Really? What part of the Eastside are you talking about, south of I-90 maybe? I live in Bellevue and poke around the listings from time to time out of curiosity, but asking prices don't seem to have gone down at all yet.
Here's an example: MLS # 27147706. It's a 4 br 2.5 ba, 2,700 sq. ft., 8500 sq. ft. lot, built in 1956, 1 story w/ basement near Phantom Lake, no garage or carport, asking $460K. Been on the market for 3+ months, with many price drops, the most recent on 11/27 (i.e. it isn't selling at the latest price).
The seller would probably accept a $440K offer, but let's be conservative and say it would sell for $450K. I don't have time to do a full analysis, but I can compare to a few comps I remember to get an idea:
- #2, Fall 2005, same Phantom Lake area, 4 br 2 ba, same lot size and era, 2-story, 1700 sq. ft. w/ 1 car garage, sells for $450K
- #3, Spring 2006, Eastgate south of I-90, 3 br 1 ba, same lot size and era, 2-story, 1450 sq. ft. w/ 1 car garage, sells for $412K after a one-day bidding war from $400K (I would've bid on this one had I not had plans that day)
- #4, Spring 2007, Eastgate north of I-90, 4 br 2 ba, 2000 sq. ft., 1960s 1 story w/ basement and carport, 4000 sq. ft. lot (small), sells for $460K
- #5, Spring 2007, Education Hill in Redmond, 3 br 1.5 ba, 1350 sq. ft., 7000 sq. ft. lot, 1970s tri-level w/ 2 car garage, nicely but inexpensively staged (think IKEA kitchen), in cul-de-sac, sells for $455K in one day
For my money, out of the five houses above I'd easily choose the one for sale today. It's labeled a "light cosmetic fixer," which would describe houses # 2-4 as well. Per sq. ft., the seller is asking 36% less than #2, 40% less than #3, 26% less than #4, and a whopping half off #5. Yet still this house is not selling! You'd probably get a 50+% return from adding a $10K carport. Most of the 1950s Eastside houses I've seen are relatively well built, and with a little upgrading they can look great.
Zillow thinks the house for sale today was worth $200K in Jan. 1998. If it sold for $450K today, that would be a 2.25X increase in ten years. I wouldn't call that a huge bubble, esp. not for Bellevue.
You're right, Markor. I hadn't looked closely at the Eastside, but at least that neighborhood was pretty much flat, accounting for inflation, from 1998 to 2004. Of course it's price nearly doubled over the last 3 years, which certainly says something, but it missed the appreciation that Seattle proper had, where prices more than doubled between 1998 and 2004, before the huge run-up of the last 3 years.
I've seen that listing before. I think that might even be the one I drove by out of curiosity. If it is the one I drove by, I remember the street it was on looked very "unkempt". Maybe that's what's keeping buyers away. Otherwise it looks like a screaming deal (comparatively) and it looks like it's in good condition.
On second thought, they're asking almost double the 2004 selling price. So 100% more than 2004, but 20 - 50% less than comparables sold in 2005-2007? I'm thinking maybe those comparables aren't that comparable.
Really? What part of the Eastside are you talking about, south of I-90 maybe? I live in Bellevue and poke around the listings from time to time out of curiosity, but asking prices don't seem to have gone down at all yet.
you can track city by city asking prices at altosresearch.com, and according to their data the Bellevue median has fallen considerably in the past 10 months - by over $100k
I've seen that listing before. I think that might even be the one I drove by out of curiosity. If it is the one I drove by, I remember the street it was on looked very "unkempt".
I haven't driven by it, but I also remember that area as unkempt.
A friend of mine bought a house in the Central Area. I thought he was nuts. A few months after he moved in, a nice Starbucks with a live jazz night went in a block away. He got a 15% annualized appreciation when a developer bought his place to replace it with townhouses.
That's an extreme example, but my point is that the unkempt neighborhoods are often the best deals, because it's all young people can afford, so they buy from the older folk who no longer have the energy to maintain the houses, and then the young people turn the neighborhood around.
On second thought, they're asking almost double the 2004 selling price. So 100% more than 2004, but 20 - 50% less than comparables sold in 2005-2007? I'm thinking maybe those comparables aren't that comparable.
In Fall 2004, I remember that new 2 br condos were selling in Newcastle for $350K. Somehow at that time the owner managed to buy this 2700 sq. ft. house for $240K. Maybe the unkempt neighborhood? Zillow thinks it was worth about $350K at that time. The potential windfall for the seller might be scaring buyers away too, but I wouldn't put too much stock in it. If the house is in decent shape it's still a relatively great deal today at $460K.
A friend of mine bought a house in the Central Area. I thought he was nuts. A few months after he moved in, a nice Starbucks with a live jazz night went in a block away. He got a 15% annualized appreciation when a developer bought his place to replace it with townhouses.
That's an extreme example, but my point is that the unkempt neighborhoods are often the best deals, because it's all young people can afford, so they buy from the older folk who no longer have the energy to maintain the houses, and then the young people turn the neighborhood around.
Probably not a bad idea when the market is going up, up, and up like crazy. Buy a less desirable house in a less desirable neighborhood and hopefully others do the same. Everybody taps into that instant equity and fixes them up. Pretty soon the neighborhood is full of charming restored homes with BMWs in the driveway and a Starbucks on every corner.
The problem is that when the real estate market stalls and credit markets tighten, these are the neighborhoods that feel it first. Many buyers for these types of houses can no longer get the easy loans, and those that still can notice that sales in these neighborhoods have slowed dramatically and start to rethink their idea of how quickly the neighborhood might turn around. All of a sudden that screaming deal becomes an overpriced (although relatively cheap) fixer upper in a bad neighborhood that isn't going to change any time soon.
Good points. I wouldn't doubt that if the economy tanks the Central Area will get worse faster than most other areas in Seattle. Capitol Hill has been prone to such fluctuation too.
As for that unkempt neighborhood in Bellevue, it's more like people don't pick up their newspapers every day.
Comments
With the direction this thread is going, I thought I would explore the thoughts you guys have on JLH.
The seller would probably accept a $440K offer, but let's be conservative and say it would sell for $450K. I don't have time to do a full analysis, but I can compare to a few comps I remember to get an idea:
- #2, Fall 2005, same Phantom Lake area, 4 br 2 ba, same lot size and era, 2-story, 1700 sq. ft. w/ 1 car garage, sells for $450K
- #3, Spring 2006, Eastgate south of I-90, 3 br 1 ba, same lot size and era, 2-story, 1450 sq. ft. w/ 1 car garage, sells for $412K after a one-day bidding war from $400K (I would've bid on this one had I not had plans that day)
- #4, Spring 2007, Eastgate north of I-90, 4 br 2 ba, 2000 sq. ft., 1960s 1 story w/ basement and carport, 4000 sq. ft. lot (small), sells for $460K
- #5, Spring 2007, Education Hill in Redmond, 3 br 1.5 ba, 1350 sq. ft., 7000 sq. ft. lot, 1970s tri-level w/ 2 car garage, nicely but inexpensively staged (think IKEA kitchen), in cul-de-sac, sells for $455K in one day
For my money, out of the five houses above I'd easily choose the one for sale today. It's labeled a "light cosmetic fixer," which would describe houses # 2-4 as well. Per sq. ft., the seller is asking 36% less than #2, 40% less than #3, 26% less than #4, and a whopping half off #5. Yet still this house is not selling! You'd probably get a 50+% return from adding a $10K carport. Most of the 1950s Eastside houses I've seen are relatively well built, and with a little upgrading they can look great.
Zillow thinks the house for sale today was worth $200K in Jan. 1998. If it sold for $450K today, that would be a 2.25X increase in ten years. I wouldn't call that a huge bubble, esp. not for Bellevue.
05, I'm pretty new here but I think I live in one of the cheaper areas of Bellevue.
I've seen that listing before. I think that might even be the one I drove by out of curiosity. If it is the one I drove by, I remember the street it was on looked very "unkempt". Maybe that's what's keeping buyers away. Otherwise it looks like a screaming deal (comparatively) and it looks like it's in good condition.
http://www.altosresearch.com/research/WA/bellevue
A friend of mine bought a house in the Central Area. I thought he was nuts. A few months after he moved in, a nice Starbucks with a live jazz night went in a block away. He got a 15% annualized appreciation when a developer bought his place to replace it with townhouses.
That's an extreme example, but my point is that the unkempt neighborhoods are often the best deals, because it's all young people can afford, so they buy from the older folk who no longer have the energy to maintain the houses, and then the young people turn the neighborhood around.
In Fall 2004, I remember that new 2 br condos were selling in Newcastle for $350K. Somehow at that time the owner managed to buy this 2700 sq. ft. house for $240K. Maybe the unkempt neighborhood? Zillow thinks it was worth about $350K at that time. The potential windfall for the seller might be scaring buyers away too, but I wouldn't put too much stock in it. If the house is in decent shape it's still a relatively great deal today at $460K.
Probably not a bad idea when the market is going up, up, and up like crazy. Buy a less desirable house in a less desirable neighborhood and hopefully others do the same. Everybody taps into that instant equity and fixes them up. Pretty soon the neighborhood is full of charming restored homes with BMWs in the driveway and a Starbucks on every corner.
The problem is that when the real estate market stalls and credit markets tighten, these are the neighborhoods that feel it first. Many buyers for these types of houses can no longer get the easy loans, and those that still can notice that sales in these neighborhoods have slowed dramatically and start to rethink their idea of how quickly the neighborhood might turn around. All of a sudden that screaming deal becomes an overpriced (although relatively cheap) fixer upper in a bad neighborhood that isn't going to change any time soon.
As for that unkempt neighborhood in Bellevue, it's more like people don't pick up their newspapers every day.
My money is on these old neighborhoods, but maybe another 5-10 years.