Homebuyers beware: Redfin reports Seattle is beyond a seller’s market (Bellevue: high crime, credit)

[Boxkicker]

House on my street was listed for $425K on Friday and today it went pending.....and we are "out here" as some people think!

King County is HOT!

[Boxkicker]

The Seattle area is the No. 4 hottest home sellers’ market in the United States.


A new ranking from Seattle-based online real estate powerhouse Zillow shows home values rose 6.5 percent in the Puget Sound region, compared to 3.9 percent nationwide.


Zillow’s home value index pegs the value of a Seattle-area home at $344,700. It also predicts that bidding wars and red-hot prices will continue: Zillow says area home values will rise another 5 percent in the next year.


The top five sellers’ markets in the Puget Sound region, behind Seattle, are, in order: Duvall, Bothell, Bellevue and Lake Forest Park.


The top 5 buyers’ markets are Gig Harbor, Graham, University Place, Parkland and Lakewood.


The report also found that the average rent in Seattle is $1,850 per month, 5.8 percent over a year ago.


Nationally, San Jose ranks as the No. 1 sellers’ market, followed by San Francisco and Denver. Philadelphia, Chicago and Cleveland are the top three buyers’ markets.


The home value index says the value of a typical home in the United States is $178,400, with values expected to rise 2.6 percent in the next year.

[GRF206]

I know of two different properties that listed in Q1 for ~$640K, and both were bid up and sold for > $100K over list; one in Maple Leaf and another in Fremont.

Some people are calling this another bubble, but the prior bubble was fueled by high risk loans. But this time lenders are very conservative -- people aren't getting loans without jumping through serious hoops; and a good percentage are paying all cash.

Thus, I don't think this is a bubble, but the new price of housing in Seattle. As long as corporate headquarters like Amazon, Microsoft, T-Mobile, Expedia, Starbucks, Nordstroms, Alaska Air, (etc) and satellite offices of Google, Ebay, Facebook, etc, are attracting new people to this region -- prices are going to stay at this level. IMO.

[revelated]

Originally Posted by homesinseattle

Gotta disagree with you, relevated. I have a number of clients who bought homes in Bothell, Kenmore who commute into Seattle daily on 522/Lake City Way (sometimes using a quick jump west on 145th to the freeway) and are happy as clams.

Originally Posted by Seacove

Agree, I know several who commute from Bothell and Woodinville to Seattle. I've always preferred the north area, it just feels more open and new IMO.

That's fine, if they're taking public transit or carpooling, or if they work off shift (i.e. after 3pm or before 6am)

IF they're single driver working 8-5 or whatever, it'll wear on them. Give it time.

When I first moved there I didn't think it was that bad, but then I was taking 520 not realizing they would throw up a toll that didn't fluctuate price during commute hours. Then all of the construction started on 522 and 520 and I-5. Then semis started rolling over once a year on I-5. After that, I got tired of hour-and-a-half daily commutes except for bank holidays. Gets old real fast.

The other frustrating thing is that there is a street that passes directly through Bothell all the way to I-5. The problem is that it narrows to a winding single lane road that is cut off by some lake and has a bunch of stops along the way, so it ends up slower than just getting on the freeway, for some bizarre reason.

Don't get me wrong. I like the appearance of Bothell, I just don't like how cut off it is from Seattle when the 522 "street" curves straight to it - yet they refuse to expand it out like it should be and separate Lake City Way as a parallel street, which would tremendously ease that commute.

[homesinseattle]

Good points, relevated. Here's my point and one that a number of my clients share. Let's say you have a couple, one works on the Eastside, one in Seattle. Maybe they aren't wealthy but have good jobs, perhaps a $500Kish budget for buying a home. They want a reasonable commute, a good home at a manageable price, good schools. Bothell or top of the lake (Kenmore, Lake Forest Park) provides that, not perfect but it gets the job done.

The home prices look downright beautiful compared to close in Seattle or Bellevue. The schools are good. The commute isn't ideal and there will be traffic but they can each go down their respective sides of the lake and have options. By options, I mean that that the bridges can get paralyzed by one accident, we have all been there. If your commuting movements are governed not by water, you can take side streets, employ little tricks.

[evilcart]

According to Seattlebubble, the Seattle area is right back to our 2007 (or whatever year it was) high point. well excluding inflation... which if counted means there is about 5-10% to go...


I am hearing all those stories you hear during bubbles... People are talking about property again, blowhards are talking up investment wins and everyone is eager to explain why it is different this time.

but for me the final straw that made me feel we are entering a big fat bubble is the reappearance of the canny investor type who wishes to humble brag about their new properties they "picked up" or "snapped up" or "found"...

Just the other day I was talking to someone who purchased their 2nd investment home , but when we got talking it turned out this dude had not made any real plans, he had no idea what his numbers were, he had never heard of the 1% rule, he had no exit plan and had purchased his rentals claiming they would be his primary residence to save money.

This are the investors who drive up prices, lower returns and make a market too risky.

Which leaves me stuck, I don't want to do the long distance landlord thing, but locally there is nothing to buy , at least for a skinflint like me how expects at a positive return and is unwilling to buy just for leveraged appreciation.


So my question is....

where are small time common sense investors buying ?

[homesinseattle]

Everett or Tacoma.

[Jalhop]

Originally Posted by GRF206

Thus, I don't think this is a bubble, but the new price of housing in Seattle. As long as corporate headquarters like Amazon, Microsoft, T-Mobile, Expedia, Starbucks, Nordstroms, Alaska Air, (etc) and satellite offices of Google, Ebay, Facebook, etc, are attracting new people to this region -- prices are going to stay at this level. IMO.

Look deeper. The bubble is caused by low interest rates, in turn driving up stock prices, in turn driving up hiring, in turn driving up house prices. And of course low interest rates fuel house prices directly. This is not a market economy. It's a bubble economy. Likely won't end well, but can last for decades. The only major & true market driven effect I see in Seattle is Chinese all-cash buyers.

[Ira500]

Originally Posted by evilcart

According to Seattlebubble, the Seattle area is right back to our 2007 (or whatever year it was) high point. well excluding inflation... which if counted means there is about 5-10% to go...


I am hearing all those stories you hear during bubbles... People are talking about property again, blowhards are talking up investment wins and everyone is eager to explain why it is different this time.

but for me the final straw that made me feel we are entering a big fat bubble is the reappearance of the canny investor type who wishes to humble brag about their new properties they "picked up" or "snapped up" or "found"...

Just the other day I was talking to someone who purchased their 2nd investment home , but when we got talking it turned out this dude had not made any real plans, he had no idea what his numbers were, he had never heard of the 1% rule, he had no exit plan and had purchased his rentals claiming they would be his primary residence to save money.

This are the investors who drive up prices, lower returns and make a market too risky.

Which leaves me stuck, I don't want to do the long distance landlord thing, but locally there is nothing to buy , at least for a skinflint like me how expects at a positive return and is unwilling to buy just for leveraged appreciation.


So my question is....

where are small time common sense investors buying ?

Actually, The Tim at Seattle Bubble is equating right now to 2005. The top of the market was 2007. When Seattle Bubble started in 2005, inventory was low(not quite as low as now, but still low), and sales and prices were increasing, as they are now. By the time 2007 came along, inventory was growing, sales were declining, but prices were still going up. If you buy the theory that, in general, house price increases over the long haul match the inflation rate, then anytime you see double digit price increases over a fairly short period of time, you have to be wary.
One argument I heard in 2006 (after other cities saw price declines) was that the Seattle area was immune, that we had Microsoft, we had Amazon, etc, and they were doing well. What wasn't understood was that everything is interconnected globally, and that how other parts of the country and the world are doing affects how things are doing here.
But, to answer the question: If you're looking for immediate positive cash flow, in addition to Tacoma and Everett, places like Kent, Renton, Skyway, Auburn, Mountlake Terrace can have a decent CAP rate. It is less likely that these places will appreciate in price the same way Seattle or the eastside will. Still, simply betting that the price appreciation will make up for all the subsidizing you'll do while renting it out makes it quite the gamble.

[revelated]

Originally Posted by homesinseattle

Good points, relevated. Here's my point and one that a number of my clients share. Let's say you have a couple, one works on the Eastside, one in Seattle. Maybe they aren't wealthy but have good jobs, perhaps a $500Kish budget for buying a home. They want a reasonable commute, a good home at a manageable price, good schools. Bothell or top of the lake (Kenmore, Lake Forest Park) provides that, not perfect but it gets the job done.

Frankly, in such a situation (working on either side of the Lake), the 520 bridge makes 100% more sense, in my opinion.

• If you work north east you're against traffic grain. It's a breeze of a commute every day.
• If you work in Seattle downtown you can catch a bus right at the mouth of 520 and take it the rest of the way in, then take it back when you're done.

The only possible derail would be accidents on 520 - which happen way too often.


But given that situation specifically, the best place to live is the very southernmost part of Kirkland, right at along that road that feeds right into 520. Expensive but not nearly as much as Seattle, but has a fantastic commute. Given the situation you mentioned. Way better of a commute than living in Bothell, frankly.


Again, if the area gets smart and finally breaks Lake City Way into a parallel street and expands 522 into 3 lanes each direction, Bothell will explode because it along with Mill Creek and Woodinville and that entire region will become viable places for people who work in Seattle but want to live somewhere really nice.