COVID-19 Impact on the Housing Market – You Might Be Surprised
Walkability to Amenities May Command a Higher Home Price
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.
Affordable Housing in Bellevue?
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
Eastside Condos – What Can You Expect in 2020?
Today’s Seattle Times and Puget Sound Business Journal reported that the 2020 real estate marketplace was likely to open fast paced with low inventory levels and high buyer demand following a robust December of residential sales. Without a significant increase in available housing inventory it could be a “red hot market” this year with a return to multiple offers and rising prices.
While most of 2019 was relatively flat for home sales and property appreciation in King County, the last quarter of the year ended up being the most active in recent years. The same was true for Snohomish, Pierce and Kitsap Counties.
Downtown Bellevue’s condo market was no different – flat throughout most of the year with a flurry of activity in the last quarter. There were 258 downtown condo sales in 2019 reflecting a median sales price of $729,500, less than a 1% increase over the prior year. More notable is that 46 of those 258 condos sold during the last quarter and the median sales price for the last 90 days of the year was $869,500. There are currently only 16 condos listed for sale in the Bellevue downtown/98004 zip code.
More jobs are coming to downtown Bellevue this year and continuing for the next few years as companies plan to move to or expand their footprint in Bellevue. Employees, anticipating a move to the Eastside, are already searching for homes close to workplaces and transit. Location, location, location is still true in real estate, but of growing importance are transit options and access to those workplaces, schools, amenities, services, etc. Communities in and near downtown will be in high demand as buyers more on available transit options (light rail, bus, ride services, bike, etc.) to reduce commute time and regain quality of life. Location will always favorably impact value, but the word for this decade may be “transit” when it comes to property values and market desirability.
Eastside Condo Sales Activity
As was true across the Puget Sound region, the inventory of available houses and condos for sale on the Eastside dropped dramatically in November.
- the median sales price was $900,000, up 2% over last year
- 20% of those homes sold above list price
- 45% of the homes sold in 15 days or less
- the Eastside currently has only 1.3 months of available inventory
- current inventory levels favor sellers
- continuing low interest rates favor buyers
Most of the Eastside condo sales activity was in downtown Bellevue and downtown Kirkland.
- $884,000 Downtown Bellevue median condo sales price in November
- there are currently only 20 condos for sale in downtown Bellevue; 35 in all Bellevue zip codes
- $617,500 Downtown Kirkland median condo sales price in November
- there are currently only 14 condos for sale in downtown Kirkland; 46 in all Kirkland zip codes
It’s a great time to buy a home. Low interest rates (under 4%) make it an ideal and affordable time to purchase a home. There are great loan program options for qualified buyers offering as little as 3% down for conventional or FHA financing.
It’s a great time to sell. With little inventory for buyers to choose from, January will be an ideal time for homeowners to put their homes on the market and stay ahead of the competitive spring market.