A warm and sincere happy holidays from myself and everyone at John L. Scott Real Estate. We have enjoyed working with many of you this year and providing informative stories and features in this newsletter as well as on the Living the Dream blog and social media platforms. To a happy 2024!
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I wrote in this newsletter 12 months ago about the bumpy – maybe even bruising – housing market of 2022 across Puget Sound and most of the country. It was a year of gyrating mortgage rates and stubbornly high home prices.
Ready to complete another year, the residential real estate market has not improved – some might say it got a little worse. Mortgage rates rose and rose again to more than 8% but have since mercifully fallen by nearly a percentage point. Inventory continues to shrink to levels not seen since the days of disco, shag carpets and pet rocks.
Just for Fun: In December 2022, the National Association of Realtors® projected mortgage interest rates would be 5.7% at this time in 2023 (quite optimistic!). A year ago, realtor.com believed rates would end this year at 7.1% (pretty darn close).
Prospective buyers this year have mostly watched the housing market pass from the sidelines. They are sitting comfortably with a mortgage rate on their existing home of about 4%, while renters seeking to buy are taking more time to build savings as affordability becomes a greater challenge.
What does 2024 look like for the national housing scene and across Seattle/King County? I offer two observations gleaned from a lot of reading and speaking with experts:
- Mortgage rates, falling for roughly the past two months, will likely start with a “6” in the first half of 2024. That, in turn, will finally move the market forward with additional sellers and buyers. This will happen slowly, like a dimmer rather than an on/off switch.
- Prices, sadly for buyers, will likely continue their trend higher. Amid unusually low inventory and an anticipated growing buyer pool, the median price of a single-family home will climb beyond $1M in Seattle’s summer months.
I am finishing up my annual blog post that looks back at 2023 and takes a glimpse ahead at the full picture – housing, economy, jobs and new technology. The story will be added to my Living the Dream blog on Tuesday (Dec. 19) at 10am PT. Here is the scheduled link to the story – Expectations for 2024 in Seattle/King County Real Estate.
THE VALUE OF PARKING
The humble parking space is often overlooked and unappreciated – until you need one. The seemingly mundane asphalt-covered piece of real estate silently champions the ebb and flow of modern living.
In congested landscapes like Seattle, a parking spot should be a coveted asset – a testament to the delicate dance of space optimization. Yet, many new home projects across King County (and, honestly, in most urban areas) are brushing aside parking as an extravagance and a burden to include in residential planning.
Lawmakers in Olympia this year, while rightly addressing our shortage of homes, also waived the need for off-street parking on a selection of residential projects. Two recent laws in Washington reduce or eliminate the need for parking if the properties are in proximity to a transit hub. (Interestingly, dozens of state Legislatures reviewed similar proposals this year to reduce parking requirements for residential projects but very few became law. Even Congress introduced a national “people over parking” proposal – without success.)
I learned first-hand this summer the value of parking in Seattle. In representing a buyer of a First Hill condo with a garage parking space, the on-site building manager indicated the lease value of that 9-foot x 18-foot area was $300/month to a resident or about $50,000 if sold separately. Having that knowledge, we then saw a steal of a deal on a 1-bedroom home with a coveted garage parking space. (My buyer has no plans to own a car and would be happy to accept $3600 in annual revenue from one of the neighbors.)
Let’s applaud those Seattleites who forgo the four-wheel convenience of a car, truck or SUV and instead enjoy the two-wheel options of a bike, public transit or simply walking. For me, however, I love getting in my SUV and driving clients across King and Snohomish counties to browse homes before making an offer.
This dynamic of private vehicle vs. public transportation will play out first in dense areas – like Seattle, Bellevue, Federal Way – and will be interesting to watch.
POLLUTED PIPES
We cap this month’s news with yet another “P” story. From predictions and parking, this one focuses on contaminated drinking water in city pipes – from the treatment plant to your property.
The 2021 infrastructure law provides $15B to replace lead pipes across the U.S. That may sound like a lot of money to address a serious issue that can damage brain development in children. But, apparently, it’s not enough and some states are rejecting the offer.
Washington is among a handful of states that have turned down most of the federal funds in Year 1 of a 5-year offer. The main reason, according to Associated Press reporting, is the state doesn’t have the financial and human capital to identify all the aging pipes. The federal government is offering to cover the costs of ripping out and replacing the lead pipes – buried deep in soil, concrete or asphalt – but not for locating them. It’s apparently too tall of a task.
Our state accepted $85K of the $63M it could have taken this year and said the decision was based on the limited number of municipal water systems that wanted loans to begin the process of searching for pipes, the AP said. The Environmental Protection Agency (EPA) estimates the state has 22,000 lead pipes.
Portland, Ore., has struggled with high lead levels for years, although recent tests have been better and officials reportedly say the issue isn’t lead pipes, but household plumbing. Oregon turned down $37M from the federal government, AP reported. The state, which the EPA projects has 3530 lead pipes, said it will spend the first year identifying their location.
The Biden administration, showing frustration with the lack of state action, in recent weeks announced additional proposals to help local governments eliminate the contaminated pipes within 10 years. The EPA is accepting comments on the new proposals and will hold a public hearing on Jan. 16.
My question to our governor and other state leaders: Have we forgotten about Flint? The Michigan city experienced record-high levels of lead from the aging pipe system, exposing thousands of unsuspecting children to tainted drinking water and triggering hundreds of lawsuits.
Are we ignoring the past because we don’t have the economic and staffing infrastructure to fix our water infrastructure? Where is the accountability in our states and why are the cost and complexity of this initiative seemingly more important than the potential human toll?
BY THE NUMBERS
>> Seattle is ranked among the best places on the planet, according to World’s Best Cities and its 2024 ranking. More than 270 cities were analyzed in three main areas – livability, lovability and prosperity. Our city came in at No. 34 overall and seventh best among U.S. cities, up a notch from the 2023 report. Seattle received high marks (No. 4) for the availability and quality of universities. London earned the overall top ranking and New York City led this county’s best places to live, according to the report.
>> Seattle is the most future-ready city in the country, according to a report from Point2 Homes. The online real estate firm reviewed the 100 largest U.S. cities to determine which are most ready for the future based on five categories – business & technology, internet connectivity, environment & sustainability, transit & mobility, and economy & demographics. The report noted the city ranks “particularly high” for the number of startups, invention patents, annual median income, the influx of population with a bachelor’s degree, and bikeability. San Jose, Calif., came in second.
>> A survey of the largest 50 cities determined Redmond is the 10th-most active for new apartment construction. The report from RentCafe said there are now 15,011 apartment units in ZIP code 98052, an increase of 5211 – or 52% – since 2017. Washington, D.C., had the top two areas (ZIPs 20002 and 20003) for apartment growth by volume, with 14,603 – or 48% – more units combined in the past 5 years.
>> The number of new multi-family units added to the Seattle metro supply in 2023 has been a disappointing 5853, according to research through Q3 from commercial real estate firm Berkadia, which forecast at the start of the year 17,975 new units for our area. Multi-family homes include apartments and condos and the metro area covers King and Pierce counties.
>> Washington ranks 45th in the U.S. for foreclosure filings, according to Q3 research by ATTOM Data Solutions. Default notices, scheduled auctions or bank repossessions collectively rose 28% from Q2 and 34% from a year ago to 124,539 foreclosure-related actions in the U.S. Only 1092 took place in our state, up 32% from Q2 and 27% from 12 months ago. California (14,230) led the nation in Q3 filings and Vermont (19) had the fewest.
>> Seattle ranked fifth – at $331,938 – for cities with the largest raw profit on a median priced home sale, according to Q3 research by ATTOM. California held the top four spots, led by San Jose, Calif. ($718,000). U.S. homes averaged a 59% profit margin on sales in the last quarter.
DECEMBER HOUSING UPDATE
The Seattle area housing market right now reads like a mystery novel with half the pages missing. So far, the narrative has included a mix of suspense, a hint of optimism and a whole lot of uncertainty.
The year in residential real estate nears its end amid twists and turns like a good book but it’s waiting for the storyline to improve as we fill out the empty pages in 2024.
Suspense has centered on the Federal Reserve and its decision to raise, maintain or lower its short-term interest rate. The optimism comes from signals in economic data that show improving conditions and a likely end to rising mortgage rates – a story that we are all looking forward to reading.
November featured a sharp drop in activity and mixed home prices across King County. Only 1513 listings hit the market in the month for all home types, a devastating 30% decline in one month. The Eastside led the way with a 33% drop-off in new listings (420) and Seattle fell 31% (586).
Read a detailed assessment of our housing market in my most recent blog post: Seattle Area Housing Market Remains Not for the Faint of Heart.
The monthly price map (below) shows a sharp year-on-year increase in most submarkets across King County for all home sales combined (single-family, townhome, condo). The greatest gain was found in Kirkland, up 25% from November 2022, with Issaquah a close second (23%). Maple Valley was the only area with a price drop, down 11% from a year ago.
This graphic – which you can click to expand – is presented every month, rotating among three home groups. Next month, we will look at single-family home prices by city.
CONDO NEWS
There are big doings on the Eastside. Avenue Bellevue has started to welcome new homeowners to the Residences building, which is part of a vast two-tower luxury condo, hotel and retail district. Located just north of Bellevue Square, Avenue Bellevue emphasizes style and substance with its beautiful architecture and bespoke shops.
When fully completed in early 2024, the $1B-plus Avenue Bellevue project will feature the Pacific Northwest’s first InterContinental Hotel. The 208-room hotel opens in January and will include a $7200/night two-bedroom Presidential Suite with living, dining and entertainment areas.
The hotel and ground-floor retail area will feature a host of culinary geniuses:
- Joshua Skenes is the first and only American chef to garner three Michelin stars cooking entirely over open flame. He will bring Angler, a new concept, fine dining experience to Avenue Bellevue.
- Masaharu Morimoto of “Iron Chef” fame will deliver intense excitement and exquisite technique to his Japanese-American menu at MM by Morimoto.
- And, Robbie Felice has many years of success at legendary Babbo in New York City and B&B Ristorante in Las Vegas. Now, the Michelin-star chef will bring his extraordinary talents to Bellevue with pastaRAMEN.
The second tower – the ultra-luxe Estates – will likely begin to accept occupants in February. Estates includes the hotel and high-end perks such as a Rolls-Royce car service and access to a luxury yacht.
You can learn more about Avenue Bellevue here and then contact me when you’re ready to take a tour.
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The luxury boutique condo Infinity Shore Club Residences announced it has slashed prices on select homes. The new project facing Elliott Bay near Duwamish Point in West Seattle is cutting prices by up to 20% for the first six buyers who take up the offer by the end of this month and close on the purchase by Jan. 31.
Major price cuts, while not unprecedented for this market, are typically a last-ditch promotion to generate sales, which have been waning at Infinity Shore Club. At last count, 11 of the 37 units have gone Pending or Sold. The community officially opened in June and features a stunning upper-floor infinity pool with unobstructed views of the bay just across the road.
A 1-bedroom, plus-den residence with 1471 interior sq. ft. is priced for this limited time at $1.285M ($874/sq. ft.), or 20% off the previous figure. A 2469 sq. ft., 3-bedroom penthouse that was originally priced at about $4.4M is now at just under $3.6M, an 18% discount. In addition to the lower sales price, homeowners’ dues will be waived in 2024.
“It’s a sign of the times for developers right now, but we need to do what it takes to meet the market,” says James Wong, CEO of the project’s developer Vibrant Cities. Wong suggested the new prices put those select homes well below replacement costs.
Infinity Shore Club is the only new concrete-and-steel product in the city that is not sited in downtown Seattle. It’s also the only waterfront project. Interested in taking a tour? Contact me today!
LUXURY LIVING
I am scratching my head (figuratively) as more stunning homes hit the market in what is traditionally a quiet time in the luxury real estate market. Starting with the least expensive, here are several amazing abodes available for purchase.
Clyde Hill is the home to some of Puget Sound’s wealthiest Americans with properties often valued in the eight digits. Here’s a “steal” – a new-build, white-brick 2-story beauty with 5-bedrooms, 5-bathrooms and 7058 sq. ft. (with basement). John Buchan Homes authored the biophilic design, which seamlessly blends outdoor space and indoor beauty with a floating staircase. One of the finest custom homes I have seen this year. List price: $8.98M ($1273/sq. ft.)
The Four Seasons is one of the elite hotels in Seattle and Four Seasons Residences – the top 10 floors within the 20-story hotel – is one of the pre-eminent condo communities in our city. The latest Residences home to hit the market features 2-beds and 2.25-baths within a massive 4339 sq. ft. expanse. This 16th-floor home is special for its private deck and firepit that faces Northwest and Elliott Bay. Each home comes with hotel-style amenities – fitness center, spa tub, outdoor pool and room service. List: $10.25M ($2362/sq. ft.)
Introducing a modern, steel, glass and concrete residence in Seattle’s Washington Park neighborhood. This 3-bed, 3.75-bath, 6930 sq. ft., 2-story (with basement) is a contemporary classic. Designed by Seattle architect Tom Kundig, the open-plan home comes with a chef’s kitchen, two fireplaces, wet bar (behind a secret door), and 60 ft. of Lake Washington waterfront. Grand and grandiose! The video alone is worth a look just to see all of the marvelous art (presumably not for sale … but we can ask!) List: $19.5M ($2814/sq. ft.)
We cap this month’s luxury tour with one of the highest-priced listings of the year. This 5-bed, 6.25-bath, 10,300 sq. ft. Mercer Island mansion sits on 1.25 acres. The video shows a grand, private entrance and it only gets better from there. Wood is prominently featured – from the floors to shiplap walls and large ceiling beams. Wood columns frame the rear patio that leads to an outdoor pool/spa tub combination, a stunning 210 ft. waterfront and a dock that extends 185 ft. for your yacht or seaplane (no joke!). From putting green to billiard room, there is so much to see and do in this 2001-built traditional home. List: $33.9M ($3291/sq. ft.)
What else is happening in and around your Seattle?
Holiday Music, Dec. 16, 21, 22, 23
Seattle Men’s Chorus sings seasonal favorites and leads a sing-along in their show A TREEmendous Holiday at Benaroya Hall (200 University St.). Tickets. Various times.
Bubble Show, Dec. 29-30
Looking for some family fun with a touch of science? Check out Louis Pearl, aka the Amazing Bubble Man, for just the right recipe. Pearl combines comedy and artistry for an interesting look at bubbles that will leave you and your kids mesmerized. Kirkland Performance Center (350 Kirkland Ave.) Tickets. Friday, 2pm; Saturday, 11:30am; Sunday, 2pm
New Year’s Eve at Seattle Center, Dec. 31
Get ready for a night of fireworks and an amazing drone light show at the Space Needle. The midnight show caps a night of fun entertainment around Seattle Center that begins with the band Groove Nation in the Seattle Armory (305 Harrison St.; 8pm) and a DJ playing music with projected videos on the International Fountain (10pm). Free. Just a few more feet away, Heart gets the band back together for a rare performance, at Climate Pledge Arena. Tickets. 8pm.
Cold Water Plunge, Jan. 1
Run, jump – and shiver – into the water to celebrate the new year. Some events have fees and/or limited parking. Here are a few options for the 2024 Polar Bear Plunge (if you dare!):
- Des Moines (Des Moines Beach Park)
- Issaquah (Lake Sammamish State Park)
- Renton (Coulon Park)
- Seattle (Mathews Beach Park)
Outdoor Hockey, Jan. 1
Following the baseball All-Star Game last July, the North American sports spotlight will again be placed on Seattle for a special New Year’s Day event. The Vegas Golden Knights and our Kraken – the two newest franchises in the NHL – square off at T-Mobile Park (1250 1st Ave. S.) for the annual outdoor Winter Classic. Tickets. 12pm
Short Film Fest, Jan. 3-14
The Sundance Film Festival Short Film Tour comes to Northwest Film Forum (1515 12th Ave., Seattle) for a special highlights package of selected shorts from the 2023 Sundance festival. The 95-minute program will feature films on fiction, animation and documentary from around the world. Tickets. Various times.
Board Game Convention, Jan. 5-7
Board games are big in the PNW. OrcaCon features board and card games, as well as panel discussions, workshops and merchants in an inclusive environment at the Hilton Bellevue (300 112th Ave. SE). Registration. Various times.
Home and Garden Show, Jan. 5-7
The annual Home & Garden Show is back at the Washington State Fair Events Center (110 9th Ave. SW, Puyallup). Thinking of a home remodel, landscaping project or redecorating the interior? Visit and learn with product demos, panel discussions and hundreds of vendors on all those topics and more. Friday, Saturday, 10am-6pm; Sunday, 10am-5pm.
Martin Luther King Jr. Day Events, Jan. 15
In addition to being a National Day of Service, MLK Day offers an opportunity to celebrate the civil rights leader through a variety of events. They include morning workshops – details to be confirmed – at Garfield High School (400 23rd Ave., Seattle; 8:30am) followed by a march to city hall (12:30pm). There are also tentative plans for a breakfast and community conversation at South Seattle College (6000 16th Ave. SW) on Jan. 12 at 10:30am. Other events can be found here.
Events are subject to change. Please check with venues to confirm times and health-safety recommendations.
In case you missed it….
The month of November on my Living the Dream blog offered a variety of stories.
We started with a look at home financing options for servicemen and women and veterans. The blog also explained the seldom-used option for buyers known as the wraparound mortgage.
And we finished the month with a fun look at a handful of tea purveyors in Seattle. They include the oldest independently owned tea room in America and other great places to sit and sip or browse and buy your favorite loose tea, tea pots and gifts. (Let me know if I missed one of your favorite places!)
Thanks for reading and please enjoy your holiday! We will catch up again in 2024!!
Will