In late Spring, Washington State’s legislators introduced a new, graduated Real Estate Excise Tax (REET), which replaces the fixed 1.28 percent tax applied evenly across all transactions.
The last few years have proven fortuitous for Seattle, as the city has undergone sustained growth with new development projects. The Downtown Seattle Association recently reported that there are a total of 66 major projects currently under construction, a figure that is expected to stay relatively stable in the near future. From South Lake Union to SoDo, it isn’t hard to see that the city is expanding. Cranes are in view in nearly every direction you turn and it is hard not to wonder what is being built. The answer? Mostly, apartments.
With effect from the October 2018 Case Shiller Home Price Index press release, Seattle officially dropped out of the nation’s top three residential markets by home price growth: “Las Vegas, San Francisco and Phoenix reported the highest year-over-year gains among the 20 cities [subject to the Case Shiller Index]. In October, Las Vegas led the way with a 12.8 percent year-over-year price increase, followed by San Francisco with a 7.9 percent increase and Phoenix with a 7.7 percent increase.” At 7.36 percent growth over the past 12 months, Seattle was not far behind; but the monthly result on the index (-1.05 percent) remained negative for a fourth consecutive month.
The coming of a new year inevitably brings about moments of reflection on months passed and gives us the opportunity to envision where things will head over the course of the next year. As we begin our journey into 2019 and prepare to set—and achieve—our real estate goals, let’s take a look at the 2019 Housing Market Forecast with the experts at Forbes magazine and realtor.com®.
Following the release of the latest S&P Case Shiller Home Price Index, the Seattle Times once again proclaimed the decline of residential home prices in the Seattle metropolitan area. Contrary to headlines, however, trendlines give way to a more nuanced story. Some are using the Case Shiller Index to reinforce misleading growth reports, so let’s have a look at the data used to calculate the Index and compare it to results gathered from sales data in the Northwest Multiple Listing Service (NWMLS).
Earlier this week, S&P Dow Jones released the August 2018 monthly results of their CoreLogic Case Shiller Home Price Index. Until two months prior, the Index had shown Seattle leading the nation in residential (single-family) home prices for 21 months. That run was brought to an end by a surge of prices in Las Vegas; and while prices in Seattle have continued to advance, the pace has slackened in the weeks since.
Though the winter months have historically given way to slowdowns within the Puget Sound real estate market, there was no sign of a slowdown in February 2018, as home prices in Seattle and on the Eastside reached new benchmark values. As Seattle Times reports, “Seattle’s median single-family-home price hit $777,000 in February, $20,000 more than the previous all-time high set just a month prior,” while on the Eastside, “the median cost of a house was $950,000, or $12,000 more than the peak price from two months ago.” According to Northwest Multiple Listing Service data, home prices in every Puget Sound county increased by at least 15%, with many setting record high values.
As Seattle has grown over the past decade, it isn’t much of a surprise that the city is now in the midst of a transportation crisis, as new residents to the Puget Sound region and growing employment in the downtown core have led to worsening traffic and climbing commute times. In order to help ease growth management, the Downtown Seattle Association, Sound Transit, City of Seattle, and King County are working together through the formation of One Center City, a partnership to craft a two-decade long plan that will transform “how we move through, connect to, and experience Seattle’s Center City neighborhoods.”
The value of condominiums in downtown Seattle continues to rise, and in 2017, a lack of new construction opportunities and increasing demand for in-city homeownership pushed the median home price of downtown Seattle condos to $625,000, a $100,000 – or 19% – increase from last year. Though the S&P/Case-Shiller Home Price Index has continued to report record gains for single-family home prices, up by nearly 13% in October 2017, it’s key to note that the index does not include new construction or resale condo properties, and hence doesn’t reflect condominium price growth.
Want to know why a 4-mile drive in Seattle now takes nearly an hour? A recent GeekWire feature has the answer, in the form of a time lapse that illustrates just how much the Emerald City has grown over the past three years alone. The footage, which was taken from a camera mounted to the Space Needle, shows the coming and going of buildings all over the city, in what GeekWire calls “an almost cartoonish representation of the massive growth taking place in Seattle.”
The CEO of Redfin, Glenn Kelman, recently asked the question in a feature for GeekWire, and though “he’s convinced skyrocketing housing costs in thriving coastal cities will lead to a ‘mass migration’ of companies and talent to smaller cities in other parts of the country,” which begs the question, will there be a mass “tech exodus” in Seattle?
Seattle’s lack of affordably priced condominiums continues as recent NWMLS data reveals there are only a handful of homes listed below $700,000, which is now the median home price after increasing nearly 20% compared to this time last year. Though some potential buyers feel dismayed at current market conditions, market experts say some are finding relief in unit reservations and presales.
Following the release of the most recent “Emerging Trends in Real Estate” report, Curbed put together a list of “The 10 top emerging trends that will shape real estate in 2018,” from demographic and economic considerations to the lack of inventory and workplace of the future. In response to the article, I have put together a list of questions generated by the article that will be key to consider as we say goodbye to 2017.