How much home you can buy for $450,000 depends mainly on how bad you want to live near the region’s biggest, most prosperous cities.
How much home you can buy for $450,000 depends mainly on how badly you want to live near the region’s biggest, most prosperous cities.
In May, that price level fetched a 975-square-foot condominium in Seattle’s historic Pioneer Square neighborhood, a four-bedroom rambler on a quarter acre in Renton, and a newly built five-bedroom, two-story home on a small lot in Lynnwood.
“It all comes down to land supply,” said Robert Hronek, president of Bridgeport Appraisal in Covington. “You’re either going to compete with lots of buyers in the city, or you’re going to have to go out farther where you get more house for your money and commute.”
May’s median price of single-family homes sold in King County was $480,942, almost 9 percent higher than a year ago, thanks partly to one-fifth fewer homes for sale, according to figures released Thursday by the Northwest Multiple Listing Service (MLS).
In Seattle, where the inventory was a stunning 37 percent lower than last year, May’s median price was $559,950, a 14 percent annual increase.
But even in more affordable Snohomish, Pierce and Kitsap counties, single-family-home prices soared in May because more buyers are chasing a vanishing number of properties for sale there, too.
Buyers appear to be less picky: In the four-county region, there were 8,620 pending sales, the highest May total in at least 15 years, according to the MLS. (A sale is considered pending when buyer and seller have a mutual agreement but haven’t closed the deal yet.)
Even the sluggish condo market revved up in May, with double-digit annual price gains in King, Snohomish and Pierce counties — all of which had fewer condos for sale than a year ago.
The shortage in King County is historic: May marked the third month in a row the county had less than a month’s supply of homes and condos for sale, which hasn’t happened since at least 2004, according to a Seattle Times analysis of MLS data.
“You’re at crisis levels. Something’s got to be done,” said Stephen O’Connor, director of the Runstad Center for Real Estate Studies at the University of Washington. “There has to be some level of comprehensive strategy here to figure out how to bring in more supply.”
With interest-rate hikes on the horizon, buyers appear willing to duke it out in bidding wars and pay a premium for living in King County’s urban corridors to avoid long commutes and surging rents, real-estate agents say.
“It’s like buying a loaf of bread for $10 because there’s nothing left on the shelf and you’ve got company coming,” said Mark Ossinger, a Seattle-based designated broker for Fathom Realty.
What buyers face
A sampling of the homes sold in May for about $450,000 suggests the trade-off many buyers face: Pay a higher cost per square foot for an older home in Seattle, or face a longer commute to secure a bigger house on more land.
For example, the Pioneer Square condo loft in a 1900 brick building drew multiple offers that pushed the final price about $50,000 over its $399,000 asking price, said Moira Holley, the listing agent for Realogics Sotheby’s International Realty.
The buyer paid more than $460 a square foot even though the unit’s western views could be obstructed by a new building planned next door.
The downtown Seattle condo market recorded a $395,000 median price in May, 9 percent lower than last year, with 59 condos sold, according to the MLS. There were 116 sales pending.
Meanwhile, some suburban homes that sold last month for $450,000 were cheaper at around $200 a square foot — but drew fierce competition, too.
On the Eastside, where the median price of single-family homes sold in May was $655,000, a buyer landed a four-bedroom Kirkland house at the end of a cul-de-sac for $450,000. Within three days of being listed, the home went under contract, with the buyer outbidding others and paying about $20,000 more than the asking price.
The successful buyer waived the inspection contingency and agreed to close the deal quickly, said listing broker Patrick Johnson of Century 21 North Homes Realty.
What the buyer got was a 1969 house with few upgrades. There are two bathrooms but no master bath, Johnson said.
In Snohomish County, a similar vintage home on nearly one-third acre in the town of Brier with a heated two-car garage received full asking price, said Susan Kittleson, the Bentley Properties listing broker. The buyer did a pre-inspection and waived the right to back out from any inspection deficiencies, she said.
Speed was key.
“Two people had clients there within 30 minutes of it going on the MLS,” she said. “The one that bought it was the first one in.”
Farther north, a five-bedroom home in Everett built in 1966 on more than a half-acre went for $450,000, or $182 a square foot.
The property, which has views of Puget Sound and Mount Baker as well as a swimming pool, would have fetched at least $500,000, but inspectors determined the slope behind the house needed a retaining wall, said Jen Bowman, the Windermere listing broker.
The property was originally listed in February for $575,000.
Some might think new construction would command a higher cost per square foot than these homes, but a five-bedroom, two-story home with a basement in Lynnwood built last year by D.R. Horton sold in May for $173 a square foot. On the other hand, the home sits on a tiny lot, sandwiched between other homes about 10 feet away, and comes with monthly homeowner dues.
To the south in Renton, a modernized 2,100-square-foot rambler on lushly landscaped grounds, complete with a backyard deck and hot tub, was listed for $450,000. The listing agents said they priced the 1969 home $50,000 higher than comparable Renton homes because it’s in the sought-after Issaquah school district.
“Within 12 hours we landed a full-price cash offer,” said RE/MAX Eastside broker Jerry Vice, who co-listed the estate-sale property with fellow agent Mary Buckmaster.
A local architect looking for a retirement home beat out other bidders, giving the seller eight hours to respond. The seller received other full-price offers, Buckmaster said, but those buyers were financing the purchase with a loan.
The winning buyer paid $213 a square foot, considerably less than the price of a similar home in Seattle, Vice said, owing to the longer commute.
“That is one of the main factors in valuing residential property here,” Vice said. “It’s one that hardly gets talked about but that’s the 800-pound gorilla in the room, really.”
Few for sale
If long commutes help explain bidding wars for the scarce homes for sale in Seattle, a new index can help buyers get an idea of the true impact of a prospective home’s location on household expenses.
The “H+T Index,” developed by the nonprofit Center for Neighborhood Technology in Chicago, estimates the share of a typical metro household’s income devoted to housing and transportation costs.
In Seattle itself, a household’s housing and transportation costs consume 46 percent of the metro area’s median household income, according to the center.
Even though median home prices are lower in, say, Federal Way, transportation costs are higher and so the combined costs have the same burden on household income.
“That’s really related to the built environment and what kind of transit system you have,” said Peter Haas, the center’s chief research scientist. “If you have a great transit system and everything is spread out, it doesn’t give you as good a benefit as if you have a great transit system and a dense core.”