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Seattle Tops Nation with the Hottest Housing Market

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Seattle Tops Nation with the Hottest Housing Market

Seattle has topped the nation with the hottest housing market, recently passing its neighbors in Portland. According to The Seattle Times, this is the first time in nine years that Seattle has led the country in home growth prices. Examining the S&P Case-Shiller National Home Price Index, the home prices in the Seattle Region have risen by 11 percent between September 2015 and 2015, surpassing Portland which has had a 10.9 percent increase during this time period. Here is what you need to know about the causes and effects of Seattle’s booming housing market.

Causes:

“Seattle leading the country in house-price growth is a testament to how attractive the region has become,” says Ralph McLaughlin, the chief economist at Trulia. He believes that this growth is based on three principles; increasing employment opportunities in the Seattle area, higher income potential, and, as most people in the Northwest already know, a great quality of life.

To read more please visit: The Seattle Times | Seattle Tops The Nation in Home-Price Growth for First Time in 9 Years

Geekwire has attributed the growth in the real estate market to the ever-expanding tech boom that Seattle is experiencing. “There are now more than 80 engineering offices in the Seattle area operated by large tech giants, including fast growing offices for FacebookSalesforceEbay and others” Geekwire writer Monica Nickelsburg remarks. It can be surmised that as Seattle grows, driven by the tech boom, it is likely to experience a real estate market like that of the Bay Area.

To read more please visit: Geekwire | Seattle Becomes Nation’s Hottest Housing Market, Driven By Tech Boom

Another aspect that is driving the Seattle housing boom is an increasing demand by foreign buyers, particularly out of China, in the real estate market.

To learn more please visit: RSIR | The “Gold Rush” of Chinese buyers Entering the Seattle Real Estate Market

Effects:

Zillow, in a recent report, has found that Seattle has one of the highest year-over-year rent appreciation rates, which has risen 9.1 percent in the past year in the Zillow Rent Index with a current median rent of $2,087 per month.

Zillow data also shows that overall Seattle prices are rising twice as fast as the rest of the country and have been doing so the most of this year. Home values across the Seattle metro area, including King, Pierce, and Snohomish counties have risen to over $400,000, which is up from only 300,000 just three years prior. The section of housing that has seen the highest increase is starter homes, which Case-Shiller have reported to of had a 12.7 percent annual increase while luxury homes have only seen a 10.2 percent increase.

To learn more about first time home buying in Seattle’s 2017 market please visit: RSIR | 2017 Real Estate Market: What Millenials Need to Know

The demand for housing is very evident in center city markets as well. Seattle is facing a lack of available condos due to the housing boom and, since 2011, only 866 condominiums were added. What’s more extraordinary is that so few of those new condominiums remain available to purchase today.  Simply put, 99-percent of what was built for sale in the last five years has been sold and more than two-thirds of what’s planned for delivery by 2019 is already reserved through priority pre-sale.

“It’s a stark reminder that when it comes to new construction high-rises, demand can rise much quicker than supply,” says Dean Jones, President and CEO of Realogics Sotheby’s International Realty.  “It can take three to four years to design, entitle and build a new condominium tower. Median home prices are rising by double-digits year-over-year. Projects like NEXUS, with attainable price points starting at $300,000, are excellent for the current Seattle housing market, however are in very high demand; hundreds of pre-sale buyers lined up on June 4th, some of which slept overnight, in order to secure a reservation for priority pre-sales.

To learn more please visit: RSIR | The Condo Comeback: NEXUS will be “First and Foremost” Among the “Few” High-Rises for Sale in Downtown Seattle

To learn more about Nexus, please visit: www.NEXUSseattle.com

With rising prices and a low supply of viable housing, Seattle has a lot of face in the upcoming years.

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Seattle: Is It Vancouver Déjà Vu

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Seattle: Is It Vancouver Déjà Vu

The popular West Coast cities of San Francisco, Los Angeles and Vancouver have long been the most direct routes to New World prosperity for Asian immigrants and their families. Now that generations of Chinese buyers have transitioned to life in North America, their experience and trend spotting is bringing to bear more practical considerations of economic fundamentals, financial and educational opportunities, and overall quality of life. So it’s no surprise that relative affordability, propensity for capital appreciation and even a recently imposed 15-percent foreign homebuyer tax in Vancouver, are boosting interest in alternative markets like Seattle—the next international gateway city on the rise.

Matthew Moore, President of the Americas for Juwai.com, a popular residential real estate search portal in China, noted significant changes: “Juwai.com buying enquiries to Seattle increased by 143 percent in August 2016, compared to one year earlier. Meanwhile buying enquiries to Vancouver dropped by 81 percent during the same period, with all of that drop concentrated in the premium end of the market.”

The forested mountains and deep blue waters of Puget Sound, together with high-quality schools, a vibrant and diversified economy, and absence of a state income tax (unlike California) have drawn a gathering surge of Chinese buyers to the Greater Seattle region in recent years. Somewhat overlooked by past generations of immigrants in comparison with Vancouver BC and San Francisco, the Pacific Northwest has so far avoided the trap of high growth fueled by non-resident real estate investment. Yet, industry experts believe that’s coming and likely part of the draw. To the trained eye, Seattle, and especially Bellevue, is looking more and more like Vancouver, albeit about twenty years its junior.

Read the Full Article Here >>

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British Columbia Government Charges 15% to Non-Resident Foreign Buyers in Effort to Curb Skyrocketing Real Estate Prices

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British Columbia Government Charges 15% to Non-Resident Foreign Buyers in Effort to Curb Skyrocketing Real Estate Prices

Foreign buyers in Vancouver will be paying more for investment properties this month (beginning August 2). The Canadian provincial government of British Columbia has enacted a 15 percent real property transfer tax on foreigner-purchased properties in Metropolitan Vancouver, adding $300,000 to the cost of a two-million-dollar home. The tax is the response of Premier Christy Clark’s government to data indicating that foreign absentee buyers have been driving up home prices past the point of their affordability to native B.C. residents. Recent data showed that foreign buyers spent more than CN$1 billion on B.C. property in just five weeks, 86 percent of it in the Lower Mainland.[1] “People who use housing solely as a means to make money rather than living and working in Vancouver should be taxed as such,” Vancouver Mayor Gregor Robertson is reported as saying.[2]

As recently as last fall, the Clark government had steadfastly denied that foreign purchases were a significant driver of home price inflation in the region, instead attributing higher prices to limited supply, high domestic demand, development regulations, and low interest rates. Hence, officials including B.C. Finance Minister Mike de Jong had dismissed any notions that foreign buyers be targeted for disincentives, as was being advised at that time by Canada’s then Prime Minister Stephen Harper. Harper had reportedly said, “Some reports have suggested that speculative foreign nonresident buyers are a significant factor in driving homes out of the price range of average families, especially in Vancouver and Toronto. If speculators are driving up the cost of housing to unaffordable levels, that’s something the government can and should address … Other countries, like Australia, have put in place regulations that limit the ability of foreign buyers to purchase existing houses for investment purposes.”[3]

Indeed, the restrictions enacted by Australia in 2010 appeared harsh. Those rules prohibit nonresident foreign investors from buying existing homes, and this constraint can only be lifted if they plan to redevelop or build new housing. Relief for temporary residents may be approved by the government before they purchase or build a home; but once approved, such residents can only purchase that one property for their personal residence while in the country. Once it is no longer their primary residence, they must sell it within three months. Yet despite the severity of the law, observers had reported no meaningful reduction in demand in recent years.

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What a Difference A Year Makes: Downtown Seattle Condominium Market Values Swell 28% in 2016

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What a Difference A Year Makes: Downtown Seattle Condominium Market Values Swell 28% in 2016

Eager homebuyers rallied during the first half of 2016 increasing unit absorption and median home prices by 48% and 28%, respectively according to analysis of Northwest Multiple Listing Service data released as of June 30th. The typical condominium is selling in just over a month with a median home value of $575,000. However, a closer look reveals that 135 of the 381 condominium closings so far this year were in the INSIGNIA condominium tower, a new construction development (and one remaining developer-owned unit in the Four Seasons Private Residences) whereas there were effectively no new construction deliveries or closings during the same term in 2015. When removing this spike of higher-priced, new inventory in the overall resale market still expanded by 22% year-over-year but total resale closings actually decreased 5% with 246 homes in 2016 (including a few resales at INSIGNIA) against closings of 258 units in the first half of 2015.

“These market results were anticipated given the rising demand and relatively anemic supply being added to the skyline,” said Dean Jones, President and CEO of Realogics Sotheby’s International Realty. “I wish I could point to a cure for homebuyers hoping for greater affordability but the answer is supply and that can take years to develop.”

Below are a collection of graphs illustrating the changing market that compare the first half of 2015 with the first half of 2016, both with new construction and resale (All) as well as exclusively resale homes (Resale).

To be sure, much of what’s occurring in the development of downtown Seattle has been a common discussion about supply and demand. In 2013, Jones prognosticated on this very topic in an interview with Seattle Magazine’s Publisher’s Series in which he mentioned the northern migration of downtown Seattle and a condominium comeback, although nearly three years ago the housing market was still very much in recovery mode.

In June of 2015, RSIR published with The Puget Sound Business Journal a supplement called “The Manhattanization of Seattle,” which again spoke to the imbalance of for-sale inventory relative to the population increases and the maturing Millennial demographic.

Then, earlier this year 425 Business Magazine tapped Jones about the trends for urbanization, this time with a focus on the Eastside. He notes that the rising trend for foreign direct investment in the region and a propensity for in-fill development will have even the much smaller Eastside urban landscape soon looking more like a skyscraper city before long.

Most recently the state of the in-city housing market has less to do with projections but evidenced by consumer response. Among the newly constructed in-fill condominiums in the region (either in development or planned), which includes INSIGNIA, LUMA, Gridiron and nowNEXUS, 80% of the homes have already been reserved, pending or closed.

“That’s just one of the reasons we’ve been so successful with NEXUS,” said Michael Cannon, Director of Sales for NEXUS. “We’re well positioned both in our geographic location as well as our time in the development cycle. Buyers have clearly been waiting for the next generation of high-rise living and at NEXUS, ‘X’ marks the spot.”

Cannon says homebuyers have a remarkably clear view of the future as downtown Seattle is moving north and NEXUS is in the heart of a new multi-billion dollar vertical village.

*Information gained from sources deemed reliable but cannot be guaranteed.

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Seattle Home Values Rise - Sets New Record in Prices

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Seattle Home Values Rise - Sets New Record in Prices

According to the latest S&P/Case-Shiller, home values rose 10.8% year-over-year and 2.4% from February to March 2016, setting a new benchmark in home values and surpassing the previous peak in the summer of 2007. The significant growth has caught some by surprise but for those close to the industry, Seattle is simply catching up to other West Coast gateway cities such as San Francisco or Vancouver, BC. In fact, a recent Seattle Times article highlights that Seattle had the second highest metro area home price increase year-over-year, rising 10.8% in March (only Portland exceeded Seattle, which rose 12.3%). Seattle, however, was actually the fastest rising market month-over-month in March, increasing 2.4%.

So is this a bubble? Probably not, suggests Jon Talton of The Seattle Times. He takes into consideration that the Great Recession and the housing market decline that began in 2008 were caused by a glut of subprime mortgages and too many unqualified homebuyers speculating in the market. This along with eager mezzanine financing led to a misread of demand by many developers that oversupplied the market with inventory. Nowadays the opposite effect is playing out where there is anemic inventory, especially in downtown Seattle, according to Dean Jones, President & CEO ofRealogics Sotheby’s International Realty. He suggests the market may have “overcorrected.”

Jones made some predictions about the state of the in-city housing market a year ago when he participated in the article “Manhattanziation of Seattle” by Cynthia Flash of the Puget Sound Business Journal.

For the most part the upward pressure on pricing has occurred and the ongoing comparisons to Seattle becoming more and more like San Francisco was best summed up in a recent interview with Gregg Lynn, a top-producing condominium broker in California based in San Francisco at Sotheby’s International Realty. So, will Seattle end up like San Francisco over the next few years? Check out why Lynn says he “can’t see it not happening” and more, in the full video.

“It looks like at least two of the planned developments in the pipeline we’ve been monitoring will not be condominiums after all, but will arrive as more apartment inventory for rent,” said Jones. “This makes the arrival of NEXUS even more anticipated.”

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