Cheapest Homes: February 2014 Edition

Cheapest Homes: February 2014 Edition

Let’s check in again on the cheapest homes around Seattle proper. Here’s our methodology: I search the listings for the cheapest homes currently on the market, excluding short sales, in the city of Seattle proper. Any properties that are in obvious states of extreme disrepair based on listing photos and descriptions will be excluded. This includes any listing that uses the phrases “fixer,” “rehab loan,” or “value in land.” I post the top (bottom) three, along with some overall stats on the low end of the market.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, that does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

Address Price Beds Baths SqFt Lot Size Neighborhood $ / SqFt Notes
8411 48th Ave S $140,000 3 1 1,170 5,450 sqft Rainier Valley $120 bank owned
751 S Cloverdale St $175,000 2 1.75 700 2,700 sqft South Park $216 -
8843 3rd Ave S $199,000 3 1 980 5,100 sqft South Park $203 -

All three of last month’s homes are now off-market. One has sold, one is pending, and one was just pulled off the market without selling. 751 S Cloverdale St was bumped off the list last month, but it’s back, even without a price change.

Stats snapshot for Seattle Single-Family Homes Under $200,000 (excluding short sales)
Total on market: 12
Average number of beds: 2.3
Average number of baths: 1.2
Average square footage: 1,041
Average days on market: 49

Inventory of cheap homes didn’t budge between January and February, staying at the new low set last month. Other stats were basically flat during the month except for average days on market, which dipped.

Here are our usual charts to give you a visual of the trend of these numbers since I adjusted the methodology in April 2010:

Seattle's Cheapest Homes: Stat Trends
Seattle's Cheapest Homes: Stat Trends

Here are cheapest homes in Seattle that actually sold in the last month, regardless of condition (since most off-market homes don’t have much info available on their condition).

Address Price Beds Baths SqFt Lot Size Neighborhood $ / SqFt Sold On
11457 70th Place S $121,400 3 1 880 6,600 sqft Rainier Valley $138 01/16/2014
4443 S Eddy St $137,000 1 1.5 960 5,842 sqft Rainier Valley $143 01/31/2014
10447 56th Ave S $145,799 2 1 1,260 10,080 sqft Rainier Valley $116 01/29/2014
  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

19 comments:

  1. 1
    David B. says:

    Have you ever considered adjusting your $200K cutoff for inflation?

    Rate this comment: Thumb up 0

  2. 2

    Assuming $10.92/hr is the Current Average Per Capita Wage and 28 Hours/Week

    Perhaps “cheap” isn’t a good adjective Tim….especially if the average crowd today [per the NYTs], even with two incomes, doesn’t qualify for the rent, let alone the mortgage payment. How about change “cheap” to “lowest cost”?

    Rate this comment: Thumb up 0

  3. 3

    By David B. @ 1:

    Have you ever considered adjusting your $200K cutoff for inflation?

    Or if the $15 minimum wage goes into effect, increase it to $300k, because everyone will be able to magically afford more! ;-)

    Rate this comment: Thumb up 0

  4. 4

    I wonder if you could do any follow up on what people who buy these properties put in to them?

    [business link removed by admin – read the rules]

    Rate this comment: Thumb up 0

  5. 5
    goblue72 says:

    In other news – tiny, crappy houses in the poorest neighborhoods are cheaper than bigger houses, in better condition, located in neighborhoods that aren’t low income. The profiling of the 3 cheapest houses for sale is marginally interesting, but not exactly sure what the point is. Water is wet. The sun rises in the East. And small, run-down shacks in lower socio-economic areas are more affordable than other houses.

    Rate this comment: Thumb up 0

  6. 6

    RE: goblue72 @ 4 – The two graphs showing the historical data is more important than the individual houses, particularly the inventory data.

    Rate this comment: Thumb up 0

  7. 7

    RE: goblue72 @ 4
    I Imagine That’s Why 1000 SF Tiny Homes on Small Lots in Seattle and LA Can go for Like $300-500K

    But these are worth it?

    Rate this comment: Thumb up 0

  8. 8
    Jonness says:

    RE: goblue72 @ 5 – I think it’s interesting that all but the bank owned are listed for near bubble-peak prices. seattlebubble2.com

    Rate this comment: Thumb up 0

  9. 9

    By Jonness @ 8:

    RE: goblue72 @ 5 – I think it’s interesting that all but the bank owned are listed for near bubble-peak prices. seattlebubble2.com

    Ignoring condition, that’s not really true. And while I can’t talk of the actives, of the solds one went below its 2001 price, and the others about $90k and $55k below their 2005 prices.

    That said, the better market has made the banks much more aggressive on price, sometimes to the point of being unrealistic. I’ve seen some absolutely insane initial list prices on REO properties, and the days of picking them up for 20% below FMV are largely over.

    Rate this comment: Thumb up 0

  10. 10

    RE: Kary L. Krismer @ 9

    Assuming 4 to a bedroom in Seattle Homes, Like San Francisco

    The gypsy hoards should be grabbing them up like crazy….its the gypsy parking problem that hasn’t been addressed…..oh well, get lucky and work within biking distance….

    Rate this comment: Thumb up 0

  11. 11
    ARDELL says:

    RE: softwarengineer @ 7

    If the lot value is $300k to $500k or more and it is selling at or near lot value, then the size of the house or even condition of the house becomes irrelevant. Basically in L.A. and the better neighborhoods in Seattle where spot teardowns make sense for builders, the land value is determined by the price a builder would pay for it as a teardown.

    If the house is remotely liveable and it is “free” after you subtract the price for the land, then often best to not put any photos sometimes, except for the one mandatory photo.

    This is my first comment since buying a new touch screen Sony Vaio laptop-tablet with Windows 8. Mostly commenting just to register the new device. This piece of equipment is a real game changer. So far the learning curve has been a snap.

    Rate this comment: Thumb up 0

  12. 12

    RE: ARDELL @ 11

    Yes Ardell

    But just like our Seattle planners [not Tim though]; lack of parking for all this planned centralized growth is conveniently swept under the rug…..until you need a car to get groceries or go to work [without a one way 2 hr bus commute].

    Rate this comment: Thumb up 0

  13. 13
    David B. says:

    RE: ARDELL @ 11 – If the value is in the land I would expect the value of the house on it to be NEGATIVE, i.e. take the value of the land, then subtract the cost of demolishing the existing structure on it to determine fair market value of the property.

    Rate this comment: Thumb up 0

  14. 14
    ARDELL says:

    RE: David B. @ 13

    It doesn’t work that way only because it is factored in when the builders buy. Also value is not an exact science but based on the principal of substitution. So when we determine the value we are basing that on the recent nearby solds which were also teardowns, and not purely vacant land…so no need for an adjustment.

    This doesn’t work where there are no builders buying spot spec teardowns and/or no builders interested at all in recent times in that area. if there is no new construction around within a mile, as example, the land may have no real liquid value. Mentioning this as if you are the David I think you are, you are likely looking at land that is pure negotiation as to price, and no real teardown-just built comps near the subject property.

    In larger parcels, and there is a very interesting 6 to 10 lot possible parcel that just came on in 98033, they don’t really count the demolition of the 3 bed 1 bath on that large parcel. No one cares about demo cost. What they do care about is the cost of bringing in new services for the new homes, and that cost expands dramatically once you pass from “short plat process” to “development” process in most Cities.

    What we also do is say “that structure is too much for it to be a teardown” meaning except in the event of condemnation or fire or some other reason for total deterioration, the structure is so big that it will likely be remodeled indefinitely vs torn down. This is particularly important when determining the odds of view obstruction due to changes in the property nearby that could partially or fully obstruct the view during the ownership of the new buyer.

    Rate this comment: Thumb up 0

  15. 15

    Sometimes it can be better for the seller to tear the house down before selling, but that’s mainly if there’s a concern someone might contest the house being torn down on some historical grounds. That type of uncertainty might limit buyer interest.

    Rate this comment: Thumb up 0

  16. 16
    David B. says:

    RE: ARDELL @ 14 – If the comps are all teardown properties, too, then I would presume the cost of demolition is implicitly figured in.

    Rate this comment: Thumb up 0

  17. 17
    ARDELL says:

    RE: David B. @ 16

    In Kirkland and Bellevue and the Seattle neighborhoods where I would be working on homes like that, the comps would also be teardowns. In newer neighborhoods, and by newer I mean newer than 1950 :), the land portion of the purchase is basically by the same % allocated by the tax assessor. Not the same $ amount, but the same % applied to current market value.

    In a lot of these “Cheaper Homes” examples over the time I have been seeing this feature, the homes often appear to be in areas where the builders have no interest in building new on those lots, which drives the prices down on them even more and why the end up being even less than “dirt cheap”.

    Rate this comment: Thumb up 0

  18. 18
    mike says:

    RE: David B. @ 16 – I’ve been watching this activity in my own neighborhood. Tear downs actually sell at a slight premium, presumably because the new house can be built out to maximize height and lot coverage limits and maximize sound and mountain views. Existing structures are more limited in how they can be re-purposed, at least that’s been the case so far as none of the flippers/rehabbers seem to be taking them down to the foundation, adding stories or otherwise increasing the square footage. I’ve seen a few moderately sized (generally 2000+ sq ft) ‘extreme fixers’ go for low $300’s. These are typically remodeled and sold in the $600-$700K range. The tear downs have been selling for high $300’s and are usually replaced with 3000-4000 sq ft houses priced north of $1M.

    It seems counter intuitive that a lot with an unusable or very small house sells for a premium, but it seems that starting over is easier and more lucrative than working with what’s there – especially if the house is under 2000 sq ft.

    Rate this comment: Thumb up 0

  19. 19
    ARDELL says:

    RE: mike @ 18
    Yes…land value is based on what is called “highest and best use” and that is why even a home in good condition can be a teardown. Teardown means the land value exceeds the value of the price attainable with that home on it. Teardown does not mean the house is necessarily in bad shape.

    $300k teardown means new house of $900k. $400k teardown means new house at $1.2M.
    Rule of thumb.

    Rate this comment: Thumb up 0

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please read the rules before posting a comment.