April 2016 Bellevue, WA Market Watch

Last 7 day market watch

New Listings – 2443
Pending Listings – 3632

If you haven’t seen it, rent it!

  • The Big Short is excellent at showing both what and how the real estate crash of 2007-08 was set in motion.

– Lending was out of control on high risk loans

– They were packaging and selling them with good loans as Mortgage Backed Securities

that were AAA rated

– One stock analyst identified the risk and set out to become the 1st to sell them short

– In one day he shorted $100,000,000 to 13 different lenders

– The banks failed at first to change the AAA ratings.  The banks should have changed

the ratings when 4% of the loans went bad

– At 11% failed the first bank collapsed and it was a domino effect after that

– American Mortgage Backed Securities were thought to be the safest place to invest

Delinquencies at 9-year low  after big drop in February

  • After a worrisome spike in January, foreclosure activity settled back down in February, with some metrics reaching multi-year lows.
  • Black Knight Financial Services said that delinquency rates, which had jumped above 5% in January for the first time in nearly a year, fell 12.57% in February to 4.45% of outstanding mortgages.
  • It was the lowest rate since April 2007 and 15.93% below the rate in February 2015.

New home sales signal confidence in housing market

  • While the latest new home sales report didn’t post any game-changing news, it still signals a positive outlook for the housing market amid a lot of economic data showing a lackluster housing market
  • Sales of new single-family houses in February 2016 were at a seasonally adjusted annual rate of 512,000

REI eyes Spring District for a new HQ campus

  • REI has a non-binding agreement to take eight acres in Bellevue’s Spring District for a new headquarters campus
  • The outdoor company said in a statement yesterday it has outgrown its 170,000 sq/ft headquarters in Kent and is looking for a new location

Bellevue's Spring District Rendering

  • A representative from Wright Runstad & Co., which is developing the Spring District, said REI would buy the land, which makes up more than 20% of the 36 -acre property
  • The deal is not final so REI or Wright Runstad could pull out at any time without penalties.  REI said it will decide by the end of the summer whether to go ahead with a Spring District campus
  • The new REI headquarters could open there by 2020, but REI did not give any details about how much space it plans to build
  • REI said the proximity of transit and outdoor space are among its top priorities in choosing a new location.  Sound Transit Link light rail will reach the Spring District in 2023, and REI said it is encouraged by recent transit investments such as bike lanes and trails
  • The Spring District could ultimately have up to 5.3 million square feet of offices, retail, housing and parks.  Development could cost approximately $2.3 billion
  • It has about 1,200 employees at its headquarters

7-Story building at Rainier Brewery site will combine work lofts and storage

  • A tower crane has popped up at the old Rainier Brewery site at 3250 Airport Way S., on a spot where several above-ground tanks once stood
  • Documents submitted to the city show the plan is to build a seven-story mini-warehouse with custom craft spaces and parking for 112 cars, both at grade and below grade
  • About 7,400 square feet of retail would face Airport Way on the ground level
  • On the second, third and fourth floors, mini-storage will share space with craft rooms lining two exterior walls
  • On the fifth floor, craft space would face a courtyard with several walkways leading to a pond with a fountain.  There also is a circular seating area off one of the walkways.

Albertsons acquires remaining 29 Haggen locations

  • Albertsons on Monday submitted a binding bid letter and form of Asset Purchase Agreement to Haggen for the purchase of 29 of Haggen’s core stores, confirming reports that Albertsons would seek to acquire the remaining Haggen core
  • This is a step in the process to obtain bankruptcy court approval, following Haggen’s Chapter 11 filing on September 8, 2015, which is required for consummation of the purchase

First look:  Expedia unveils designs for huge Seattle waterfront campus

New Expedia location

  • Nearly a year ago, Mark Nagle was on the hunt for a location that could serve as Expedia’s new headquarters
  • He found himself standing outside one spring afternoon on a sprawling campus along the Seattle waterfront
  • There was a massive cruise ship docked at Pier 91
  • The chugging sounds of a train carrying Boeing fuselages then echoed nearby; another, destined for Chicago via Amtrak, prepared for departure
  • Looking upward, Nagle saw jets descending to the Sea-Tac airport, holding their flight patterns in the sky
  • Expedia VP of Global Real Estate Mark Nagle….. this he thought, was the spot
  • “It was just screaming travel!”

New Seasons to start Mercer Island grocery

Storefront rendering for New Seasons
 

 

 

 

 

 

  • New Seasons Market unveiled designs this week for a grocery store on Mercer Island that it will start building this month
  • The 37,00 sq/ft store will be at 2755 77th Ave. S.E. in a space that was home to Albertsons until it closed last summer. The new grocery store is expected to open in the fall
  • Like all New Seasons, the Mercer Island store will have an indoor dining area, local and organic produce, sustainable raised meats and seafood, a deli with chef-prepared foods, fair trade and local flowers, a sandwich shop, organic bakery, home goods and gifts made by local artisans, and a wellness section.

After $155 million sale, Boeing has a new landlord in Bellevue

  • A large office complex along Interstate 90 in Bellevue has sold for nearly $155.3 million, according to public records
  • Beacon Capital Partners of Boston sold the 17 year old, three building Sunset North campus in the 3100 block of 139th Ave. S.E. to M-M Properties Inc. of Houston
  • Located on the north side of the freeway, the building total around 460,600 sq/ft.  A big parking garage and 19.5 acres of land were included in the sale

Move seeks $1.77 billion in damages from Zillow for alleged trade secret leaks

  • Realtor.com’s parent company Move is suing Zillow (Nasdaq:Z,ZG) for $1.77 billion, court documents revealed for the first time this week
  • Until now the court documents hadn’t disclosed the amount of damages that Move was seeking from Zillow, the Seattle online real estate portal
  • In the case, filed in the King County Superior Court, Move alleges that two of its former employees, Errol Samuelson and Curt Beardsley, revealed trade secrets when they took jobs with Zillow in 2014.  For its part, Zillow has denied the charges, calling them “baseless”

Port of Everett takes another stab at $350M redevelopment

Redevelopment of Port of Everett

 

  • After 16 years and one failed attempt, the Port of Everett is taking a second shot at redeveloping its North Marina property
  • The port anticipates Waterfront Place, the new name of the project, will ultimately have around 650 residences, two hotels, commercial office and retail space, and a large park
  • The goal of the $350 million project is to create jobs and bring people to the 65-acre site on Puget Sound
  • The picture postcard setting is where, back in the day, pollutants belched from the smokestacks of lumber and shingle mills.  Commercial fishers and laborers at boat repair shops still operate on the site at the mouth of the Snohomish River
  • The port says that once Waterfront Place is fully built out, it will support 2,075 family-wage jobs
  • It’s a big task, as Chicago-based Maritime Trust found out last decade.  The port and Maritime Trust worked for six years to strike a development deal that led to the 2007 start of construction of a project that was to have up to 600 condos, restaurants, shops and a 1,000-seat amphitheater
  • A major financial backer pulled out of the deal a month later and eventually the Maritime Trust subsidiary that was developing the project filed for bankruptcy
  • Port officials say this time is different
  • “For starters, the port is going to be the master developer of the site, so we can continue to make forward progress on recruiting and attracting businesses to fulfill the development”

Amazon seeks stake in digital mapping company with ties to self-driving car market

  • Amazon.com (Nasdaq: AMZN) may be staking its first claim in the world of self-driving vehicles
  • Reuters reports that the Seattle tech giant is in talks with a group of German carmakers about acquiring a stake in digital mapping company Here
  • Amazon could offer cloud computing services to Here, which is owned by Audi, BMW and Mercedes, as part of such an agreement, Reuters said.
  • The connection with Here also would give Amazon exposure to the nascent field of autonomous automobiles, which one day could figure into Amazon’s development of its delivery services

Uber’s Seattle engineering office grows to 100 employees, with plans to double workforce

  • If you’ve used Uber to hail a ride around town, it may seem like there isn’t all that much that goes into the app.  You press a few buttons, a driver picks you up, you get dropped off, you pay for the ride, rate the driver, and it’s done
  • But underneath the skin of Uber’s app lies complex algorithms, complicated systems, dynamic pricing, supply positioning, mapping data, and much, much more
  • Uber’s Seattle engineering office, which is expanding rapidly as the ride-hailing giant- now valued at more than $60 billion – continues its rocketship growth

Census populations of WA market

Capitol Hill businesses hopeful the new light rail service will continue to increase business

  • Almost two weeks after the light rail station opened on Capitol Hill, the streets are still bustling with activity
  • “A lot of folks are taking the light rail up here during the day that we probably wouldn’t have seen with just the buses and cars
  • “There are a lot of fresh faces”, said Sierra Hansen, executive director of the Capitol Hill Chamber of Commerce.  “There is a buzz on Broadway we haven’t seen in some time.”
  • What the shops and restaurants on and around the Seattle neighborhood’s main thoroughfare are waiting to see, however, it’s if the recent uptick in business will cool down when the novelty of the new 4-minute ride from either downtown or the University District wears off

Seattle traffic is so bad commuters spend an extra 66 hours a year in their cars

  • Bolstered by fast-growing powerhouses including Amazon and Microsoft, the Puget Sound regions is nearly bursting at the seams – and one consequence is quickly worsening traffic
  • Kirkland traffic data company Inrix on Tuesday released its annual Urban Mobility Scorecard.  In a list dominated by top technology hubs
  • Seattle ranked near the top in total time commuters waste in traffic.  The average Seattle commuter wastes 66 hours annually behind the wheel – up from 63 hours in 2014
  • Seattle is No. 6 on the list.  Los Angeles, Washington D.C., San Francisco, Houston and New York rounded out the top five
  • Puget Sound-area companies are quickly bringing in new employees, adding to the region’s congestion issues.  Amazon, for example, nearly doubled its overall workforce to 231,000 in 2015 from 154,000 in 2014 – though most of the company’s employees work outside the region
  • The population of Seattle metropolitan area reached more than 3.8 million in 2014.  It’s expected to grow to close to 5 million by 2040, according to a Puget Sound Regional Council forecast

Paul Allen gives $100M to launch group to “make the world better”

  • Paul G. Allen on Wednesday announced he is starting the new Seattle-based Frontiers Group, which will fund out-of-the-box scientific research around the world
  • The co-founder of Microsoft (Nasdaq: MFST) made the announcement at the National Academy of Sciences in Washington, D.C., and said he is funding the initiative with an initial commitment of $100 million
  • The purpose of the Frontiers Group is to “explore the landscape of bioscience and fund ideas at the frontier of knowledge to advance science”, according to the group

Court gives green light for Paine Field commercial services as early as next year

  • Commercial flights out of Paine Field could start as early as 2017 now that a federal court has ruled against opponents.  “The ruling closes the door on all the environmental concerns, and allows us to continue to move forward”, said Propeller Airports LLC CEO Brett Smith

Nationwide Annual Real Estate Appreciations

Puget Sound area home sales slow (but not prices) as supply can’t match demand

  • Traffic isn’t the only thing that is gridlocked around many Puget Sound communities
  • We’re experiencing gridlock in the Puget Sound housing market
  • MLS figures show pending sales, across the 23 counties it serves, dropped about 4.5% in March compared to the same period a year ago
  • Inventory fell sharply – down more than 25%.  Brokers say that imbalance helped spur a 9.4% escalation in prices area-wide, with 12 counties reporting double-digit increases
  • One MLS spokesperson wondered if spring “has sprung in the wrong direction”.  Noting inventory usually grows at this time of the year, yet it is shrinking
  • The housing pool is getting smaller, resulting in a market that is extremely hard on people who are looking to find a place to live in Kitsap County
  • Kitsap County is one of six counties with less than two months of supply.  Area-wide, Northwest MLS figures show only 1.8 months of supply, well below the “balanced” range of four to six months.
  • During March, brokers reported 10,900 pending sales, about 500 fewer mutually accepted offers than a year ago for a drop of nearly 4.5%.  For the four-county Puget Sound region, pending sales were down about 6%
  • The year-to-date drop in pending sales versus first quarter 2015 is a reflection of tight inventory
  • To illustrate this point, we cite figures for the single family component.  In King County, pending sales for March declined nearly 11%, while prices spiked 20.7%.  Pending sales of condos (excluding single family homes) were about the same as a year ago in King County, but year-over-year prices jumped 15%
  • MLS members added 10,511 new listings to inventory during March, about the same as a year ago when they added 10,505 single family homes and condos to the offerings
  • At month end, there were 12,653 total active listings in the Northwest MLS system.  That represents a drop of 25.6% from the year-ago total of 17,007 active listings
  • In today’s market sellers want to find their next home before they list their current home, but because of the severe inventory shortage it’s hard to win in a multiple offer situation
  • Buyers are finding themselves in the company of another buyer “waiting in the wings” as back-up buyers, thereby creating an environment where the “first place” buyer is reluctant to ask for repairs in response to inspection discoveries
  • The existence of back-up buyers often shifts leverage to sellers when negotiating property improvements
  • An uptick in new construction around Snohomish County is expected to continue
  • This would certainly help stabilize the market so appreciation can return to more “healthy” escalation or normal levels
  • Closed sales outside of King County are outpacing year-ago levels.  This is most likely a reflection of the lack of affordability within King County and indicates that buyers are increasingly looking to other counties for their home purchases
  • The median selling price on homes and condos that closed last month was $320,000, up 9.4% from twelve months ago when it was $292,500
  • Compared to February, prices rose nearly 4%.  In King County, year-over-year prices for March jumped 11.5%, from $411,200 to $458,450
  • For single family homes (excluding condos), prices area-wide are up 8.7% from a year ago.  In King County, prices soared 20.7% compared to a year ago, jumping from $440,250 to $531,250
  • Condo prices shot up nearly 14.6% from a year ago.  For the 1,075 sales that closed last month, the median price was $275,000.  That compares to the year-ago sales price of $240,000
  • MLS members reported 7,075 closed sales of single family homes and condos during March for a gain of 4.5% from the year-ago volume of 6,769
  • First quarter figures for King County show the number of completed transactions is trailing 2015 slightly (6,114 versus 6,148), but the total for the other 22 counties in the MLS report shows a year-over-year increase of 11.4%

Statistical summary Pacific Northwest Region

SFH + Condo Pending Sales 4-County Puget Sound Region

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