The 2016 Waterfront Summer Report Has Arrived!

I am pleased to share the newest edition of the Realogics Sotheby’s International Realty Waterfront Report, containing information on home values, sales trends, and market activity throughout waterfront locations in the Puget Sound region. This updated report includes data for the first six months of 2016, from January 1-June 30, and compares that data to the same time frame from 2015 and 2014. Overall, we are seeing a higher average sales price and decreased days on market driven by rising competition for available homes in an environment of lower inventory as sellers wait to see how high their home values might rise. As a company that specializes in waterfront property, we seek to aid you with your future home buying and selling by being a consistent and reliable resource for this desirable lifestyle.

I hope you enjoy the report! Explore now at RSIRWaterfront.com.

5 Tips for First Time Homebuyers

A recent article by My Northwest describes 5 things buyers do that can cause agents distress and strain the client/realtor relationship:

1. Try and see beyond the current look of the home. As the article describes, "real estate professionals say they wish more clients could get past the aesthetics of the house, especially since so many of the items that bother them are easily fixable."
2. Focus on more than just finances. Sure, it's important to be prepared to purchase, but it is also key to remember that "it's not necessarily the highest offer that the seller will accept, but rather the best structured offer combining timing, price and reasonable contingencies." That is why it is key to have an agent who is on your side and can allow you to make informed decisions regarding all aspects of the transaction.
3. In this fast-paced real estate market, timing can be everything and you won't always have a substantial amount of time to commit to a decision. "If too much time passes between a buyer viewing a home and making an offer, the seller might not take another party who quickly expressed interest and maintained communication."
4. Do not talk to the listing agent without your realtor by your side. As the article says, "the listing agent is there to get the most money for the seller, not save the buyer money," which is why you need your own advocate throughout the process.
5. When making a counter offer, don't "lowball" - going back and forth can be a frustrating process for agents and more often than not, is counterproductive as it offends the seller(s).

Seattle Housing Market Ranked 4th in the Nation

Seattle has experienced a "hot" housing market as of late, and has garnered national attention as Rebecca Troyer from The Puget Sound Business Journal reports that "Seattle is the fourth-best U.S. city for homeownership since the market bottomed in early 2012." What contributed to the recognition? As Troyer writes, not only has Seattle "experienced an 8.8 percent increase in job growth and 9.9 percent increase in average wages in the past three years. Unemployment has dropped by almost 42 percent and home values are up almost 30 percent."

State of the Market: Realogics Sotheby's International Realty Compares Region's Affordability to Other Pacific Rim Cities

Not so Bad — Seattle MSA is Effectively Twice as Affordable Compared to Vancouver, BC

It’s a new year, and that means that market pundits will review the year-end statistics. Despite the news from media headlines about meteoric increases in home prices around the Seattle metro area, we may actually still be undervalued. That’s the view of analysts at Realogics Sotheby’s International Realty (RSIR), who have been studying the data for their year-end report. When dividing the median home prices (what we need to pay) into the median household incomes (what we earn), we find that the Pacific Northwest remains relatively affordable in comparison with the other West Coast gateway cities of Vancouver, BC, San Francisco, and Los Angeles.

Even upon isolating the specific market areas to include all housing types (condos, townhomes, co-ops and single-family or detached homes), RSIR found that the Seattle Metro Area (Seattle-Bellevue-Everett) and both the cities of Seattle and Bellevue are still far more affordable than their West Coast peers in the U.S., and certainly less expensive than the Vancouver, B.C. region.

“It’s a function of relatively high incomes in the region while corresponding home prices have not escalated as much as they have in other West Coast markets,” said William Hillis, RSIR’s Research Editor and Publisher. “That said, I do believe we will be playing catch-up now that we are experiencing increased demand from foreign nationals, and that we will start seeing more renters become homebuyers in the years ahead.”

Hillis notes that Vancouver, San Francisco, and Seattle have long experienced foreign direct investment from Asia, mostly from China, and as such have become a “hedge” city. In hedge cities the local price of real estate is not just influenced by local income or population growth, but by external demand forces like international homebuyers. Perhaps the most shocking revelation is that the benchmark value of a detached home in the Vancouver metro area is now $1.248 Million—up 24.3% in one year according to a new report by The Vancouver Real Estate Board and as reported in the Vancouver Sun (January 7, 2016).

Furthermore, if you isolate the single family market in Vancouver the effective cost of ownership is just shy of Hong Kong—the most expensive real estate market in the world.

“Clearly, Vancouver is one of the most unaffordable markets in the world based on prevailing incomes, but its residents are global citizens—just like London, New York City and Hong Kong,” adds Hillis.  “Even though prices here are rising, the Seattle area can and does attract similar buyers without as much of an affordability gap, offering its renowned quality of life with better prospects for capital appreciation. These are all reasons why we’ve become more favored over the more typical, more expensive West Coast gateways.”

To be sure, the Seattle/Bellevue area has witnessed a significant rise in international home buying, especially from China.  A year ago, China Daily accurately prognosticated the market demand by Chinese nationals hinting that Seattle may be “globally undervalued” (“Fengshui in Seattle: City’s real estate draws Chinese”).

In response to the trends, RSIR has played a leading role connecting homebuyers on both sides of the Pacific Ocean with their Asia Services Group (ASG) – a team of brokers specialized in the languages and logistics when working with a foreign buyer. The group recently sponsored the region’s first all-Mandarin magazine called Seattle Luxury Living as published by Tiger Oak Publications. ASG also built a custom WeChat app with adSage targeting the WeChat social media platform’s subscriber base of 600 million (and growing) in China and around the world. RSIR executives recently released a video documentary on the trends for foreign direct investment and immigration called East Meets West. 

Nowhere locally has the influence of foreign buyers been more evident than in West Bellevue (NWMLS #520), where 2015 ended with a median home price of $1,080,000, according to NWMLS data. That’s a 17.4% increase from 2014, and nearly 88% higher than the 2011 median home price of $575,900.

Hillis believes the recent turmoil in China’s equities markets will only drive more emigration and foreign direct investment to North America, especially to rising markets like the Seattle/Bellevue metro area. The recent corrections in the Shanghai Stock Exchange and regulations on housing reminds Chinese nationals that their economy (and their personal investments) are very much influenced by the government.

“We’ve been discovered,” said Hillis. “Global wealth is always flowing to emerging markets, and considering the relative value and lifestyle proposition we offer, it isn’t surprising that more and more foreign buyers are drawn here. Real estate in America is considered a blue-chip investment that you can enjoy. You can’t live in a stock portfolio.”

NOTE: Information was obtained by sources deemed reliable but cannot be guaranteed. E&OE.

Condos Stage a Comeback; First Presales in a New Development Cycle Begin Closing

Following a five year absence of condominium development the first presales at Insignia have begun closing in July 2015. The 700+ unit twin tower was the first large condominium project to break ground and commence presales in 2012 as the in-city housing market signaled a rebound and Bosa Development kick started a new cycle of for-sale development. The last major development was Escala, which broke ground in 2007 and delivered in 2009/10 amidst the Great Recession. Until recently, developers have focused on building apartments, noting that the region’s robust job growth has attracted many new residents that prefer to rent, helping to drive up lease rates despite the fact thousands of new apartments have been delivered and more are in the pipeline.

The Daily Journal of Commerce recently tapped Realogics Sotheby’s International Realty (RSIR) to evaluate the success of Insignia and what this means for the in-city housing market ahead. Reporter Nat Levy noted that the only substantial condominium projects being developed currently are the Insignia in Belltown and LUMA on First Hill.

“About half the condos being developed are already presold,” said Jones. “Values are rising for both new construction and resales alike, which will be needed to pencil new condominium projects ahead. Consumers need to recognize that their purchasing power is dwindling as inventory shrinks and interest rates expand. What we see is what we get for new supply until the market values support new towers. Without this new inventory, the market will only get tighter and more expensive.”

Jones says high rents and low capitalization rates means apartments are selling at similar prices with the typical condominium. So unless a developer is targeting a luxury segment and builds a tower that will command the premium necessary to edge out apartments, consumers will find fewer condos to choose from, especially at more affordable price points. That means higher prices ahead.

Meanwhile, RSIR has suggested that it may actually be less expensive to own than to rent. RSIR has partnered with Caliber Home Loans on an educational platform called #NoPlaceLikeOwn to help renters understand the market fundamentals and explore ownership opportunities. Consumers are encouraged to register for upcoming events and market information.

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