You’ve heard the horror stories: Seattle-area home prices are rising out of control, with multiple offers, sometimes at thousands of dollars over the asking price.
Evelyn (not her real name), an attorney who lives near Lake Washington with her family in one of Seattle’s upscale neighborhoods, experienced the stories firsthand. When a “For Sale” sign appeared on the lawn of a waterfront home down the street, she quickly assessed the market and—knowing that there would be competition for the house—promptly submitted an offer at $200,000 more than the asking price. “It was a clean, noncontingent offer with an expedited closing,” Evelyn says, “but we didn’t get the house. We weren’t even in the running. There were 11 other offers, and ours wasn’t one of the top three.”
The dollars may differ—after all, some condos cost less than Evelyn’s $200,000 bump—but similar scenarios are playing out all over the greater Seattle area at all price points, says Patt Sellen, a Re/Max managing broker who focuses on the Eastside. This is true especially in the “middle range” of the market, which represents 50 percent of all home sales and excludes the most expensive and least expensive homes on the market. “It is not unusual for buyers to make 10 or 12 offers on homes before they finally get one,” Sellen says.
A stunning report by Redfin senior data analyst Troy Martin reveals the root cause of the recent surge: a lack of inventory. In an analysis of total home sales in King and Snohomish counties from 2011 to 2014, Martin found that the total number of homes for sale in the middle price range fell by 33.4 percent, while the prices that constitute the middle range increased by 36.5 percent (moving from $179,900–$449,900 in 2011 to $256,000–$599,900 in 2014). It’s a double-whammy hit to the middle class and a trend that some believe puts the Darwinian principle of “survival of the richest” on full display.
Blame it on Seattle’s meteoric success and desirability as a place to live, says Nela Richardson, Redfin’s chief economist. “All you need to know to understand is that Amazon decided to keep its headquarters in town—“it is hugely impactful to our region and is symbolic of the crux of the matter regarding rising housing costs in Seattle,” she says.
Millennials are drawn to companies like Amazon and to Seattle, with its universities, high quality of life, desirable amenities, astonishing natural beauty and relatively lower cost of living (by comparison, rents are much higher in Silicon Valley than they are in Seattle). Companies, especially those in high tech and the sciences, are drawn to areas where millennials congregate. “It’s a win-win for both,” Richardson says. “Millennials get to live in a vibrant community with a lower cost of living, and companies get talented individuals for less than it would cost elsewhere.”
The symbiotic relationship works big time in Seattle. “The national average for unemployment is 5.6 percent, but Seattle’s is only 4.6 percent,” Richardson says. “The economy here is strong; jobs in the technology and scientific sectors are growing like crazy.”
According to the Urban Land Institute and PricewaterhouseCoopers, Seattle is one of the fastest-growing cities in the U.S. (with 6.9 percent population growth in the past three years) and is one of the country’s top real estate markets (ranking eighth overall, third for development and fourth for investment). Seattle is now considered a gateway city (like New York, Boston and Los Angeles), making it a magnet for foreign investment.
All of which leads to increased competition in real estate, and higher rents and home prices. But Richardson doesn’t think Seattle will become the next San Francisco, where the service sector (nurses, firefighters, teachers, etc.) has been priced out of the city. “In 2013, we had an abnormal year in real estate. There were a lot of international buyers with cash, 51 percent of offers by Seattle Redfin agents faced competition from other buyers,” Richardson says. “In 2014, that dropped to 44 percent.”
Richardson believes that in 2015, Seattle’s real estate market will be robust and experience solid growth. However, the frenzy of the past two years will continue to dissipate, and the market will experience a return to more normal—and healthy—buying and selling cycles.
For those pushed out of the market due to increased competition in the past year or two, 2015 represents an opportunity. This may be the perfect time to buy that first home or consider trading up.
Sure, Seattle homes are more expensive than they used to be, but there are still middle-range homes in decent neighborhoods, if you know where to look. With the help of agents and buyers, we’ve identified six unique communities with a mix of housing options (apartments, condos and homes) and demographics (singles, families and seniors). All have local amenities, such as parks and trails, and access to good schools and nearby services.
1. Puget Ridge (West Seattle)
This West Seattle gem is located just south of the West Seattle Bridge, east of Delridge Way. Puget Ridge residents are passionate. “We love Puget Ridge because it’s a great community; it’s close to the amenities of downtown Seattle and convenient to both of our workplaces,” say Nancy and Jason, who both work in the health care field and moved from a rental in Montlake with their cat, Karma. “The location is so convenient to the Junction as well as Alki, yet our immediate neighborhood is quiet. There is even a neighborhood park with a P-Patch to grow produce for neighbors and food banks.” There are two cohousing communities on Puget Ridge. Kristen Walsh, who lives in Puget Ridge Cohousing with her family, enjoys the community as well as watching her “children growing up surrounded by adults who know them and love them.” Redfin broker Joseph Hunt says the views of the Seattle skyline at night are stunning and the lots are a little larger here. “You can buy a new-construction home for $600,000, but you can also buy an older 1,400- to 1,800-square-foot home that needs some updating for $250,000–$290,000,” Hunt says.
2. Upper Rainier Beach
There are still many homes in the $400,000 range in South Seattle, including the Upper Rainier Beach neighborhood; Photo by Alex Crook
There is no doubt in Redfin broker Collin Horn’s mind: “You get the most bang for your buck in Upper Rainier Beach. Good houses, many remodeled. Lake Washington views. Excellent neighbors. Services are close by. You can buy a 1,700-square-foot house with a hot tub, two decks and fabulous views close by the park for around $400,000.” Attorney Matthew Kaminski and his wife were looking in the Central District, but one trip to check out a remodel in Upper Rainier Beach, located a little more than a mile south of Seward Park, a neighborhood they had never before considered, is all it took for them to change their plans. “The house was beautiful, and the neighborhood was lovely; it felt cohesive and welcoming,” Kaminski says. “You could feel the magic right away. People are warm and friendly, there’s a jovial spirit; you feel that you belong. Neighbors have gardens; they share their fruits and vegetables.” They also share treats, like the warm apple turnover cake a neighbor brought to welcome the Kaminskis to their new home. Kaminski’s favorite thing to do is to sit on the deck early in the morning, sip his coffee and gaze contentedly at the lake. “I love it here,” he says.
In addition to more affordable homes, Kenmore’s perks include proximity to Lake Washington, Inglewood Golf Club and Saint Edwards Park; courtesy of Kenmore city hall
Located on the north end of Lake Washington, “Kenmore is not only affordable, with homes in the $400,000 range, it’s a great community for dual-income families commuting to Seattle, Bellevue and Redmond,” says Re/Max managing broker Patt Sellen. “You get a lot for your money here,” says Jason Maybell, a Coldwell Banker Bain broker who recently sold a 2,360-square-foot home (4 bedrooms, 2.5 bathrooms) on a 15,000-square-foot lot in the Arrowhead development for $535,000 in three days. “The same house in Issaquah or Sammamish would have sold for $630,000–$650,000.” Lainie Colburn lives and works in Kenmore; she’s director of events at Inglewood Golf Club (and the writer’s daughter). She has lived in the community for 14 years. “I love the location; I can get to Seattle or Bellevue in 20 minutes on back roads,” Colburn says. “Northshore schools are great, I really enjoy taking my boys to Saint Edwards State Park for hikes, and there’s a real sense of community here, with family-owned restaurants, a butcher and drugstore nearby. It’s a wonderful neighborhood.”
4. South Newcastle
On the Eastside in Newcastle, the more affordable homes are south of Coal Creek; photo by Alex Crook
Redfin broker Michael Fleming says we’re almost back to 2006–2007 peak pricing, and Newcastle, located just south of Bellevue, is no exception, with homes on the north side of Coal Creek costing $650,000–$1 million and up.” But south of Coal Creek, buyers can pick up a mid-century single-level home for less than $400,000, according to Fleming. “It’s a popular choice for young professionals who don’t have a lot of money and are willing to give up the remodeled home requirement in exchange for a solid 1,600-square-foot home with a nice big yard.” Sandra Canaday and her husband, who both work in health care, found the perfect home here, with ample space and a big yard.
“South Newcastle is a fantastic community; it’s family-oriented, the landscaping is lush, beautiful and clean, and I love the location—near the 405 and 90, for easy commutes to Issaquah and Renton,” Canaday says. And talk about perfect timing: “We found out just days after moving in that our first baby will arrive in 2015.”
New residents Yusuke, a software engineer, and Parisa, a registered nurse, wanted a neighborhood that was an easy commute, had a nice assortment of restaurants and was family friendly for our future children. “Pinehurst is a good combination,” says Yusuke. “very close to Northgate and its transit center, a growing restaurant community on Lake City Way, and a good school system.” Kyle May just snagged a beautifully redone Craftsman in the neighborhood and appreciates that “the grocery store, the gym and Northgate are just a couple of blocks away, but when I’m home, it’s very quiet and the neighbors are friendly.” He sees lots of walkers and joggers, but there is surprisingly little auto traffic on the street. May still can’t believe his good fortune and loves his new home. “The space is well-used, the remodeling is superb, it has a great deck and, best of all, a double car garage—a rare find in a city neighborhood,” May says. The area just north of Northgate Mall is going through a major transition, says Redfin broker Robin McCue, with new restaurants, coffee shops and other services moving in. “While new construction will cost around $700,000, remodels run from $450,000 to $550,000,” McCue says.
6. Kingsgate (Kirkland)
Close to Kirkland’s charming downtown waterfront, Microsoft, EvergreenHealth medical center and Woodinville’s wineries, Kingsgate is located east of I-405 in Kirkland. Kingsgate is a neighborhood in transition, with a wide range of housing options, from tiny ramblers in distress to new construction on smaller lots with amazing valley views of the Woodinville area, says KC Brants, a Redfin broker. Buyers can find good homes in the $400,000–$500,000 range, with the sweet spot being around $425,000. Pamela Cornell, director of the Move Over Mozart (MOM) music program for kids, has lived in Kingsgate for 15 years. “I love how close everything is: groceries, banks, shopping centers, schools, church and great neighbors,” Cornell says. “I also love the trees, and it’s just a short walk to a number of different wooded trails for hiking and biking. As a cyclist, any direction I go is downhill, which means I always have a hill climb at the end, guaranteeing a workout if I want to get home—which may not sound like a bonus, but it has definitely made me stronger!”
How to Break Into the neighborhood of your dreams
You’ve found a neighborhood you love, but nothing is available in your price range. Before giving up on your dream, consider these strategies
1. Rent, look to buy
Renting where you want to buy can lead to a deal. One health care executive recently rented a luxury condo in Kirkland’s Lakeview neighborhood with expansive views of the Olympic Mountains, Lake Washington and the Seattle skyline. Renting allows him to enjoy the perks of the neighborhood while he scouts the opportunities, builds relationships with the locals, gathers intel on the community, checks out the latest listings and keeps in touch with the elderly widow who’s thinking about selling—all of which will help him beat potential competition to the deal.
2. Find the affordable block
The median sale price of homes in the Norkirk neighborhood of Kirkland, just north of downtown, is about $750,000. But the small, mid-century ranch homes on Fourth Place in that neighborhood sell for around $420,000. The median price of a home in pricey Madrona is $1 million–plus, but savvy buyers can snag older homes on 30th Avenue for $470,000 and up. In much coveted Ballard, the median price is around $530,000, but $300,000 could recently buy a beautifully remodeled mid-century condo on 58th Street in the heart of Ballard’s vibrant downtown.
3. Live on the edge
The modest homes in south Mount Baker ($350,000–$400,000) may not look anything like the elegant lake-view mansions farther north ($1 million–plus), but they are still in Mount Baker, close to beautiful parks and other neighborhood amenities, and have high walkability, transit and biking scores. Hawthorne Hills, a North Seattle neighborhood located next to tony Windermere, boasts a median list price of $1.5 million for view homes, but an updated townhouse on the Burke-Gilman Trail on the lower eastern edge of the nabe will sell for about $550,000—and residents can walk or bike to the University of Washington, University Village and Magnuson Park.
4. Buy the ugly house
Re/Max managing broker Patt Sellen says that one great strategy, for those who are handy, is to buy the least expensive home in the neighborhood—the fixer-upper that no one else wants—and show it some love. Replace the windows, paint it, and add new appliances and flooring. Hold it, enjoy it and sell it at the right time. Use the proceeds to move up in the neighborhood. Most neighborhoods, even upscale communities, have a few ugly ducklings.
5. Live (and rent) like the rich
Beautiful neighborhoods such as Medina are beyond the reach of most buyers. However, from time to time, a rental on an estate becomes available. If you are willing to forego owning a home and act quickly, you can live on private, lush grounds in the studio over the garage, in a tiny cottage down the lane or a small one-bedroom suite overlooking a chateau-like courtyard. To grab one of these, you need a boatload of patience and the homing instincts of a hunter. These units are rare and move fast—mostly by word of mouth or drive-by responses to small, discreet “For Rent” signs posted at the edge of driveways. Prospective renters who miss out often leave their names and numbers with owners, hoping for a call the next time the unit becomes available.
6. Look at the whole picture
Are there good public schools nearby that will spare you thousands in private school tuition? Parents with young kids might consider Wedgwood with its proximity to highly ranked Wedgwood Elementary and Eckstein Middle schools. Can you ditch the car and all the associated costs and take transit to work—better yet, can you walk or cycle—and really cut down your monthly nut? Zero in on transit hubs such as First Hill or the University District.
Waterfront Homes That Won't Sink Your Budget
You’ll almost always pay more for waterfront, but water views are a little more accessible in these neighborhoods.
Located near the Seahawks training camp and The Landing (a shopping, dining and entertainment pedestrian village), “This area features unique homes with south Lake Washington views and funky layouts,” says Redfin broker Michael Fleming. “You can get in for $400,000–$450,000 and buy a rebuilt mid-century for $500,000–$600,000.”
Charming downtown Edmonds. Photo courtesy Daniel Shapiro
Price-wise, one client couldn’t touch downtown Kirkland, but found the perfect condo in Edmonds, says Re/Max managing broker Patt Sellen. “She loves it. She can walk to the train, restaurants, shopping, the arts center, beaches and parks. And the people are friendly.” The median price here is $502,000 for all homes; many condos with nice views of Puget Sound sell for less.
A sweet little condo (631 square feet) with city and water views at Pike Place Market was recently listed by Windermere brokers Ader Berger for $379,000. “It’s perfect for a busy, active or traveling professional looking for a lock-up-and-go home in a well-run building. Imagine walking out the door to shop for groceries in the most iconic market in the city,” Heather Berger says.
Three Tree Point (Burien):
Three Tree Point in Burien. Photo courtesy of Alex Crook.
It’s a bit of a challenge to get down to the homes near the water; some people take the tram, others hike down the switchback trail. “But once you get there, it’s magical. The views of the Sound are totally awesome,” says Redfin broker Joseph Hunt. The area is a blend of secluded homes ranging from fixer cabins to million-dollar houses. “It’s possible to buy a waterfront home for $600,000–$750,000—and for waterfront, that’s affordable,” Hunt says.
The swimming beach at Matthews Beach is serene in the off-season and hopping during the summer. Photo Courtesy of Chusdine Minoda
For lake and mountain views, Redfin broker Robin McCue recommends Matthews Beach, northeast of Seattle on Lake Washington. “It’s peaceful, the people are lovely, and it’s a close-knit community. Amenities and services are nearby, and the Burke-Gilman Trail runs through the neighborhood,” McCue says. “A comfortable home with an unobstructed view that needs some updating will cost about $700,000 to $750,000.”
How To Buy Your Dream House In a Competitive Market
It will be a challenge, but even in the most competitive market, you can snag the perfect house and come out a winner. Here’s how to do it.
Do your homework:
“It will take a lot of effort,” warn Yusuke and Parisa, who recently bought a home in Pinehurst, but it’s necessary—and you don’t want to be doing this in the middle of a bidding war. Attend several open houses to get a sense of the market, pricing and inventory, and then make a list of “must-haves” and “want-to-haves.” Think about trade-offs and set priorities—don’t settle for something that’s not right for you. “Be very picky; this is a huge investment.”
Find a broker:
A well-informed broker can be your best weapon in the war of houses. After spending more than a year looking for homes at open houses and watching bidding wars and multiple offers tank their dreams, Jason and Nancy eventually bought a wonderful home on Puget Ridge. “We didn’t find a house in that first year,” they say, “but we did find a terrific broker [Redfin’s Joseph Hunt], who understood the market, and whose suggestions and recommendations were spot on.”
Don’t underestimate the importance of connecting with prospective sellers, advises Redfin’s Joseph Hunt. With multiple offers on the table—all of them comparable—the buyer who thoughtfully presents a potted magnolia tree to a seller reluctantly leaving the Magnolia neighborhood or the one who shares a secret family recipe with a seller who loves to bake is likely to get the deal.
“Stay away from homes the first day on the market,” advises Redfin broker KC Brants. “Wait seven to 10 days; let the rustle die down. Buying a house is a process; it takes education. Be patient with yourself; take the time to get educated and you’ll be prepared to go forward boldly at the right time. ”
Multiple generations share experiences and expenses at Puget Ridge Cohousing in West Seattle. Photo courtest of Hayley Young.
Kristen Walsh, a professional home educator, is passionate about the benefits of living in an intentional community, as she does at Puget Ridge Cohousing. It’s a village-like setting, with beautiful common grounds and gardens. About 60 people live here, ranging in age from 3 to 87. They own their homes (there are 23 townhomes) and maintain autonomy as independent families, but share the land and experiences such as gardening, meals and maintaining the common house in which they gather, Walsh says. “To have daily interactions with friends and elders in our community provides a rich and meaningful experience for the kids.” And the zero lot lines and shared common grounds mean more of everything for less money.
Grow Community on Bainbridge Island was established to create an intergenerational urban community that makes sustainable choices both available and affordable. Sixty percent of Phase 2’s 5-Star Built Green–certified homes are constructed with accessible features especially designed for older residents, and all residences include solar power (an energy- and cost-saving feature) and shared community gardens. Homes to buy start in the $400s and homes to rent range from $975 to $1,975 per month.
Clockwise from top: Eli, Ethan, Nate, Nicole and Rick Nicholson in their waterborne home. Boat life gives them a waterfront view and proximity to downtown Ballard conveniences. Says Nicole: “The small space forces us to become good at editing our things, which gives us a sense of freedom and a simpler way of living.” Photo Courtesy of Hayley Young.
Living on a boat is one way to deal with the high cost of housing, and living in a marina means it’s close quarters in the neighborhood, so you’ll know your neighbors well. If you love the lifestyle and camaraderie, the price is right: Monthly moorage rates for 40-foot boats at Seattle’s popular Shilshole Bay Marina is just under $500, and each slip has its own power. A new 2015 33-foot ultraluxe Sea Ray Sundancer might cost around $350,000; a well-maintained resale with standard features might run $100,000. Even factoring in the costs for electricity and the boat, it’s more affordable than buying a home. According to those who do it, there is nothing better than watching a glorious Northwest sunset from your own deck on a summer evening.
Move to the Backyard:
Bruce Parker, owner of Microhouse, recently designed this beautiful 650-square-foot contemporary cottage for a family in Seward Park. Photo Courtesy of Hayley Young.
Think of them as a way to create micro communities: Several cities, including Seattle and Mercer Island, have changed zoning codes to permit small accessory dwelling units (aka ADUs) or micro houses of up to 800 square feet to be built as separate homes on the same lot containing a primary residence. Many owners who build them rent them out. Others use them to create a family compound and invite grandparents to move in to participate more fully in family life and save money.
Reconsider the Suburbs & Beyond
Green space is a big motivation for moving outside the city, and there’s plenty of it on Whidbey Island. Photo courtesy of Holmes Harbor Aerial Tour.
Instead of living near Kirkland, where he has worked for Northwest Multiple Listing Service for 17 years, Bob Gent, director of business development and member relations, lives in Mount Vernon and drives 120 miles round trip each day. “If I leave at 5:30 a.m., I can usually be at my desk in Kirkland by 7 a.m.,” Gent says. “If I leave later, the commute time goes up almost exponentially. In the afternoon, it generally takes about a half-hour longer than the morning commute.” That’s almost four hours a day in his car—provided there are no highway accidents.
Why would anyone do this? It’s about housing costs, lifestyle and family, according to Cheryl Keefe, a John L. Scott broker in Langley on Whidbey Island, whose clients often choose to live on Whidbey and commute daily on the ferry to the “mainland” and downtown Seattle. “At half the price, you get twice the house and more land. On Whidbey, a nice family home starts at $250,000–$300,000. Real estate taxes are often lower by more than 30 percent,” Keefe says, “and you get to live in a beautiful location.”
Those who make the choice to put up with a long commute say it’s worth it. “This is where we could afford the size and quality of house and lot we wanted,” explains journalist and author Michelle Goodman, who moved with her husband, Greg Beckelhymer, to Shoreline. There are some drawbacks: “It’s about as un-diverse population-wise as you can get, and there aren’t many restaurants you can walk to,” Goodman says. But the quiet, the trees, how close she lives to Puget Sound—which makes for gorgeous hilly sunsets and nice beach romps with the dog—make it all worthwhile.
The good news for commuters is that there are more options than ever before to support those who choose to go the distance. On Whidbey, for example, there are free buses and commuter parking along the main highway, says Keefe. There are van-pool rides for Boeing employees. Commuters headed into Seattle can take the ferry and then walk to the train station to hop on the Sounder.
Rent vs. Buy
What makes sense in spendy Seattle in 2015?
Owning a home is like apple pie, mom and puppies—it’s part of the American dream for many of us. But the mortgage meltdown crisis made owners realize they could actually lose money in real estate, leaving some to wonder whether renting might be the best option.
Photo by Hayley Young; Models: Daniela, Heffner Management and Scott, SMG Models; Hair & Makeup: Kaija Towner; Set Design: Erin Kay
Others don’t think so. Nela Richardson, Redfin’s chief economist, is firmly on the buy side. “In the U.S., home has been the savings bank. But it’s no longer an ATM. As a society, we don’t save and we need home equity as a buffer against financial challenges,” Richardson says.
For others, it depends on circumstances. According to Joshua Harris, managing director of business development and cofounder of Paracle, a personal financial management firm on Mercer Island, “The first question to ask is ‘How long do I plan to live there?’ Many people get so focused on the dream of homeownership, they forget that it takes 8–10 percent appreciation just to get their money back, because of Realtor commissions, excise taxes and other expenses incurred when they sell. In addition, there are property taxes, homeowners’ dues and maintenance costs.”
“When you rent, you avoid most of those costs and any expensive surprises that might come up when owning a home. The downside to renting is that you don’t build equity in an asset over time as you pay down the principal of a loan,” Harris says.
So rent or buy? Renting makes sense for young professionals just starting out (who haven’t the funds yet for a down payment); millennials who want the freedom to move every couple of years (because they like trying new things); those who haven’t decided yet which neighborhood is right for them (but plan on buying soon); and those who just don’t want to deal with ownership issues. Green Lake resident and renter Shawna Leader says it like this: “Buying right now is not on my radar, mainly because it seems out of reach, cost-wise, to own a home in the city; I love my apartment, and it meets my needs.”
Buying is a good option for young families that have substantial down payments stashed away; established couples and families trading up in housing (especially those who apply current home equity to the new purchase); professional couples with hefty assets looking to diversify their investment portfolios; empty nesters and retirees who are scaling back; and those who can pay cash for their homes.
In fact, 2015 may be an ideal time to buy. “In this market of low interest rates, more of your payment goes towards paying down the principal on a mortgage, so homeowners are building equity faster than ever in recent history,” Harris says. “From that perspective, if you plan to live in a home for awhile and have the resources to cover a down payment and potential costs, buying a home can be a great way to build an asset while living the American dream.”
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