Region’s home prices quickly returning to pre-crisis highs
In many submarkets of King and Snohomish counties, average prices are already at or near the peaks hit before the Great Recession. And in some areas, prices last quarter were up 20 percent or more compared with a year earlier.
Seattle Times business reporter
Home prices in many parts of King and Snohomish counties are returning to the peak levels they hit seven years ago before their historic plunge.
This could be the year the housing market finally regains those heights if frothy sales continue:
• In the first six months of the year, the median sale price of single-family homes in King County was $430,000, about 5 percent shy of the peak set in 2007. Median means half sold for more, half for less.
• Half of the county’s 30 submarkets have either surpassed their previous price peaks or climbed to within 5 percent of them, according to a Seattle Times analysis of home-sales statistics from the Northwest Multiple Listing Service (MLS).
• Across the county, 14 submarkets saw average annual home-price growth accelerate in the second quarter, with affluent places like Bellevue, Mercer Island and Seattle’s Queen Anne and Magnolia neighborhoods posting the highest annual gains, between 19 and 34 percent.
• Snohomish County prices are rising, too, by an average 10 percent annually, with a couple of submarkets up more than 17 percent.
As more people move here for the lifestyle and jobs, prices in the Seattle area are soaring because of limits in housing supply and geography: an urban-growth boundary on its east side and water on its west.
“The supply of buildable land in the Seattle market is very, very constrained,” said Ken Perlman, senior vice president at California-based John Burns Real Estate Consulting. “Add the fact that we have relatively low interest rates that don’t appear to be moving upward anytime soon, and that’s a recipe for home-price appreciation.”
While prices for single-family homes in King County are close to recovering the ground they lost in the recession, prices for condominiums on the whole aren’t — except in downtown Seattle and Kirkland.
There, the thousands of new employees joining big tech firms such as Amazon.com and Facebook in Seattle and Google in Kirkland are finding limited choices for housing. Vacancy rates in urban apartments are low. The average rent in King and Snohomish counties was $1,284 in the second quarter, up almost 8 percent annually.
More renters are searching for homes to buy, but the inventory of homes for sale is still relatively tight, pushing prices higher.
In the second quarter, the average price of King County single-family homes sold was $545,886, 10 percent higher than a year ago.
As with any average, the appreciation varied dramatically across the county. (The Multiple Listing Service does not publish submarket statistics on a quarterly basis, so The Times calculated these quarterly averages from monthly statistics.)
Leading all submarkets in annual gains were the county’s most expensive areas: The average prices of homes sold in Mercer Island and Bellevue west of Interstate 405 — an area that includes Medina, Clyde Hill and Hunts Point — were up 28 percent and 34 percent, respectively.
Right behind with 19 percent annual gains were Bellevue east of I-405 and Seattle’s Queen Anne-Magnolia area.
Some MLS areas with the lowest annual appreciation — less than 3 percent — were Lake Forest Park-Kenmore, Central Seattle, North Seattle, West Seattle, south Renton and Black Diamond-Maple Valley.
While the number of homes sold during the quarter was lower than last year, places where homes are relatively affordable and close to transit saw big jumps in sales activity — Shoreline, Beacon Hill and West Seattle.
The volume of home sales in Snohomish County is down over the year more than in King County. Prices gained, however, with the biggest increases in east and southeast submarkets: Second-quarter home sales posted an average price of $329,586 and $467,410, respectively, up more than 17 percent annually.
The most affordable area in Snohomish County, the northwest submarket, saw 7 percent appreciation, with the average price rising to $274,530.
Five King County submarkets broke through the peak set during the previous housing boom, based on the median price of homes sold in the first half of 2014:
• Queen Anne-Magnolia: The popular Seattle area first set a new peak in the first quarter of this year and broke it again in the second quarter, with a median price of $715,000.
• Central Seattle: This area, which the MLS defines as spanning from Capitol Hill to Madrona and Eastlake to Interstate 90, had a median price of $654,500. In 2007, the median price was just under $590,000.
• Ballard/Green Lake/Greenwood: The median price was $491,000 in this area, which the MLS defines as everything from the Ship Canal north to the city limits that’s west of Interstate 5. In 2007, the median price was $480,000.
• Mercer Island: The median price was $1.13 million, up 22 percent from the same period a year ago. In 2007, the median price was $1.08 million.
• Bellevue west of I-405: Homes sold in King County’s most expensive submarket in the first half of 2014 had a median price of almost $1.44 million. In 2007, the median price was $1.4 million.
But until 2014 is over, it’s hard to tell if these submarkets will sustain these new peaks.
Mixed condo market
Homebuyers who can’t afford single-family homes — especially young singles and couples — have choices in the condominium market. Condos account for about one in five home sales reported by the MLS.
King County condos sold in the first half of 2014 had a median price of $250,000. While that’s 11 percent higher than the same period a year ago, it’s still 13 percent below the peak set in 2007.
The hardest-hit area in the county is the Skyway area between Seattle and Renton, where the median price of $85,000 is 64 percent below the last peak. The Dash Point-Federal Way area has a similar median condo price and is 54 percent below its last peak.
Downtown Seattle and the Kirkland area have hit new peaks: The median condo price in Belltown and downtown Seattle was just shy of $450,000, while in the Kirkland area, it was $369,500.
Condo prices in two more areas — Ballard/Green Lake/Greenwood and Redmond-Carnation — are within 5 percent of catching up to their previous peaks.
But in 16 submarkets, condo prices are still more than 20 percent below the peak.
“There was clearly some overbuilding (during the boom),” said Perlman, the real-estate consultant. “It’s just going to take a little more time for that excess inventory to be absorbed.”
In the second quarter, the region’s largest condominium submarket, Belltown-Downtown Seattle, saw the average price of units sold increase 18 percent annually to $576,368.
Central Seattle — which includes Capitol Hill, Eastlake and the Central Area — posted the largest annual gain among the major condo submarkets, with the average price rising 24 percent to $391,559.
Condo sales were most brisk in the Kirkland area, up 32 percent over the year. The average price of condos sold was $489,110, up 14 percent over the year. Sales cooled in the Queen Anne-Magnolia area, where the average price of sold condos was $349,071, down 2 percent over the year.
Bellevue west of I-405 saw the steepest price drop among submarkets with at least 10 condo sales on average a month. The average price fell 6 percent over the year to $501,194.