2016 was a challenging, fast paced residential real estate market with multiple offers and sales over list prices the norm. So far 2017 is set to match or out pace last year, crushing any concerns about another real estate bubble. Downtown Bellevue continues to be a high demand destination for people working on either side of the lake. With Amazon, Microsoft, Google, Facebook and numerous other companies continuing to expand and hire, its unlikely the local demand for housing will decline. Last year when Expedia announced it would be moving its offices from Bellevue to Seattle there was concern downtown Bellevue might have an excess of available office space – that lasted just a few minutes. Amazon has leased the entire Centre 425 office tower, Salesforce and other companies occupy most of the 929 Tower, and there isn’t much space left at the Lincoln Square 2 office tower. Its likely the Expedia space will be leased before its even vacated.
New residential rental units have been built downtown but there’s been little in the way of new condo construction. A few condo and townhouse communities are under construction and in design review, but most are less than 20 units. One88, developed by Bosa Development, is the only condo community scheduled to start construction downtown in the next 60 days. As seen in Seattle, expect buyers to line up around the block when the 140 units are offered for sale. (one88bybosa.com)
What does the city’s robust economy and high demand for housing mean for existing condos in the 98004 zip code? Multiple offers will continue and buyers will stretch their budgets to secure an urban residence. Last year the median condo sales price in the 98004 zip code was $580,072. So far this year the median sales price is just over $700,000 – a 21% increase. Until inventory, resale or new construction, can satisfy demand, expect condo values to continue to increase in double digit numbers.
CONDO MARKET SPECIALIST
As an industry expert I keep track of the Eastside’s condo inventory, market trends and new projects under construction or in design review. Contact me if you need information about buying or selling or just want to know what projects are on the horizon.
There are currently 76 new construction and resale condos listed for sale in downtown Bellevue (98004 zip code) with prices ranging from $274,999 to $1,983,000 reflecting a median list price of $797,260. (Median sale price – half the condos sold for more, half sold for less.)
During the first half of the year 124 condos (new construction and resale) sold downtown with sale prices ranging from $237,500 to $1,750,000 reflecting a median sale price of $599,443. (Peak sales months were March, May and June.)
During the same period in 2015, 131 condos sold with sale prices ranging from $212,000 to $2,035,000, a median sale price of $550,000.
Sales data for the first half of the year reflects a 9% increase in median sales prices this year over 2015.
27 of the 76 available condos represent the remaining new construction units at Washington Square. (The developer of Washington Square has been marketing those homes since 2009). Removing the 27 WA Square units from the available inventory leaves only 49 resale condos on the market downtown. With an average absorption rate of 21 condos per month, there is just over a two month supply of available resale condos in downtown Bellevue. (Since January 1st 9 condos have sold at WA Square.)
Local real estate activity tends to be sluggish in August – great weather is predictable, its peak vacation time, parents are busy getting children ready for school or off to college. With interest rates expected to remain low through the end of the year, and with limited available inventory, the fall market should present opportunities for buyers and sellers.
Whether you supported or opposed the construction of the Eastside’s light rail system, light rail is coming to Bellevue. Residents in Seattle are discovering the advantages and convenience of being connected from downtown Seattle to SeaTac, Capitol Hill to the UW.
As is the case in other parts of the country where light rail has existed for years (Portland, Boston, Chicago, NYC, Washington, DC to name a few), property values benefit from being located near a rail station. In major metropolitan areas on the East coast and in the Midwest, homes within walking distance of a rail stations are marketed as being more desirable, having more value and command higher prices.
In Seattle homes and condos in neighborhoods located near the light rail stations have seen an increase in median prices. Buyers are willing to pay more for the convenience of living close to transit. In Bellevue, where completion of the light rail system and stations is still several years away, homes close to proposed light rail stations are in high demand and being located near a station is definitely a marketing tool and a positive selling feature. While increased bus service is also needed, unlike buses, which get stuck in the same traffic you’re sitting in on I-90 during rush hour, light rail has a clear path station-to-station, significantly reducing commute time.
Take a look at the link below for a video, courtesy of Sound Transit, which gives you a look at the Eastside’s light rail system and station locations.
In this fast paced real estate market, there will occasionally be a condominium unit or community that seems to languish on the market. While condition and location are obvious elements that impact value and buyer desirability, there are other factors that owners have little control over that may impact resale value.
Overly Restrictive Pet Rules – many HOAs permit pets with realistic restrictions on the number of pets per home, size/weight and sometimes breeds. If your HOA bans all pets, or just dogs, that can narrow the window of buyers. Be up front about pet policies when listing your home for sale.
Parking – a condo with no assigned parking or that is difficult to access, is unsecured or uncovered,may have a more difficult time competing in the market. Your condo may have a better view or higher quality upgrades, but if there’s no parking the value may need to be adjusted to overcome parking objections. Sometimes there are owner spaces available for rent – be sure potential buyers know about that option.
Unusually High HOA Dues – unlike a house, when buyers apply for a loan to purchase a condo, the lender includes the monthly HODs in the buyer’s loan qualification calculations. The buyer may qualify to purchase the condo, but not qualify for the mortgage plus monthly HOA dues. If the monthly dues are on the high side, and there aren’t amenities or upgrade plans to justify the figure, it may take longer to find the right buyer. Provide detail of all the amenities and services included in the HODs as well as any future capital improvements planned.
High Non-Owner Occupancy Percentage – buyers, especially those planning to occupy the condo, prefer to invest in a community where there is stability with more owners than renters occupying the homes. And though rental caps are more difficult to enforce, lenders also like to see at least a 50% owner occupancy, or higher, in communities where they’re planning to lend.
HOA Litigation – just about any condo community built in Washington State since July 1990 has gone through litigation with the developer over defects or warranty issues.That process can take years to resolve, leaving unanswered questions regarding defects, repairs or future special assessments. Buyers are less likely to assume the risk and few lenders will approve a loan in a community until the HOA resolves the litigation.
Its difficult for sellers to control or change some elements that can impact their home’s value. As a seller its important to be educated about what’s happening in your community and how the HOA and Board are handling issues that impact all owners. Before you list your home for sale, know what’s happening in your community. The more you know, the more information you can provide to buyers and real estate brokers, potentially eliminating or resolving perceived negative issues that could impact a sale or market value.
While the number of condos sold increased just slightly the first quarter of this year compared to the same period last year (40 in 2015 – 46 in 2016), median sales prices are up significantly . . . nearly 20% this year vs. last. Statistics for April reflect a continuing trend of fewer condos coming on the market, multiple offers, homes selling quickly and sales prices at or above list prices. Of the 46 condos sold in downtown Bellevue the first quarter of this year, 29 sold at or above the list price and most sold in ten days or less.
There doesn’t appear to be any relief in sight. There are a few condo projects in the design pipeline, but those homes won’t be available for presale for another 18+ months and occupancy is well over two years away. Hundreds of new apartment units have recently been added to downtown, with more on the way. It will be interesting to see if any of the existing apartment communities consider converting to condos in the future. Buyers would definitely welcome more condo inventory to choose from
With only 24 resale condos listed for sale in downtown Bellevue (98004 zip code) there are very few choices for buyers ready to purchase. (Add in the 39 developer owned units still available at Washington Square and the total is barely over 60 in the entire downtown marketplace.)
Inventory is at historic lows, prices are at or near record highs, multiple offers are the norm, high buyer demand continues and there’s no new condo construction in sight . . . this year may well be your best time to sell your home or investment property. Bellevue is continuing to grow, more companies are moving to the city than are leaving, the arts and social scene is thriving, some of the best shopping and dining north of San Francisco can be found in Bellevue and the schools are outstanding. The city has so much to offer for a variety of lifestyles and budgets. Condo prices start in the mid $300,000s (yes, there are affordable condos downtown) and can skyrocket to several million for a view penthouse. Don’t miss the opportunity to maximize your return on investment if you’re ready to make a change, find more space, move up to a view or reinvest in another rental property.
2015 definitely saw the continuation of price recovery for houses and condominiums in Seattle and on the Eastside. If you were in the market, either buying or selling a home last year, you were aware of the historically low levels of available inventory and escalating prices in most neighborhoods. With so few homes to choose from and so many buyers in the market, multiple offers were common, time on the market declined and prices rose in most communities. So what’s in store for 2016?
The Seattle/Bellevue area still ranks high nationally as a very desirable place to live and work. With a positive employment climate, more people are relocating to the area than are leaving which will continue to add to the housing crunch for buyers and renters. Interest rates are expected to rise this year but fixed rate mortgages aren’t expected to exceed 5% – still very attractive and affordable for buyers. Area housing prices are predicted to continue to increase, good news for sellers, but at a more modest level than last year. Depending on which forecast you read, area housing prices will increase in the range of 4.5% to 6% this year.
Home values will continue to rise but at a more typical and sustainable pace than the last few years. Its likely demand will still exceed supply but with more households returning to positions of positive equity, more homeowners may finally have the ability to make plans to move up, downsize or relocate, improving inventory levels.
Is this year the perfect time to sell or buy a home? Demand for housing is high and we’re in a very strong sellers market – interest rates are low which benefits buyers and investors. Rents are skyrocketing; if you’ve been thinking about buying this would be an excellent time to purchase your first home and begin to build equity for yourself rather than your landlord. This could also be the time to maximize your equity position and buy a larger home, an investment property, downsize or think about a second or vacation home. How long will low interest rates last and property values continue to increase? That’s the sixty-four thousand dollar question. Major changes to the market aren’t anticipated, so its a safe bet that getting into a home now will result in increasing equity and a solid investment.