In pricey Seattle, $1M can buy just an ‘entry level’ single-family home

Mark Koks felt confident as he and his wife began house hunting in Seattle this year. With a budget exceeding $1 million, the couple were ready to land a home bigger and nicer than their Greenwood town home.  

But the cruel reality of the city’s home prices quickly sank in after touring several single-family houses in Greenwood, Phinney Ridge, Ballard and nearby neighborhoods this winter. 

“We have had to come to terms with the fact that the perfect home doesn’t exist within our price range,” Koks said. 

In Seattle, where homebuyers have long suffered with affordability, even a $1 million-plus budget no longer guarantees living in the city’s high-priced market. 

The median price for a single-family home in the city hit $1 million last month. That means half the home sales that month had a higher price tag, while the other half sold for less.  

But as home prices continued to rise, single-family homes priced at or under $1 million are in fewer pockets of the city and often draw fierce competition from buyers, real estate agents say.  

“It might be the entry level for some neighborhoods,” said David Palmer, a Seattle-based agent for Redfin. 

Ryan Palardy, a Seattle-based agent, said $1 million will buy “a pretty reasonable town house in a pretty decent location.” As for single-family homes, $1 million buys a house “on the fringes of the city” or a small fixer-upper in a desirable neighborhood. He also said the $1 million traditional home is usually 30 to 70 years old, rarely updated and often under 2,000 square feet.  

“Not bad houses per se,” Palardy said, “but definitely not something people would be fighting for if they could afford something more.” 

Koks, who is Palardy’s client, said the homes priced around $1 million that they’ve walked through almost always had “flaws,” such as odd floor plans or they are far outside the area where they want to live.  

Koks is a regional sales manager who works remotely for a brewery, and his wife works downtown. The couple, both 30, own a three-bedroom town house in the north-central neighborhood of Greenwood but are planning for when they have children and need more room.  

They would like to stay in Greenwood or nearby, like Phinney Ridge and Ballard. His wife takes public transit to an office downtown. Neither want to leave the city for the suburbs.  

“We want to live within walking distance from amenities that we enjoy,” Koks said. “We live in the city for a reason.” 

Despite their setbacks, Koks said they remain selective, hoping they will eventually find their dream house on a budget not to exceed $1.2 million.  

“Ultimately, the plan is to buy a single-family home and what that might look like is a good question.”   

The shrinking $1 million home  

The size of Seattle-area homes that can be purchased for a million has been getting smaller, according to Zillow.  

As of January, the typical Seattle-area home worth $1 million was 2,120 square feet, which has shrunk by 410 square feet over the past five years, Zillow said. The national average for a $1 million home is 2,388 square feet.  

Since 2020, Seattle-area homes at $1 million have lost one bedroom and a quarter of a bathroom, Zillow estimates. 

Among major metros, only in the pricey California cities of San Jose, San Francisco, Los Angeles and San Diego will $1 million dollars buy less house, Zillow said. 

This “shrinkflation” is primarily a result of escalating home prices, which have been driven up by strong buyer demand for a scanty numbers of homes, said Orphe Divounguy, a senior economist with Zillow. This is particularly true of traditional, single-family homes within city limits.  

“If you don’t have enough supply to keep up with demand, that’s a problem,” Divounguy said.   

This imbalance has been pushing more properties above the $1 million threshold. According to Zillow estimates, the Seattle metro area had 60,523 homes of all types valued at $1 million or more at the start of the year, up 87% over the prepandemic number in January 2020. The $1 million-plus home still represents a fraction of the 1.1 million homes in the Seattle metro area, however. 

Seattle’s median price for a single-family home was exactly $1 million in March, according to the Northwest Multiple Listing Service.  

The median price was above a million in Central Seattle ($1.2 million), the Queen Anne/Magnolia area ($1.5 million) and in North Seattle ($1.18 million) It was just under $1 million in Ballard/Green Lake ($999,000). 

More affordable neighborhoods included Beacon Hill ($680,000), West Seattle ($800,000) and Southeast Seattle ($905,000). 

Seattle’s median prices for single-family homes are well below the Eastside, where the median price was $1.7 million in March and all eight neighborhood areas tracked by the NWMLS had prices north of $1 million. 

The area’s highest prices for single-family homes were in Bellevue-West ($3.37 million), Bellevue-East ($2 million), Mercer Island ($2.6 million) and Kirkland/Bridle Trails ($2.2 million). 

Sharon O’Mahony, a Seattle-area based broker affiliated with Keller Williams, said it is possible to find sub-$1 million, single-family homes in certain Seattle neighborhoods.   

For example, a three-bedroom, two-and-a-half bath home with 2,500 square feet on Kenny Street close to Rainier Avenue in the Hillman City neighborhood sat on the market for nearly a year. O’Mahony took over the listing and reduced the price to $965,000, and it went into contract within a month after receiving only one offer, she said.  

However, another listing on 40th Avenue Southwest in West Seattle, a three-bedroom, two-bathroom home under 1,300 square feet, drew seven offers and was bid up to $1.07 million from the list price of $885,000. 

“If it’s in a neighborhood that is up and coming or a neighborhood that’s less desirable in terms of transit or amenities, then those tend to sit a little longer,” O’Mahony said. “The ones in the city that are close to light rail, transit or shopping, walkable, those are in high demand and are going to get bid up.” 

Even once-affordable suburbs, like Burien and Skyway in unincorporated King County, “have come up in the last five years because of the proximity to downtown Seattle,” O’Mahony said.   

“Burien I always thought was a great gem because it has such a cute little downtown, but that area now has had a lot of multiple offers this year,” she said. 

Redfin’s Palmer mentioned Northgate as an area where single-family homes can be bought for under $1 million. In the south end of the city, Georgetown, South Seattle, Rainier Beach and Columbia City are some others.  

The property type also matters in Seattle, he said, with single-family homes drawing multiple bids while other property types rarely do.  

“I’m definitely seeing competition for single-family homes priced appropriately for the neighborhood that they’re in,” Palmer said.   

“I’m not seeing multiple offers on condos, I’m not seeing them really on town homes either, but a single-family home that is dialed in and priced appropriately, those are the ones getting multiple offers.” 

In the city, a teardown property can cost the buyer over $1 million. Palmer, for example, is listing a three-bedroom, one-bath, 900-square-foot home on North 107th Street off North Northgate Way. The structure is boarded up with plywood sheets and likely will be torn down, Palmer said.  

The $1.07 million listing price reflects the value of the nearly half-acre of land, where a developer might build multiple units or a larger home on the lot.   

“That’s basically a developer special right there,” Palmer said. “For a million dollars there’s a large double lot that you can build on.”   

Homebuyers are not expected to get much price relief. Seattle’s high cost of land as well as development and borrowing costs make it particularly difficult to build affordable single-family home within city limits, Zillow’s Divounguy said.  

Builders are “leaning toward having to build on smaller lots, building taller, building more attached single-family homes, so town homes and condos as opposed to detached homes,” Divounguy said.  

“And, basically, builders did that because their costs have risen and they are trying to make the math work for potential homebuyers,” he said. 

Real estate agent Palardy said he recently experienced the pain many Seattle-area buyers have been feeling when trying to land a single-family house in the city.  

He and his fiancée, a nurse, were outbid for numerous traditional homes throughout Seattle until finally closing on a home in March in the North Beach area. He said they hoped to spend around $900,000 but wound up paying $1.3 million for a 1957-built single-level, 1,700 square foot home in Olympic Manor with a water view. 

While the home is in a good neighborhood, it needs work. He’s had to replace the HVAC system, gut the crawl space and redo the landscaping, and will eventually have to replace the pipes.  

 But he considers himself lucky.  

“Frankly, it could have sold for more,” Palardy said.