This week Matthew Gardner, Windermere’s Chief Economist, shares his thoughts on the latest US home sales data.
Single family and multi family home values continue to rise while available inventory levels continue to decline. What’s the news for condos? Condo prices are trending higher nationwide, up 10% year-over-year. It’s difficult to know how long this trend can be sustained as we close 2020. What could impact values next year? We may hit an affordability issue, which could push some buyers out of the market, and increasing inventory levels may create more selection for buyers but more competition for sellers.
I specialize in Bellevue’s condo and townhome communities. If you have questions about the market or what’s been happening in your community, call, text or email.
Happy Thanksgiving. While this year may be very different from years past, if you have an opportunity to safely share the holiday with family, enjoy the day. Be safe and stay healthy.
This week Matthew Gardner, Chief Economist with Windermere Real Estate, provides updated news about the mortgage forbearance program. The program has provided a safety net for homeowners but isn’t likely to have any long term negative economic impact.
The National Association of Realtors® recently published an article with data from a Redfin study addressing the impact walkability to neighborhood amenities has on home values. Homes within walking distance of workplaces, shopping, parks, schools, etc. rank high on buyer wish lists but will command higher prices.
Homes with in-city locations are often condominiums (stack flats) or attached townhomes. Buyers willing to consider moving to close-in but less walkable, more car dependent neighborhoods, may find more affordable options as well as more single family house choices.
West coast urban markets have seen the premium walkability has on home values. In 2019 the premium for walkability in the Seattle marketplace increased the average price by 15.7% or $86,331. In San Diego urban/walkable homes averaged 10.5% more or $60,225 and in Los Angeles the premium for walkability was 5.8% or $34,583.
You might be surprised to find there are many affordable housing options close to downtown Bellevue. Apartments in the city are expensive and it’s likely the rent will increase each time the lease renews. The average monthly rent for a 2 bedroom apartment in downtown Bellevue is $3,250 or more per month (plus utilities). That’s a lot of money for housing with no return on investment.
Last year more than 100 one and two bedroom condos in or near downtown Bellevue that sold with median sales prices* under $475,000 (98004 & 98005 zip codes). Some of these homes were in communities walk-able to downtown, others were less than a 10 minute drive to Bellevue’s workplaces, shopping, dining, arts and entertainment events, parks and sought after Bellevue schools.
With a budget of $550,000, a lot of money but considered affordable in the Eastside real estate marketplace, if you were buying a condo what could you expect to pay for your monthly housing expense?
- A 2 bedroom condo priced at $550,000 with a 5% down payment ($27,500) would have a monthly mortgage expense (PITI) of about $2,850/month
- There are great loan programs available with 3%, 5% and 10% down, but if the down payment is less than 20% the lender will require PMI which will could add $300-$400/month to your mortgage payment. (Consult your lender for more information.)
- Budget $395-$495/month for homeowner’s dues, but that will include the water/sewer utility, garbage/recycle service, master insurance policy and sometimes even basic cable.
With a 5% down payment on a $550,000 purchase the monthly PITI + PMI would be approximately $3,240 – about the same as renting a 2 bedroom apartment downtown, except you would get the benefit of a tax deduction for some of the closing costs and the deduction for mortgage interest and real estate taxes every year.
Before you renew your lease, talk with your lender and Realtor®. This might be the right time to purchase a home and avoid the next rent increase. You would own your home, shelter income and start building equity and wealth. You may even reduce your commute.
* median sales price – half the homes sold for more, half sold for less
Today’s Seattle Times (link to the article below) provided a review of the region’s 2019 real estate market comparing sales activity and property values to the prior year. While prices in the county were flat throughout the year, the last quarter of 2019 bucked that trend with inventory selling quickly and multiple offers more common.
There are currently only 26 condominiums listed for sale in all of Bellevue. Since January 1st, 11 new condos were listed for sale – all have sales pending and many received multiple offers. What’s driving the spring market?
Low mortgage interest rates. Fannie Mae conforming loan limits increased to $741,750 in King County. (Jumbo loans will have slightly higher interest rates.) Conventional and FHA loan programs offer low down payment programs (3%, 5%, 10%) for qualified buyers, making it easier to purchase a first or move-up home.
Amazon is scheduled to start moving employees into the former Expedia office tower in downtown Bellevue this summer. Amazon has also signed leases for several office towers currently under construction that will be completed in the next 9-24 months. Employees who know their jobs will move from Seattle to Bellevue are already searching for homes in Bellevue.
Buyers want shorter commutes, and they’re willing to make compromises for less car time and more personal/family time. There are dozens of condo communities within a 15 minute or less commute to Bellevue’s central business district as well as Kirkland and Redmond workplaces. Those communities are in high demand.
The “spring” market is off to an early and active start. The next few weeks should set the pace and reveal what buyers and sellers can expect in the coming months.