DECEMBER HOUSING UPDATE

The chill in the air may not be coming from an Arctic blast. Some might argue the cold is emanating from the near-frigid Q4 real estate market, knocking the bloom straight off the housing-market rose in our region.

This year’s “cold down” is stark, with 36% fewer new listings and about 26% fewer homes under contract (Pendings) for all King County home types combined as well as single-family structures alone – and that’s simply from October to November. Pending sales are a forward indicator of existing home sales (leading by 1-2 months), meaning December and January figures will likely be bleak.

The number of active King County listings, as of Dec. 1, was about 17% lower than Nov. 1. Active listings are sharply higher from last year, including a ridiculous 688% increase among Eastside single-family homes and more than 200% higher countywide.

Buyers are finally receiving a break on prices, falling sharply from October for single-family homes and among all home types (single-family, townhome and condo combined). Prices stand at $750K across King County, down 7.5% in a month, down 3.9% to $1.152M on the Eastside and 3% lower to $824.9K in Seattle. Single-family prices in King fell a remarkable 8.4% in a month to $827K, while declining 2.5% on the Eastside ($1.316M) and 4.7% in Seattle ($905K).

Eastside prices are now running in negative territory year-on-year (YoY), including down 7.8% for single-family homes, astounding after YoY prices were up 35% in the 12 months ending November 2021. A wide swath – from Kirkland, Redmond and Woodinville north to the county line – is seeing YoY price drops of around 14% for single-family homes. 

This is far beyond a “seasonal norm” and reflects a market correction following two-plus years of pandemic-driven price appreciation. The market had to slow down at some point.

North King – led by Shoreline – bucked the downward trend by seeing median prices rise 8.4% in one month for all home types to $799K, while single-family prices rose 4.5% since October to $817.5K. Prices are up 5.5% YoY for North King homes.

“There is definitely a belief that home prices will go down,” noted Ali Wolf, chief economist for real estate consultancy Zonda. “Consumers are saying, ‘Why would I buy now if prices are lower in two months’ time or three months’ time?’” she said in November.

In addition to lower prices, a glimmer of hope is that inflation numbers will eventually decline and help lower interest rates. Rates for inflation and interest tend to move in parallel. In fact, the number of mortgage applications rose briefly as interest rates fell following October’s slowdown of inflation growth. (Does this signal a peak in mortgage rates or a temporary blip? Read my real estate forecast blog post after you finish the newsletter to learn more!)

Meantime, condo activity followed a similar track as other home types in King. The county saw a 33% drop in new listings and a 15% decline in active homes for sale since October. Pending (14%) and closed sales (24%) also fell sharply for the month. Prices declined 5.4% in King ($468K), 6.3% on the Eastside ($569.5K) and 8% in Seattle ($480.5K) in the past 30 days. The Seattle luxury condo market is taking it on the chin, with prices in downtown/Belltown down 19% for the month and 24% YoY ($515K) on 7.7 months of inventory.

Inventories across the county for all home types now stand at 2.2 months, up from 2.1 in October. Single-family inventory is unchanged from October at 2.1 months. Exclusive neighborhoods such as Medina and Mercer Island have roughly 4 months of single-family inventory.

The four-county region of King, Snohomish, Pierce and Kitsap is on a pace to be the slowest year for total home sales since 2011.

In addition to King County’s sharp 7.5% median price month-to-month decline on all home types, to $750,000, Snohomish County saw a 3.2% drop ($677,475). Pierce experienced a modest 1.4% price drop for the month ($517,500) while Kitsap lost 1.0% ($505,471). Single-family home prices in King stumbled 8.4% in the month ($827,000), while Snohomish prices fell 4.1% ($700,000), Pierce lost 1.9% ($525,000) and Kitsap 1.5% ($505,471). Year-to-year, single-family prices were higher across our region but little changed, up 0.9% in King, 0.7% in Snohomish, 1.9% in Pierce and 1.1% in Kitsap.

CONDO NEWS

The next Seattle condo unveiling is one step closer to reality. The city recently issued an occupancy certificate for Infinity Shore Club, the 37-unit, luxury waterfront residences on Alki Point in West Seattle. Residents can expect to begin moving in by January.

A little more than a third of inventory is under contract. To help drive sales, developer Vibrant Cities is offering prospective buyers a $75K credit towards custom interiors, interest rate discounts or on closing costs on a selection of homes. Residences range from 1156 to 2469 sq. ft. and are priced from the lower $1Ms to $5M+.

“This vision has been more than a quarter century in the making to assemble the land, design, entitle and construct this community,” said James Wong, Vibrant CEO. “And it may be just as long before we see anything quite like it again.”

Construction started in January 2020, just before the pandemic introduced a slew of setbacks for local construction projects – pandemic restrictions, supply-chain disruptions and economic headwinds for buyers. It’s now time for Infinity Shore Club to make its debut.

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To help sell off some of its remaining unsold inventory, Nexus is offering a rent-to-own promotion in the 41-story Denny Triangle high-rise. The promotion allows future buyers to “test drive” the condo community with a 6-month rental and the option to purchase thereafter. 

The promotion applies to a limited number of homes in the 389-unit building. Rent and purchase price are determined when a customer visits the sales office, but the beauty of the offer is that the value of the rent paid is put towards the purchase. Customers wishing to pursue this offer must pre-qualify for their mortgage before move-in.

This follows in the footsteps of Gridiron, the Pioneer Square condo that announced a similar offer in the summer. 

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Taking a different approach, KODA is offering a chance to purchase a new home in the Japantown section of Seattle’s International District at a discount – a mortgage discount, that is. The 201-unit KODA is offering a buy-down program that provides buyers with a closing cost credit to be applied to lower their interest rate by 2% for the first year of ownership and by 1% for the second.

Also known as a 2-1-buy-down mortgage, buyers must qualify for the promotion and agree to make a minimum 20% down payment. Mortgage rates vary depending on the buyers’ financial situation. The rate would climb to the full amount in the third year of the 30-year term.

Both promotions run through this year…so hurry! Remember to always have a real estate broker represent you during the visit and signing.

LUXURY LIVING

Hunt Point is on the map again this month with a stratospherically priced estate. It’s a 5-bedroom, 7.5-bath, 7750 sq. ft., 2-story home (with basement) with just-shy 100 ft. of waterfront on 1.1 acres. This 1989-built abode is spectacular: the contemporary open plan includes a massive kitchen and picture-perfect sunset views from three levels. Plus, don’t miss the outdoor pool. List price: $43M ($5548/sq. ft.) A neighboring home that came on the market in April is still for sale at a record-setting $85M.

One peninsula east in Yarrow Point, a modern mansion is for sale – 3-beds, 2.75-baths, 3700 sq. ft. on one-third acres. The 2-story home (with basement) comes with a matching-white exterior, 860 sq. ft., 1-bed Detached Accessory Dwelling Unit in the back. The main residence features light and bright interiors, tall ceilings, large rooms and walls of windows with westerly views. The owners are selling after 25 years. List: $5,695,000 ($1249/sq. ft.) 

Something a little more affordable can be found on Mercer Island – a 3-bed, 3-bath, 3945 sq. ft., 2-story (with basement) and 22 ft. of waterfront on one-third acre. The original home was constructed in 1920, according to county records, with renovations completed in 1982. The property comes with a 610 sq. ft., 1-bed Accessory Dwelling Unit (ADU) above a detached garage. The residences sit on a bluff overlooking Lake Washington toward Seward Park. Parts of the main residence may need an update, hence the buyer-favorable price: $4.1M ($900/sq. ft.).

Feeling European? Check out this refreshed estate in Northwest Bellevue. It includes 5-beds, 4.75-baths within 5390 sq. ft. of a tastefully designed home on one-third acre. The place exudes Continental taste, from French oak floors and Carrara marble to European appliances – even a steam laundry. Outdoor privacy is lacking, however. It also includes a 1-bed basement ADU. The property was purchased at the start of the year for $3.44M and is now listed at $5,999,900 ($1113/sq. ft.).

We cap this year’s luxury listings with a stunner in Seattle. It’s a 5-bed, 4-bath, 3990 sq. ft., 2-story (with basement), wedged into about one-eighth of an acre in the View Ridge section of the city (just west of Sand Point). The owner purchased in 2020 and put a contemporary thumbprint on this brand-new home – spacious rooms, oak cabinets, high-end appliances and a matching basement ADU. Plus, there are three outdoor spaces to enjoy an array of views, from mountains to water. List: $3.6M ($902/sq. ft.).