 tax credit as a down payment.

Seattle real estate economist Matthew Gardner is among those predicting that in the second half of the year, home prices will rise a bit, as the recession ebbs. Says Gardner: “Do I think we’ll start seeing stability in the real estate world this year? I think we will. It will start improving in the later half of the year.”

Just how brutal has the past year been in real estate? Phoenix, The New York Times reported in the spring, had the unwanted distinction of becoming the first American city to experience home prices falling by half since the market peaked in June 2006. Other places, too, such as San Francisco and Los Angeles, parts of Florida and Las Vegas, also witnessed steep declines in house values, leaving many homeowners holding mortgages for more than their homes were worth. In Washington, it’s instructive to compare the first quarter of 2009 to the first quarter of 2008 to get a sense of the plunge: House values fell by about 30.6 percent in that period, according to a report by the Washington Center for Real Estate at Washington State University.

Still, locally, there are some positive signs. Fionnuala O’Sullivan, an agent with Gerrard, Beattie and Knapp, says homes priced around the $300,000 mark were doing well in the first half of the year, with many attracting multiple offers. “I had one client who was one of 12 offers on a house” in that range late last spring, O’Sullivan recalls.

The pain continues for many, of course, including overextended homeowners, stung by jumps in their adjustable-rate mortgages, homeowners who have been laid off, and those who have seen the value of their real estate plunge in the past year, making it tough to sell a property, as nearly everyone in the industry points out.

“What I think everybody is seeing is that some of the real bargains are selling,” says Kathleen Funk, a Windermere agent, “or what people see as bargains are selling.” Move-up sellers seem to be sitting back, she says. “You have to sell low and buy low.”

Ken Nicholas, a John L. Scott agent, couldn’t agree more. Buyers, after years of being at the mercy of a booming market, are in the cat-bird seat, and will be for some time to come, he says. “They’re super-choosy. Whatever the price is on the listing, they’re going to come in below that, I can tell you that.…This is a great time historically for buyers, in our market, at any price point.”

>>More on our 110 Best Neighborhoods: 

Affordable Areas

Look-alike Hoods

Your Best Investment Bet

Recession Proof Nabes

A Parking Lot Transformed

The Top Ten Best Hoods


With Elizabeth M. Economou, Karen Johnson and Virginia Smyth
Research by Sheila Mickool with Sarah Dawe and Alexis Morley

Photographs by Brianne Nicole Braun