The Neighborhoods and Market

The neighborhoods that are receiving the most pursuit from new buyers are the ones in downtown Seattle, Bellevue and West Redmond. One real estate appraiser says the neighborhoods closer to the city core “have a greater number of buyers vying for houses than in outlying areas, whether it’s Kent, the Sammamish Plateau, Marysville, or Monroe.”

 

Many contractors are trying to keep the prices down on the new homes adding to the lower priced new homes. Most of the new growth in the Seattle area was in the outlying areas like the Sammamish Plateau area. First time home buyers looking for a new contemporary house with more square feet and a comparatively lower mortgage would do better to search for a home in the afore mentioned areas. Vintage never goes out of style and in the case of neighborhoods and homes, vintage means more return on your investment and a fat mortgage.

 

The following is a table found in the Seattle Times. It will give you an idea of the differences between buying a new home as opposed to buying an older one.

 

New homes:

Year built: 1999

Square footage: 2,430

1999 price: $312,990

2004 price: $379,900

1999 price per square foot: $133

2004 price per square foot: $168

Total appreciation: 27 percent

Annual appreciation: 4.8 percent

 

Older homes

Year built: 1964

Square footage: 1,590

1999 price: $209,250

2004 price: $304,209

1999 price per square foot: $137

2004 price per square foot: $192

Total appreciation: 40 percent

Annual appreciation: 7 percent

 

Source: King, Snohomish county assessor's records

The fact that the inner core neighborhoods are out performing then newer developments in the outlying areas comes as no surprise. Seattle is hailed as one of the darling markets in the nation. Corporate investors are lining up just to get a chance at getting their hand in the cookie jar. The corporate economy in Seattle is booming and is super stable. This produces confidence in investors and developers and sends real estate prices through the stratosphere. The strong economy is another reason why homes near the core of the city are excellent investments for the long run. If they are outperforming new homes now by at least 3 percent, imagine what the market will look like in 5-10 years. Albeit the national real estate bubble may pop by then, but then again, if Seattle’s economy stays as strong as it is now, then it is the next best thing to a sure thing—speaking of sound investments.

 

CNN ran a story last August that delineated the economic markets across the U.S. that might see their real estate bubble burst over the next year or so. Some of the cities that have between a 40% - 50% chance of seeing major decline are Boston, New York and San Bernadino (east of L.A.). CNN’ s rubric to measure risk is the PMI Risk Index. CNN reports, “The PMI Risk Index is based on economic activity and other conditions that PMI thinks are predictive of home-price declines over the next two years.

 

 Factors used to derive the index include home prices, employment conditions and the affordability of homes.” Among the cities that are currently risk free is Seattle.