Another ‘Manhattan moment’: Seattle’s new $19,265-a-month apartment

By

Danny Westneat

Seattle Times staff columnist

The latest signpost pointing to our city’s shiny future — or bleak destiny, depending on where you stand — is taking shape in South Lake Union directly across from my office.

I’ve never seen it, though. And based on the cheapskate crowd of reporters and nonprofit types I tend to hang out with, I probably never will.

It’s up in the sky, a $19,000 apartment. I don’t mean per year — the advertised rent is $19,000 per month. Actually $19,265. Though up in air that thin, it’s hard to see why they bothered tacking on the $265.

(Historical asterisk: My first apartment, a Capitol Hill studio in 1985 with a view of the Sound, has now officially become but a rounding error in Seattle’s brutal new math. It rented for $220 per month.)

Nineteen grand could be a record for a Seattle apartment (it’s hard to tell for certain because some penthouse rents are not advertised publicly.)

But regardless, the inflation in luxury living is remarkable. Just three years ago, the most expensive apartment on the market in Seattle was $6,800 a month, for one of the units in the Belltown luxury building Escala. Recently a penthouse on top of One Lincoln Tower in Bellevue was going for $20,000 a month, but at more than 4,000 square feet it’s a third larger than the apartment at the under construction Kiara building.

Says Dean Jones, founder of Seattle’s Realogics Sotheby’s International Realty: “It’s a Manhattan moment, that’s for sure.”

Unit 4009 is a 3,000-square foot penthouse in one of those 41-story towers sprouting like bamboo in the Amazon jungle. From the outside the building has all the style of an ’80s office tower. But inside it promises sky lounges, an “elevated oasis … with meandering paths,” concierge services and Instagram-able views.

“We’re not just renting apartments. We’re building a community,” says the Kiara promotional material.

Jones, who was kind enough to explain to me how high-end rentals work, said there are three likely categories of renters who could be willing to pay nearly a quarter-million dollars a year in rent. One is the wealthy looking for a temporary in-city pad while they are “between houses.” Another could be a tech executive or high-level recruit taking Seattle’s temperature (“maybe they want to try one of our winters first, before committing.”) Three could be a corporation that plans to use the suite as a recruiting tool.

“People who rent at this price want to be limber,” he said. “They don’t want to make a commitment to the market yet, for a variety of reasons. They like the luxury of liquidity.”

This sounds to me less like community and more like the arrival in Seattle of a phenomenon just chronicled with great angst in the July issue of Harper’s Magazine.

 

“The Death of a Once Great City,” is about New York, which is years if not decades ahead of us. But it contains a warning for Seattle about that city’s “urban crisis of affluence.”

It notes two fascinating trends. One is that increasingly it’s money that lives in pricey real estate, not actual people. One-third of the apartments in midtown Manhattan apparently sit empty for at least 10 months of the year because they are used primarily by the superrich as “an investment, a pied-à-terre, a bolt-hole, a strongbox.”

“We are becoming a city of transients,” author Kevin Baker writes.

The second trend is that Manhattan’s real estate is so superheated by investment capital that it is weirdly disconnecting from human reality. The article recounts finding “188 vacant storefronts along Broadway … this on a main commercial avenue in an incredibly wealthy city, in the eighth year of an economic expansion.” The value of the real estate is so stratospheric as an investment that the rent roll no longer matters.

This was the germ of an idea I was trying to get at last year when I coined the term “prosperity bomb,” to describe what has hit Seattle. Those of us who were lucky enough to arrive here decades ago and buy a house have been showered with prosperity. While many who don’t own are being blasted out of town, including scores of small businesses.

“Jane Jacobs’s ‘intricate ballet’ of the streets is being rapidly eradicated by a predatory monoculture,” the Harper’s author depressingly concludes, name-checking the enthusiastic urbanist who wrote “The Death and Life of Great American Cities.”

So here’s the question: Is it possible to square a $19,000 per month rent with “building a community?” Can they coexist? Or is extreme affluence a sort of benign virus that can only hollow out the diverse life of a city.

I don’t know, but I guess the prosperity bomb is more like a neutron device. What’s guaranteed to thrive after it goes off isn’t the people. It’s the real estate.

To read the article on SeattleTimes.com, click here.

Posted on July 16, 2018 at 11:37 am
Mallory Hanley | Category: Uncategorized

Local Market Update – July 2018

The local real estate market looks like it might finally be showing signs of softening, with inventory up and sales down. More sellers have opted to put their homes on the market. Inventory was up 47 percent in King County and price increases were in the single digits. Despite the increase in inventory and slowdown in sales, it’s still a solid seller’s market. Over half the properties purchased in June sold for more than list price.

Eastside

>>>Click image to view full report.

A booming economy offered little price relief for buyers looking on the Eastside. In a recent study of economic strength by state, Washington ranked number one in the country. An additional report targeting cities ranks the Seattle-Bellevue-Tacoma market as the nation’s fourth strongest economy.  The median price of a single-family home on the Eastside rose 10 percent over a year ago to $977,759 setting another record. There is some good news for buyers. Inventory rose to its highest level in three years, with the number of homes for sale increasing 46 percent from the same time last year.

King County

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The number of homes on the market in King County soared 47 percent from a year ago, the biggest increase since the housing bubble burst. Despite the increase, there is just over one month of available inventory, far short of the four to six months that is considered a balanced market.  The median price of a single-family home increased 9 percent over last June to $715,000. That’s down 2 percent from the $726,275 median in May. Home prices haven’t dropped from May to June in King County since the last recession.

Seattle

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Seattle trails only Bay Area cities when it comes to greatest profits for home sellers.  That may help explain the surge in inventory in June. For example, the number of homes for sale in the popular Ballard/Green Lake area doubled from a year ago. Even though buyers are finally getting more choices, demand still exceeds supply. Homes sell faster in Seattle than in any other U.S. real estate market.  That demand propelled the median price of a single-family home to $812,500; up 8 percent over last June and down from the record $830,000 set in May.

Snohomish County

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The largest jump in home prices in the region came in Snohomish County. While higher-priced markets in King County are seeing increases slowing slightly, the median price of a single-family home here jumped 14 percent to $511,500, a new high for the county.  Buyers willing to “keep driving until they can afford it” are finding Snohomish County an appealing destination.

Posted on July 13, 2018 at 10:23 am
Mallory Hanley | Category: Uncategorized

Home Inventory Jumps, Demand Stays Strong. 

 

New news: Inventory is finally up.

New listings and total home inventory took a big leap recently. In King County, more people put their homes on the market in May than any May in the past 10 years. And the total number of homes for sale increased by 40 percent from a year ago. Why the big leap? Home prices have risen so sharply that sellers are finally jumping into the market. That’s good news for buyers, who have more choices than they’ve had in years.

Old news: There still aren’t enough homes to meet demand.

While King County now has about a month of available inventory, four to six months of inventory is considered a balanced market. Despite the increase in listings, it’s still a seller’s market.

Posted on June 29, 2018 at 11:59 am
Mallory Hanley | Category: Uncategorized

Why High Home Prices And Rising Mortgage Rates Aren’t Stopping Sales

 

 

Mortgage rates hit their highest point in seven years last month, and home prices have jumped 6.5% since mid-2017. On the West Coast, many cities are seeing double-digit gains in home appreciation. But somehow, home buying isn’t slowing down.

In fact, according to the most recent Ellie Mae Origination Insight Report, purchase loans were at their highest share since 2014 in April, and builder confidence is strong, with most feeling good about new home sales for the next six months.

So what gives? With rates high, prices rising and affordability seemingly on the downslope, what’s keeping today’s home buyers in the game? According to experts, there are lots of factors at work.

 

Buyers Want to Lock in Rates … Before They Rise Again

Rising mortgage rates worry would-be homebuyers, spurring them to lock in the current ones—even though they’re less than ideal.

According to Mark Fleming, chief economist at First American, “The fact that rates are rising actually causes demand—particularly first-time homebuyer demand—as they try to crowd into the market and lock in a mortgage rate and price before both go even higher.”

Increasing rates also push uncertain buyers into the market, ones who may have been on the fence about buying in the first place.

“As rates initially move up, there is an impetus for people that are thinking about buying a home to get off of the sidelines,” said Daniel Beckerman, founder of Beckerman Institutional. “If people anticipate higher interest rates in the future, there is an incentive to buy a property and lock in today’s interest rate.”

Apparently, these proactive moves are founded.

According to the Housing and Mortgage Market Review from Arch Mortgage Insurance, interest rates are only expected to increase as the year goes on. In fact, projected monthly payments to buy the same-priced home could jump 10 to 15% over the next year.

As Arch’s global chief economist Ralph DeFranco bluntly puts it, “Interest rates may not be this low again for decades.”

 

It’s the American Dreamand Renting’s Not Much Better

At the end of the day, owning a home is still the American Dream, and some people just want to buy a house. As Gina Ko, agent at Triplemint Real Estate explains, “Overall, people always want to buy a home to start a family, build a legacy and move forward in their life.”

Take Tylor Tourville as a prime example. He and his wife, Chelsey, recently braved the hot Boston market for five months to land their dream home—and the process wasn’t without its challenges.

“My wife and I got married in 2016 and have rented for the last two years,” Tourville said. “We decided we were ready to take the next step on our journey and pursue homeownership.”

Tourville said he and Chelsey “fully acknowledged” that they were home hunting at a difficult time. “We decided from the start that we weren’t going to let fear of market timing dictate our lives and deter us from moving our lives forward and accomplishing our goals,” he said.

Though chasing the American Dream was one factor in the equation, Tourville said he and his wife also saw buying as an opportunity to get out of the heated rent race.

“Buying a house is expensive, there’s no other way around it,” he said. “However, rent prices have been relentlessly rising year after year. Plus, we saw the added benefit of putting our money into something tangible, rather than seeing rent money disappear into the abyss of some landlord’s bank account each month.”

According to the recent Rental Affordability Report from ATTOM Data Solutions, renting a three-bedroom property is more expensive than buying a median-priced home in 54% of major markets. The average three-bedroom costs renters 38.8% of their annual income.

“Even if the percent of income that goes to payments on a home you own is on par with that number, it’s still money you’re putting toward building equity in the home, rather than going into someone else’s pocket,” said Sean Black, cofounder at Knock.com and founding team member at Trulia. “And as a homeowner, you benefit come tax time when you make some of that money back. As a renter, once that money is gone, it’s gone forever.”

 

Rates Actually Aren’t That Highand Buying Power’s Still Strong

Though nominal rates and home prices might be higher than in past years, in the grand scheme of things, experts agree they’re not as bad as it seems on paper.

“I would say that there is a certain degree of sensationalism when you’re looking at and discussing these numbers, and how certain cities like those on the West Coast inflate overall national numbers,” Black said. “Everything is relative—yes, affordability is low compared to where it was following ’08, but that does not mean that every home in every market is unaffordable.”

Thanks to improving incomes, employment and the economy, housing is actually still affordable in much of the U.S. In fact, according to the recent Real House Price Index from First American, consumer-home buying power is up 14.3% since 2011, and “real” home prices—which are adjusted for changes in incomes and rates—are 32.5% lower than their housing boom peak.

If they did reach that peak, Fleming says people would still continue buying homes.

“Even when both mortgage rates and real, consumer house-buying power-adjusted house prices were significantly higher than they are today, people still bought homes,” he said. “Our home purchase decisions are often less financially motivated than personal preference driven.”

 

Home Buying Has Other Benefits, Too

No matter where rates or prices go, when a fixed-rate mortgage is involved, homeownership always offers more consistency than renting—and that’s not going to change. Even Tourville, who’s closing on his Boston home later this month, said that reliability was a big reason he and his wife decided to buy in today’s hot market.

“We almost saw buying as a way to lock in our monthly housing payment, even if it would be at a slight premium compared to our current rent,” he said.

Michael Micheletti, director of corporate communications at Unison Home Ownership Investors, said this consistency is one of the biggest benefits homeownership can offer today’s consumers—especially amidst rising costs elsewhere.

“To me, the biggest benefit is the ability to control housing costs—a major component in the household budget—giving you an ability to take care of rising healthcare costs, saving for a kid’s education, transportation, food and other quality of life issues that the average American faces,” Micheletti said.

According to Laura Conry, executive vice president of consumer originations at FirstBank, homeownership also cuts out all the relocation costs that renters deal with on a regular basis.

“Not only can owning be more affordable, but it allows people to control their housing costs and ensure they are not forced to relocate as opposed to choosing to relocate,” she said. “Rising rent costs cause tenants to move often, which can be difficult, costly, and causes instability for families.”

 

Millennials are Finally Buying in

According to experts, Millennials are behind much of today’s price-resistant housing demand as they finally reach the point where they can both afford a home and desire one.

“The majority of first-time buyers/Millennials have been waiting to enter the marketplace to purchase a home,” Micheletti said. “They have saved enough over the past few years to qualify, and when they do the math on renting versus buying, in most cases, it makes sense for them to buy now.”

Data from the National Association of Realtors shows that Millennials currently account for 36% of all home purchases. And though student loans have long been holding this cohort back from buying, Brendan McKay, owner of McKay Mortgage Company, said improving jobs and income have helped alleviate some of the financial pressure.

“The job market has improved, “McKay said. “There was a dearth of young people buying homes over the last five years. They were buried in student loans, and their income allowed for little in the way of savings. This is less the case now than it was then. Those same people are a little older, have better jobs, and feel stable enough to take on a mortgage payment in addition to their student loans.”

And at 27, Tourville and his wife are two of those Millennials. He says he and Chelsey budgeted, knew what they could pay, and stuck to it. The rest is history.

“We had to be firm about what we were willing to pay, and not compromise,” Tourville said. “In a market where bidding wars are the norm and waiving inspection contingencies is becoming dangerously common, sticking to a number and having an ‘If it’s meant to be, it will be’ mentality helped us not get too high or too low when making offers on houses we liked.”

As Tourville put it, “It takes time, patience, and thick skin. But that doesn’t mean it’s impossible.”

To view article on Forbes.com, click here.

Posted on June 20, 2018 at 11:14 am
Mallory Hanley | Category: Uncategorized

Local Market Update – June 2018

Last month brought some long-awaited, positive news for buyers with May posting the most new listings in over a decade. Despite the uptick in inventory, most homes are selling in less than a month. Prices haven’t been impacted either, with the majority of the region continuing to experience double-digit home price increases.

Eastside

>>>Click image to view full report.

 

The median home price on the Eastside hit an all-time high of $960, 000 in May; a 10 percent gain over the same time last year. While there were a third more homes for sale in May than a year ago, the area still had only about a month of available inventory. Three to six months is considered a balanced market. Redmond, a city with a population of 64,000, currently has only 51 single-family homes on the market.

King County

>>>Click image to view full report.

 

First the good news: Those looking to buy a home in King County in May had almost 1,000 more homes to choose from compared to the previous month. The bad news: That boost in inventory did little to moderate home prices. The median price for a single-family home jumped 15 percent to $726,275, up slightly from the record high set in April.

Seattle

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A strong economy and desirable lifestyle have kept Seattle a leading destination for job-seekers. The ever-increasing demand for housing has sapped supply and sent prices soaring. For 19 months Seattle has led the nation in rising home prices.  May saw the city set yet another record, with the median home price jumping 14 percent to $830,000.

Snohomish County

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Soaring prices in King County combined with rising interest rates make Snohomish County an affordable alternative for those willing to extend their commute time.  The typical home cost $500,000 in May, an increase of 11 percent over the previous year, and down very slightly from last month.

Posted on June 15, 2018 at 10:15 am
Mallory Hanley | Category: Uncategorized

Single-family home rents leveling off — and that could be good for buyers, too

 

  Seattle Times real estate reporter

 

Houses with yards and driveways aren’t just for homeownership: You might be surprised to know that 1 in 6 single-family houses across the Seattle metro area is actually rented out.

Single-family home rentals are especially important for families who can’t squeeze into a 1-bedroom apartment but don’t have the money to buy a house. They also are an option for groups of young singles to save on rent by splitting a bigger space.

Now there is finally good news for them after years of steep rent hikes – and there’s a chance that could ultimately help lead to relief in the homebuying market, as well.

Rents in local single-family homes rose a paltry 0.4 percent in February from a year ago, according to a new report from the real-estate data firm CoreLogic.

 

 

 

That’s by far the smallest growth since the company began tracking the data in 2011, and is way down from the average single-family rent hike of 5.8 percent this decade.

And the shift has been sudden: Last year, rents rose about 4 percent. Just two years ago, rents were soaring as much as 9 percent annually.

“One, two, three years ago, we would literally have people move out and we’d be there to do a quick cleaning, and change the locks, and have someone literally move in a couple hours later. We didn’t lose a day of rent,” said Chris Benis, who rents out a dozen houses on the Eastside. Some tenants would even rent houses sight unseen.

But in the last couple months, two of his houses became vacant and drew just one tenant application each, and it took about a month to rent out each house. “We didn’t have people banging down the door to rent” them, Benis said.

Of course, that doesn’t mean you can suddenly rent a house on the cheap. Across the entire metro area – spanning from Tacoma to Everett – the average house now rents for $2,730 a month, according to CoreLogic. Compare that with $3,590 in Los Angeles – but $2,020 in Miami, $1,950 in Chicago, and $1,770 in Austin.

Why is this happening?

At first blush, this new trend of slow rent growth makes sense – it lines up with what we’ve been seeing in the rest of the rental market here. Rents at Seattle-area apartment buildings have also cooled way down recently, and are actually below their highs reached last summer.

But dig deeper and it’s a bit confusing: Experts have pinned the apartment-rent slowdown on the record number of new apartments flooding the market. The supply of single-family houses for rent, on the other hand, hasn’t changed at all in recent years, and yet house rents have eased, anyway.

Julie Purchase, principal of Avenue One, which manages about 600 single-family home rentals in Greater Seattle, said the huge jump in new apartments has had a chilling effect on the home rental market, too. While the vast majority of the new apartments opening are studios and 1-bedrooms – not exactly a good alternative for families renting a house – roommates who split a house now have so many more rental options to choose from.

“I think some people, instead of renting a single-family home, maybe they’re renting a luxury condo or apartment,” Purchase said. “It affects the overall inventory.”

The data back this up. Molly Boesel, principal economist for CoreLogic, said the number of available homes for rent on the local market has jumped about 20 percent in the last year, even though the total number of houses here hasn’t really increased.

Purchase said in the last few years her firm could automatically raise rents about 10 percent when a new tenant came in – now they’re cutting rents 5 to 10 percent just to get enough applicants, and even still, it’s taking about two weeks longer to rent the typical house than it used to.

“I expect it to be tough (to raise rents) as long as they continue to build 11,000 (apartment) units a year here,” Purchase said. Based on construction underway now, that brisk pace of development is set to continue at least through this year, and likely next.

Impact on homebuying market

One wild card to watch out for is whether landlords cash out and sell their houses now to take advantage of the for-sale market, which continues to be as hot as ever – particularly now that home rentals aren’t offering the same returns.

Purchase said last spring about 5 to 10 of her clients sold their rental houses, while this spring it’s tripled to about 25 to 30.

A sell-off of rental homes could help ease the historic shortage of houses for sale here, which has helped drive up prices to record highs.

The region, and the rest of the country, saw a huge spike in homes being taken off the for-sale market and converted to rentals in the aftermath of the recession, when investor companies began buying homes for cheap as the housing market crashed and regular buyers couldn’t get mortgages. At one point in the frenzy, Wall Street-backed Invitation Homes was buying 10 homes a day in the Seattle area, and wound up with more than 1,500 homes here in total.

From 2000 to 2008, about 13 to 14 percent of all single-family homes in the area were rented out, according to a Zillow analysisof Census data. Since 2009, however, about 16 to 17 percent of houses here have been rented out.

The difference looks small but adds up: About 30,000 single-family homes across the region were converted from for-sale to rentals during the housing bust. In all, about 145,000 houses in the Seattle metro area are now rented out.

There are only about 4,300 houses on the market right now in the metro area, so even if a fraction of those rentals went up for sale now, it could make a difference.

To read full article in Seattle Times, click here.

Posted on June 7, 2018 at 10:32 am
Mallory Hanley | Category: Uncategorized

TWO SEATTLE COMPANIES HAVE BUILT THE SMART HOME OF THE FUTURE

 

 CHELSEA LIN | FROM THE PRINT EDITION | MAY 2018

 

Picture this. After a long day in the office, you park your car in the garage and before you enter your home, you click an “I’m home” button from an app on your smartphone, the doors unlock, and all the lights turn on. You enter your house and it’s freezing inside. Why not change the temperature through your smartphone app?

Homes like this do exist and you can find one in Eastlake built by Lynnwood-based tech company Kirio and Seattle-based sustainable design + building company, BuildSound. Many look not just for a contemporary design when home shopping today, but also what a home offers technology wise and how it can care for its homeowners.

This home is the first project for both companies allowing users to coordinate between various smart home sources such as Nest and Sonos. Kirio has created a “brain-like” app that allows the connection between sources as well as further integrate more smart technology. The goal of this project is to help create the best possible living environment for homeowners. The plan is to create an environment that can manage itself. According to Seattle Magazine, “there’s a long list of gadgets at play such as automated blinds, lights, sound system, surveillance camera – this management system is really the crux of what makes the smart home so unique. By allowing two ductless heating/cooling systems to talk with the exhaust fan and Next thermometer, the house is able to essentially heat, cool, and control humidity itself.” The system also includes sensors that send signals to turn systems on and off and overtime, these systems will log resident’s patterns and send suggested automations.

To read the full Seattle Magazine article, click here.

 

Posted on June 1, 2018 at 10:52 am
Mallory Hanley | Category: Uncategorized

Eastside Market Review

Eastside Market Review – First Quarter 2018

The Eastside Market Review is now available for the first quarter of 2018.

Read the full report online by clicking the image below.

Posted on May 25, 2018 at 12:22 pm
Mallory Hanley | Category: Uncategorized

114,000 more people: Seattle now decade’s fastest-growing big city in all of U.S.

Seattle has topped the list again and has now surpassed Austin, Texas! It is the nation’s fastest-growing big city this decade. According to the Seattle Times, “the city’s population hit an estimated 725,000, gaining 17,500 people from July 1st, 2016 to July 1st, 2017. Our growth rate in that period – 2.5 percent – was second only to Atlanta among the 50 largest U.S. cities.”

 

Since 2010, Seattle has grown 18.7 percent in population gains. Interesting fact! The Seattle Times states that “Seattle’s population increased by 114,000 in the first seven years of this decade – that’s around the same amount it grew in the previous 30 years, back to 1980.” We are not surprised to see these numbers with the tech industry still booming bringing more and more people into this city and surrounding areas. In fact, Seattle added more people in 2017 than all the suburbs in King County combined.

 

Another interesting trend from the census data was that more and more larger U.S. cities are shrinking in population size. Not in Washington State. Auburn and Redmond tied at 3.1 percent as the “fastest-growing cities in Washington State.” Bellevue landed at 2.3 percent.

 

 

 

 

To read the full article from the Seattle Times, click here.

Posted on May 25, 2018 at 10:59 am
Mallory Hanley | Category: Uncategorized

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