Bellevue, WA – Real Estate Activity for July 2016

Key corner in Redmond to get new apartments

  • Another apartment developer has invested in downtown Redmond and plans to build a large project at the key corner.
  • Fairfield Residential will build a six-story, 360-unit project at 15810 Bear Creek Parkway.  This is on top of the nearly 700 units that have opened in downtown and nearby Overlake area since 2015, according to city officials.

Redmond Town Center, the next Eastside mall expected to add lots of housing

  • Portions of Eastside shopping centers are being redeveloped with hundreds of housing units and Redmond Town Center is the latest.
  • Lowe Enterprises is moving forward with a 86-unit apartment project on a parking lot next to Macy’s.  Lowe hopes to break ground late this year or early next year.

Seattle-area home prices set record; 2nd-fastest rising in nation

  • Seattle home prices have hit a record and are now rising faster than any major city outside the Pacific Northwest, according to the latest S&P/Case-Shiller data.
  • Compared with a year ago, Seattle area single family home values in March were up 10.8%, behind only Portland where prices have shot up 12.3% in the last year, according to Case-Shiller index released Tuesday.  The Seattle growth rate was more than double the national average of 5.2%.

Seattle region’s population growing at historic pace, making biggest annual gain in a century

  • Seattle and its surrounding counties added 86,320 new residents between April 2015 and 2016, marking the region’s biggest population gain this century, fueled in large party by the region’s technology industry.
  • In other words, an average of 236 people are moving to Seattle area each day, according to a new report by The Puget Sound Regional Council, a growth management and planning organization.
  • By that metric, the Puget Sound area has likely already surpassed 4 million residents, possibly as early as the first week of June.
  • In April, population was at 3,985,040, according to the report.  King County saw the biggest growth, adding 52,300 people (a 2.5% increase).  Snohomish County followed with 5,260 newcomers.
  • The 2.2% increase in the Seattle area over the last year can largely be attributed to the region’s tech boom.  Amazon is growing rapidly, adding jobs at a break-neck pace, and other titans like Microsoft and Boeing continue to be major employers in the area.
  • These thriving corporations also feed into startup ecosystem as employees leave to launch their own ventures.  Meanwhile, Seattle’s reputation as a city with top tech talent has compelled dozens of big companies to set up engineering centers here.
  • This hyper-growth has become a lightning rod in the community as traffic, housing prices, and cost of living rise rapidly.

Foreclosure starts now at pre-crisis level

  • Foreclosure inventory continues to decrease, decreasing 3.55% from April to May and 29% year-over year, according to a recent report from Black Knight Financial Services.

‘Brexit’ Could Give U.S. Real Estate Brief Boost

  • Britain’s vote to exit the European Union will likely have a long-term impact on the world economy, but in the short-term, real estate could be flooded with investors flocking to the U.S. as a safe haven, pushing up the dollar and sending down mortgage rates.

Seattle’s devilish new home price record:  $666,000

  • The typical house in Seattle now costs 74% more than it did in 2011.  Across King County, the median home price is up 66% over those five years.
  • As home prices and rents continue to soar faster in the Seattle area than just about anywhere else in the nation, the city and its neighbors have set new highs for housing costs.
  • Seattle’s median single-family home cost $666,500 in June, easily beating out the record set in February according to figures released Wednesday by the Northwest Multiple Listing Service.  Seattle home prices have risen 15.9% just in the past year and an astounding 74% in the last five years.

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City of Seattle

  • In 2015, the City of Seattle passed an ordinance requiring owners of certain multi-family properties to provide advance notice to the City prior to listing the property for sale (the “Ordinance”).  This Bulletin outlines the Ordinance and provides information on brokers’ disclosure obligation arising from the Ordinance.
  • The Ordinance requires owners of multi-family properties containing five or more units, where at least one of the units is affordable to a household earning 80% or less of area median income, to notify the City of their intent to sell their property at least sixty (60) days prior to advertising the property for sale or listing it with a listing service.
  • A penalty of up to $500.00 may be assessed against owners who fail to comply.  Information about whether a property is subject to the notice requirement in the ordinance and where to send the required notice is available at  www.seattle.gov/housing/intent-to-sell

Real estate deal of the year: Seattle tower sells for $387M

  • Another overseas buyer has snapped up a Seattle office tower.  This time, it’s the 50-story Safeco Plaza in Seattle, according to a new report.
  • The $387 million purchase by a German company makes it the region’s biggest real estate sale so far this year.
  • Much of the attention has been on Chinese buyers, but German firms are also active, especially when it comes to office buildings leased to Amazon.
  • This is at least GLL’s second Seattle office acquisition.
  • Three years ago, the company paid $97.4 million for an Amazon-occupied building in South Lake Union, and at the end of last year another German firm, Union Investment Real Estate paid $299 million for two buildings that are part of Amazon’s headquarters.

From $30 billion to $45 million:  Once-giant Infospace slowly slips away

  • Twenty years ago, before “Google it” was the default answer to “How can I find out where that restaurant is?”, a Bellevue company called Infospace was clawing its way to the top of the search engine pack.
  • By 2000, the company was one of the largest software companies in the Northwest with a vaulation of more than $30 billion – about 30 times more than Boeing at the time.
  • Now, Infospace has been sold to a small Venice California based online marketing company called OpenMail for $45 million.

Fortive starts trading, becomes on of Washington state’s largest publicly traded companies

  • Washington state just got a new publicly traded company, when Danaher Corp. split in two.
  • Everett-based Fortive Corp. completed a planned spinout from Washington, D.C.-based Danaher (NYSE:DHR) to form a standalone company that oversees a number of industrial technology and professional instrumentation businesses and retail/commercial petroleum businesses.
  • Headed by president and CEO James Lico, Fortive employs more than 24,000 people in over 40 countries.  The companies that make up Fortive, collectively reported 2015 revenue of $6.2 billion, Fortive said.  That makes the new company the state’s 10th largest publicly traded company as ranked by revenue.

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Eastside cities create ‘Innovation Triangle’ to lure foreign investors

  • The cities of Bellevue, Kirkland and Redmond are banding together with the Economic Development Council of Seattle and King County to promote the Eastside to a variety of foreign-owned companies interested in investing in the United States.
  • As part of the effort, the cities this week are rolling out a new branding strategy called Innovation Triangle.
  • The triangle is “a place where creativity is the goal and building the future is the destination,” Bellevue Major John Stokes said in a prepared statement.
  • The group is in Washington, D.C., at the SelectUSA Investment Summit, a government program administered through the U.S. Department of Commerce.  The cities and EDC are working with the Washington State Department of Commerce to promote the state, and in particular Seattle and King County, as a place for international businesses to be.
  • Stokes said Bellevue, Kirkland and Redmond want tech and “innovation-intensive” businesses to experiment and develop products and services.
  • There already are 54,600 software publishing workers and 99,100 information and communications technology workers in the cities, so they offer a deep pool of talent.

65 buildings under construction now in downtown Seattle

  • More than 14 million square feet of office space is in the pipeline; more than 5,200 hotel rooms are on the way; and 8,661 housing units are slated for completion this year and next
  • More buildings are under construction in downtown Seattle than a any time since 2005 when the Downtown Seattle Association started tracking.
  • $3.5 billion is currently invested in downtown development – more than twice the amount invested five years ago.
  • The demand remains strong for office and residential space, and we’re seeing evidence of that with continued low vacancy rates for housing and major employers choosing to locate in the heart of the city.

Market showing signs of adjusting, but buyers still see double-edged sword

  • Home sales around Western Washington continued at a torrid pace during June, but a 10% year-over-year increase in new listings has some brokers with Northwest Multiple Listing Service suggesting a little relief may be emerging.
  • Citing reports of projected job growth in the region (pegged at 70,000 new employees) but only 8,000 new residential units in the same forecast, this imbalance is rippling to outlying counties.  Inventory is now shrinking at a greater rate in some of the outlying counties than in the tri-county area of King, Snohomish and Pierce counties.
  • This market is “frenzy hot” in June, but suggest there was a “short breath of fresh air for homebuyers”.  He credits the combination of more inventory coming on the market and lower interest rates with bringing some “welcome relief to the backlog of buyers who have been waiting to purchase a home”.
  • There were fewer multiple offers for each new listing, 80% of new listings are still selling within the first 30 days in price ranges where 90% of the sales activity is taking place.  That contrasts with a “healthy” (more balanced) market when only around 30% of listings are selling in the first 30 days.
  • Northwest MLS members reported 11,995 mutually accepted offers last month for a 4.73% increase over the year-ago volume of pending sales.
  • Fore the four-county Puget Sound area, brokers reported 8,869 pending sales, the highest total for the month of June since 2005.
  • New listing activity improved compared to a year ago with 12,759 sellers putting their home or condo on the market.
  • That’s a 10.2% improvement from 12 months ago and marks the largest number of new listings added in a single month since March 2010 when brokers replenished supply with 12,994 new listings.
  • Last month’s additions brought the number of total active listings up to 16,838 properties.
  • A year ago, across the 23 counties in the report, buyers could choose from 20,333 listings.
  • With only 1.7 months of supply system-wide (for single family homes and condos combined), inventory is well below the 4-to-6 month level.  Both King and Snohomish counties have barely more than one month of supply.
  • Inventory of condos is more meager, hovering near 1.1 months supply area-wide.  In both King and Snohomish counties there is less than a month of supply (.0.80).
  • For single family homes only, there is 1.82 months of supply – and even less than that level in all four central Puget Sound counties.
  • Not surprisingly, prices continue to escalate.  In fact, a recent report from CoreLogic, a property analytics company, indicated home prices are rising faster in Washington than in any other state in the nation.
  • Last month’s 9,805 closed sales across all counties in the MLS report had a median selling price of $350,000, with is nearly 8.9% higher than the year-ago figure of $321,500.  17 of the 23 counties experienced double-digit increases, led by Grant County (up 24.9%), Jefferson County (up 24.4%) and Skagit county (up nearly 23.8%).
  • In King County, which accounted for about 40% of the sales, the median prices surged 13.3% from a year ago, rising from $450,000 to $510,000.
  • For single family homes only (excluding condos), prices in King County rose 14.7%, from $500,000 to $573,522.  Condo prices skyrocketed nearly 22% compared to a year ago.
  • The median sales price last month was $350,000; twelve months ago the buyer of a median-priced condo in King County paid $287,000.
  • Buyers are seeing rapidly-rising prices as a double-edged sword.  On one hand, the market is a fabulous investment and a way to secure monthly housing costs,” he explained, but added, “on the other hand, prices and scarce inventory are getting out of hand!”
  • For the first time, we’re hearing a common theme.  Buyers are willing to make “huge sacrifices”, such as significant concessions on a home’s square footage, in order to be closer to jobs and good schools, and they’re foregoing once-desired “core features” for their family’s home.
  • Buyers are making large down payments instead of relying on zero down programs.
  • The high down payments (achieved at times by borrowing from family) are sometimes made to help cover the difference between the sales price and appraised value.
  • “Demand for U.S. real estate could rise”, said Lawrence Yun, chief economist for the National Association of Realtors.  He attributes uncertainty before the Brexit vote as the likely reason the Federal Reserve decided not to raise interest rates in June and said the U.S. could face an influx of foreign buyers looking to pull out of the U.K.
  • This market has buyers asking ‘what do I have to do to buy a home’, while sellers ask ‘what don’t I have to do to sell my home’?
  • Despite the challenges the market is encouraging for owners who have been considering a move.
  • “It’s a cause and effect situation: they find a home to buy, then put their home on the market, thus adding to inventory”.  We believe the best opportunity for buyers to purchase will be within the next 4 months because of expected improvements in inventory and lower interest rates.

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