Expensive Neighborhoods See Biggest Price Gains

Expensive Neighborhoods See Biggest Price Gains

It’s time once again to take an updated look at how King County’s sales are shifting between the different regions around the county, since geographic shifts can and do affect the median price.

In order to explore this concept, we break King County down into three regions, based on the NWMLS-defined “areas”:

  • low end: South County (areas 100-130 & 300-360)
  • mid range: Seattle / North County (areas 140, 380-390, & 700-800)
  • high end: Eastside (areas 500-600)

Here’s where each region’s median prices came in as of June data:

  • low end: $250,000-$391,225
  • mid range: $337,475-$775,000
  • high end: $526,000-$1,664,000

First up, let’s have a look at each region’s (approximate) median price (actually the median of the medians for each area within the region).

Median Price of Single Family Homes Sold

The median price in all three tiers rose between May and June. The low tier rose 5.2 percent in the month, the middle tier increased 10.6 percent, and the high tier gained 6.8 percent. Meanwhile, the median price in all three tiers is also up year-over-year, but with smaller gains than the month-to-month increases in the low and middle tiers. Here’s how the median prices changed year-over-year. Low tier: up 1.2 percent, middle tier: up 7.3 percent, high tier: up 11.4 percent.

Next up, the percentage of each month’s closed sales that took place in each of the three regions.

% of Total King Co. SFH Sales by NWMLS Area

The share of sales in Seattle gained some ground in June stolen mostly from the Eastside. Year-over-year sales were up in the low and medium tiers and down in the high tier. Compared to a year ago, sales increased 5.3 percent in the low tier, rose 3.6 percent in the middle tier, and fell 2.1 percent in the high tier.

As of June 2014, 32.2 percent of sales were in the low end regions, 35.7 percent in the mid range, and 32.1 percent in the high end. A year ago the low and mid ranges had less of the share and the high range had more: In June 2013 the low end made up 31.3 percent of the sales, the mid range was 35.2 percent, and the high end was 33.5 percent.

Here’s that information in a visual format:

Bank-Owned: Share of Total Sales - King County Single-Family

Finally, here’s an updated look at the percentage of sales data all the way back through 2000:

% of Total King Co. SFH Sales by NWMLS Area since 2000

The middle tier (mostly Seattle proper) has been steadily increasing in sales share over the last year and a half, increasing from 30.6 percent of the sales in December 2012 to 35.7 percent in June. This fits well with my theory that post-bubble homebuying attitudes have buyers leaning more toward the close-in neighborhoods than during the bubble.

  

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.

27 comments:

  1. 1
    Christian Wathne says:

    Just purchased another property, this time a sfh 4br/2ba fixer in Bellevue. Will be selling my capitol hill condo for a profit around end of September :)

    This will make 3 property’s in 2 years. Come on seattle area market, keep on rising!!

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  2. 2
    Erik says:

    RE: Christian Wathne @ 1
    Good job player.

    Rate this comment: Thumb up 0

  3. 3
    Erik says:

    RE: Christian Wathne @ 1
    I almost got one on Queen Anne last week, but I got outbid. Maybe next week I will get one?

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  4. 4
    Shoeguy says:

    RE: Christian Wathne @ 1

    Endlessly rising prices are horrible for a consumption based economy, especially considering real wages have actually declined in the last 15 years. The higher percentage that the average American has to spend on mortgage/rent per month, the less money they have to spend into the rest of the economy.

    What is much more important than the endlessly rising prices that you seem eager to beg for is a sustainable parity between median incomes and median home prices, and you want rising incomes to drive rising prices.

    Unfortunately that isn’t what is happening in today’s market.

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  5. 5
    Christian Wathne says:

    By Shoeguy @ 4:

    RE: Christian Wathne @ 1

    Endlessly rising prices are horrible for a consumption based economy, especially considering real wages have actually declined in the last 15 years.

    I’m not sure if you quoted me because you extrapolated my statement and came up with false assumptions regarding my thoughts on what makes an economy healthy, but in either case, I have not said that I believe the current price appreciation as seen over the past 2 years is healthy nor have I said I believe this rate will continue for very long.

    Also, the well being of the “average” individual is not a primary concern for me. My objective is to move myself up in the economic ladder while having a good life. Housing prices over corrected to the downside a couple years ago and I’m taking advantage of the surge back to normal.

    On another note, your statement that “Endlessly rising prices are horrible for a consumption based economy” is false. Moderate inflation is a goal of the fed because it is a known fact that if consumers know prices will rise in the future they are more likely to buy today. Simple example, if you know that gas will be more expensive tomorrow you’ll fill up today; if you know that cars will be more expensive next month you may buy sooner; on the flip side, if you know that cars will be cheaper next month (deflation) you’ll likely hold off on purchasing. Moderate inflation is a GOOD thing for any economy because it stimulates more spending, which in turn creates jobs.

    “What is much more important than the endlessly rising prices that you seem eager to beg for is a sustainable parity between median incomes and median home prices, and you want rising incomes to drive rising prices.”

    You sound like a socialist, why don’t you move to southern Europe where things are more “fair”.

    The income gap between the rich and poor will only continue to increase due to globalization, automation and economies of scale. As it does, the % of the population who can afford homes in wealthier areas continue to shrink. Prices in wealthier areas (as seen in Tims graphs) will continue to rise at a faster pace than in poorer areas. Good news is that you’ll still be able to buy a house out in the sticks.

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  6. 6
    Andrea says:

    http://mobile.bloomberg.com/news/2014-07-15/microsoft-said-to-announce-job-cuts-as-soon-as-this-week.html

    This might cool down the house pricing in Seattle.

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  7. 7

    RE: Andrea @ 6

    Unfortunately, Assuming Seattle’s Like New York

    About half the high priced home buyers simply do not work. They have no skin in the game, but expect a robust economy to buoy up excessively high rents/mortgages anyway. Even when we’re still stuck at about 1.9M total labor force since the Great Recession peaked [or flatlined is probably a better definition].

    The good news, the MSFT layoffs should unclog our freeways some, albeit that assumes the laid off won’t be replaced with lower paid Neptune workers anyway.

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  8. 8
    Shoeguy says:

    RE: Christian Wathne @ 5

    Good lord, where to start with you…

    When you cheer on house prices to “keep on rising” in spite of the fact that median incomes are not rising with those prices, all you are doing is cheering on a second Housing Bubble because you have some assets you want to see rise, fundamentals be gollyed. Lots of people like yourself were cheering in 2006 and were as condescending towards others as you are today. Those people showed their true colors when they walked away from their properties after all of their jeering. You throw insults about “socialism” yet you’ll walk away from your properties as soon as they turn down, socializing your losses, which makes you a hypocrite.

    Yes, I know all about the Fed’s views on inflation. The Fed loves using inflation to create urgency and pull demand forward (which sacrifices future demand, by the way, we saw that with Obama’s $8000 subsidy). The thing is, is that there are two forms of inflation: Asset inflation and Wage inflation. The two must go hand in hand in a healthy economy, but unfortunately we are seeing a ton of asset inflation while seeing stagnant wage inflation and even wage deflation. Asset inflation isn’t sustainable without wage inflation, we saw that in 2008.

    “You sound like a socialist, why don’t you move to southern Europe where things are more “fair”.”

    This quote is where you went off the deep end. It isn’t about FAIRNESS, it’s about a sustainable economy that runs on it’s own steam, free of ZIRP and QE. When you look back at 100 years of economic history, the least turbulent, most sustainable and healthy “capitalist” economies occurred when there was parity between median incomes and median home prices (as well as every other asset class). This is just a plain fact, and no amount of your hypocritical “socialism” comments will change that.

    Forget Socialism, even in a healthy Capitalist economy, a huge wealth gap like we have today is unhealthy and unsustainable. Even the most die hard Keynesian Capitalist Economist will tell you that. Too large a wealth gap and the whole house of cards topples, taking the rich down with it, so be careful what you cheer for.

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  9. 9
    Erik says:

    RE: Christian Wathne @ 5
    You are doing well and making money. These people are fraidy cats and they hate on people that have success. Keep doing what you are doing.

    You are a uw grad. Are you really gonna listen to some shoe salesman anyway? Take shoe salesman’s advice regarding whether to buy Adidas or Nike, not houses.

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  10. 10
    Erik says:

    RE: Shoeguy @ 8
    Shoe guy, I am currently wearing nike free run 5’s. Will nike come out with a 6?

    Also, are there any Adidas styles that provide the same comfort and breathability as my free runs?

    I hate when people do what you are doing and play housing god. Christian should focus on buying low and selling high. He had no control over the economy and what everyone else is doing. All that he can control is how many chips he stacks.

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  11. 11
    Christian Wathne says:

    By Erik @ 9:

    RE: Christian Wathne @ 5
    You are doing well and making money. These people are fraidy cats and they hate on people that have success. Keep doing what you are doing.

    You are a uw grad. Are you really gonna listen to some shoe salesman anyway? Take shoe salesman’s advice regarding whether to buy Adidas or Nike, not houses.

    Truth! We both know that we can’t control the greater economy, all we can to is position ourselves to take advantage of the upward swings. Shoeguy cant figure out how to do that so it seems like he’s content with twiddling his thumbs on the sidelines while complaining about the systems imperfections.

    — RE: Shoeguy: “When you cheer on house prices to “keep on rising” in spite of the fact that median incomes are not rising with those prices, all you are doing is cheering on a second Housing Bubble because you have some assets you want to see rise, fundamentals be gollyed. Lots of people like yourself were cheering in 2006 and were as condescending towards others as you are today. Those people showed their true colors when they walked away from their properties after all of their jeering. You throw insults about “socialism” yet you’ll walk away from your properties as soon as they turn down, socializing your losses, which makes you a hypocrite.”

    Here you go again making up a bunch of nonsense. Yes, I hope prices keep rising. As population increases and land area does not you’ll see a smaller and smaller percentage of people with incomes high enough to live in the nicer areas.

    In regards to your statement that I’ll “walk away from my properties as soon as the price goes down”…. You know too little about me to make such statements; I’ve never put less than 25% down on any of the last 3 properties, AND all 3 of those have been fixers which I’ve invested cash into. I own the risk and will not be leaving anyone else with my debts.

    In regards to your statement that “The Fed loves using inflation to create urgency and pull demand forward (which sacrifices future demand, by the way, we saw that with Obama’s $8000 subsidy).” That wasn’t inflation, that was a short term tax credit. Inflation does not sacrifice future demand, for example, if I know what cars will become more expensive in the future I’ll be more likely to buy one today. If I buy a car now I’ll buy the next car sooner than I would have compared to if I had bought that first car 2 years later.

    Moderate inflation is also generally good for business and employment; for example, if you know that prices for everything will be going down in the future then you may hold off on investing money into a factory which will produce a product. However if you know that prices will be going up, then that will be incentive to build that factory sooner rather than later.

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  12. 12
    Blurtman says:

    RE: Erik @ 10 – Try Brooks. I am digging my Ghost 6’s and still like the quirky Green Silence which are tres confortable.

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  13. 13
    Shoeguy says:

    RE: Erik @ 9

    I’m hardly playing housing god. I was one of the guys screaming Housing Bubble back in 2006 while Bubble Buyers on blogs condescendingly patted me on the head for my lack of foresight as they were “getting rich off of housing”. I didn’t buy something, so I was priced out forever.

    Insult after insult, yet it turned out I was right and they were wrong. Median home prices were out of whack with median incomes and it wasn’t sustainable

    Now here we are in Echo Bubble 2.0, not as bad as before, but again prices are out of whack with incomes. Here again I’m screaming about it. Here again come the condescending remarks from the Bubble Buyers for my lack of foresight. I’m priced out forever, but I can at least buy out in “the sticks.”

    Its Deja Vu all over again. Sigh. Here we go.

    Remember, things don’t have to be as bad as 2006 to cause even more destruction once this Echo Bubble pops. We were firmly in a housing bubble in 2003, 2004, and 2005 as well. 2006 was not the beginning of the bubble, it was the end.

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  14. 14
    whatsmyname says:

    RE: Shoeguy @ 13
    Since you are happy with your choices, it’s all the same to me, but I wonder about your strategy. Are you in a nicer abode than you would buy? A less nice one? Do you pay more in rent than the current payment for something you would buy? Do you pay less?

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  15. 15
    Erik says:

    RE: Shoeguy @ 13
    Tim calls people like you “perma-bears.” Constantly predicting a crash. Nobody has argued that prices are or are not inflated. It doesn’t matter either way. If we are in a bubble, these bubbles can go on for many years. This could be like 2004 was on the first bubble. I will continue to put as little money down as I can in case I need to be bailed out by taxpayers again. We know the rules and I play by them. Giving a house back is not breaking the rules. Not paying your mortgage for 5 years while riding the hampster wheel isn’t breaking any rules. Go get yours and quit trying to throw darts at everyone that is having success. It makes you look bitter.You can only be bitter that you don’t have enough sack to get up and do it yourself.

    I am encouraging you to go make some money like Christian is. Being afraid of failure your entire life is not the trait of a successful person.

    Blurtman:
    I use to get my grandpa’s hand-me-down Brooks running shoes. They were always nice. Maybe I will try a pair of new ones? I wear my shoes for everything, so as long as they don’t look too much like a running shoe, I would like them.

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  16. 16
    boater says:

    If $15/hr minimum wage isn’t wage inflation what is? Seattle incomes are rising at least at the top and bottom. Personally I dont thonk we’re in a bubble. Prices outside of the desirable areas are still reasonable if you’re willing to commute. If prices in south king county start goingv wild I’ll be concerned.

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  17. 17
  18. 18
    Eastsider says:

    By Erik @ 15:

    RE: Shoeguy @ 13
    I will continue to put as little money down as I can in case I need to be bailed out by taxpayers again. We know the rules and I play by them. Giving a house back is not breaking the rules. Not paying your mortgage for 5 years while riding the hampster wheel isn’t breaking any rules.

    RE: Erik @ 15

    Hmm… this says a lot about people like you. It is all about abusing the system for your own personal gains.

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  19. 19
    Shoeguy says:

    RE: whatsmyname @ 14

    Yes, Whats. Right now I am renting a nicer place than I could buy at a shorter distance from work. Portland inventory is at 2.8 months, which is beyond dismal. It’s sad, really. With that low inventory, there is a lot of garbage on the market and sellers are asking ridiculously inflated prices for homes (sometimes $300k+ for 1500 sq ft in terrible school districts) because they know there isn’t much out there.

    Yes, I would like to buy. I’m not looking to invest, or get rich quick like Christian and Erik. I’m looking for a nice place to live at an affordable price in a nice school district to raise a family, but I won’t make myself house poor to do it.

    By Erik @ 15:

    RE: Shoeguy @ 13
    I will continue to put as little money down as I can in case I need to be bailed out by taxpayers again. We know the rules and I play by them. Giving a house back is not breaking the rules. Not paying your mortgage for 5 years while riding the hampster wheel isn’t breaking any rules.

    Wow. Just wow. After being condescended to and called bitter by a couple of bubble buyers, I’ll just let this comment speak for itself….

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  20. 20
    boater says:

    As much as I couldn’t do what Erik’s proposing I can’t terribly fault him. The banks right the rules for the most part with the public instituting rules to protect against egregious corporate behavior. If the banks want to stop people like erik all they need to do is increase the down payment requirements. That protects everyone by reducing bubble risks. It decreases home ownership but everything is a tradeoff.

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  21. 21

    RE: boater @ 20

    The down payment requirements for investors have always been higher than for people buying homes as residences. Old School rule was 30% down for investors, though these days you can find 25% down fairly easily and sometimes 20% down. If the lender agrees to less than the OS 30% down, they agree to take the associated risk.

    The problem during the bubble years is that lenders were allowing the same person to buy up to 6 or 7 homes “as residences” and turning a blind eye to the fact that they were investment and even flip properties. That put the investment home at zero down and today could put them as low as 2% down. Even though FHA is 3.5% down, since the funding fee is financed and sometimes the closing costs as well, the LTV is often 98% and not 96.5%.

    If you buy an investment property and pretend the primary reason to purchase is as a personal residence so you can finance 95% or more of the purchase, well you might get away with it if you live there for a year or two, but it’s still fraud.

    If the lender knows what is going on and turns a blind eye, then I don’t think you can fault the borrower, except the only thing in writing will be the borrower’s word that the intention was NOT as an investment.

    That’s why when I ask people are you buying as a personal residence or an investment, and they answer “BOTH!”, they really don’t seem to understand that the answer is not allowed to be “BOTH!”. Your personal residence is indeed in many cases the family’s most valued asset. But that does not mean the answer is “as an investment”. If you are buying “as an investment” you need to put a lot more money down as an “investor loan”.

    So there is indeed a difference between buying as a personal residence and buying as an investment. You can’t mix the two and say both, and to not be honest about it is lender fraud. That’s where things go sideways. Yes…investors “walk” the minute they see the profit diminishing and that is expected and why investor loans require a higher downpayment. But if you buy with little down and then act like an investor…well…therein lies the rub.

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  22. 22
    boater says:

    RE: Ardell DellaLoggia @ 21
    Well lets take care Eriks case. It is his primary residence so he can legitimately say home vs investment. If the banks allow him to tbuy with very little down its their choice but I wont feel sorry for them if he defaults o it.

    I have friends who do exactly what Eric’s talking about. They live in each home usually for a year while remodeling and then flip or rent based on market conditions. Lenders generally dont give them a second look until they have about four homes at a time.

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  23. 23

    RE: boater @ 22

    hmmmmmmmmmmm…define “legitimately”. :) We have become a “gamer” society that thinks winning, and doing what it takes to win, is OK. Is it “the letter of the law” or “the spirit of the law” that should be followed? I’m a spirit of the law person, but understand that there are many who look for the loopholes to jump through…and there are clearly many lenders and agents ready to help people squeak by until someone complains. I’m just not one of them nor will you ever have all people agree which side of that fence people should be on.

    People keep asking if we are in a bubble. If investors and flippers are pretending to be something else in order to put less than an investor % down payment, then yes. No question. Investors are expected to bail when the profit margin erodes…and they are expected to put more money down for that very reason.

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  24. 24
    boater says:

    Alright I’ll bite. Legitimate primary residence is the one where you exclusively live or live the majority of the time. Erik qualifies. He intends to do so as long as he owns the home. The reason the letter of the law is what matters is because of how subjective the spirit of the law interpretation is. If you buy in a market own for five years and hope to sell for a profit is that fraud because you didnt live there for 30 years like your loan was for? Where’s the cutoff at 5,10,15?

    As to that technique being an indicator of a bubble the answer is no. It’s an indicator if investor size. It’s not something that you can do at large or medium size so it’s a little helper to the small investor. It’s used in bear and bull markets.

    Finally since the lender is the one taking the risk especially now that Fannie Mae and Freddie Mac are scrutinizing loans much more it’s their decision as to whether you qualify for a primary residence loan and no one else.

    The real question is why have two different rates at all? Sincerely both an investor and a resident really have all the same options just treat everyone as an investor and you get a more stable market. The whole two tier structure is to get people on the border to qualify when they wouldnt have with more scrutiny.

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  25. 25

    RE: boater @ 24

    The purpose of the lower down payment, especially government insured loans like fha, is NOT to help the small investor. It is not fair to use hindsight Erik as the example, as clearly he moved from Everett to Kirkland for personal residence reasons, as he has stated here many times.

    Let’s talk about “exotic loans” for a minute. When people used interest only, arms, stated income loans, reverse mortgages and lesser than “A” paper appropriately, as they did for decades, there was no problem. When people started applying them inappropriately all hell broke loose. The answer became to eliminate some of them entirely, but that clearly isn’t better than just don’t LIE please.

    What you are suggesting is like saying there should be only one best cereal on the shelf. Eliminating all of the options instead of going back to using them with integrity and good intention is NOT a good answer.

    Intent is the key boater. Primary intent is the key. You say you have many friends doing “it” and four at a time. You don’t seem to see how buying four investment properties, and pretending they are all four a primary residence for loan purposes simultaneously, is just wrong. That just boggles the mind.

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  26. 26
    Christian Wathne says:

    I agree with boater that it’s ok to have a primary residence be an investment. They are not mutually exclusive. If you live there then its your residence; really as simple as that. A homeowner who renovates his home while living there then sells a couple years later should not be penalized or put into a higher risk category by a bank simply for improving the property.

    I do however agree with Ardell that when this is done with 3-4 or more properties that should not be allowed (which boater never disagreed with, so I think we’re all in agreement on that).

    However in regards to the owning of 3-4 properties as residences, I’m pretty sure higher down payments are already required when having a mortgage on more than one home….is that not right?

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  27. 27

    The standard deed of trust, which is signed at closing, states that you will occupy the home within 60 days. It’s pretty simple… I agree with Ardell that folks like to toy around with occupancy and the word “intend” and they may be committing mortgage fraud. My most popular post on my blog is about occupancy.

    The reason for different rates is also simple – it’s risked based pricing. An investment home is more likely to go into foreclosure vs a home a family occupies. The more mortgaged properties somebody has, the more reserves the will be required to have. Down payment requirements remain the same regardless of how many properties one has mortgaged (up to 4).

    Fannie Mae HomePath has the lowest down payment available for investment properties too.

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