Spring 2015 Waterfront Report
Realogics Sotheby’s International Realty, the Pacific Northwest’s largest affiliate for the global real estate network, recently released several findings from their internal Q1-2015 waterfront market report focused on the central Puget Sound region including King, Kitsap, Snohomish and Pierce counties. Their analysis measures trending through the first quarter year-over-year and weighs results of April and May transaction activity to predict the likely results of the summer sales season June 1st through September 31st.
“This is already shaping up to be a pivotal year for waterfront throughout the region,” said Dean Jones, President & CEO of Realogics Sotheby’s International Realty. “Both the values and sales velocity are likely to increase further as would-be sellers test their opportunity in an otherwise anemic marketplace – inventory is very low. At the same time, this is the most robust we’ve seen demand since before the 2008 market correction and the peak of the season is still ahead.”
Demand for waterfront in the Puget Sound region is rather seasonal – not only because buyers surface when the sun comes out but because brokers and sellers are more inclined to list properties during the sales season of April through September each year. Therefore sales activity trends in the first quarter lead into decision making in April, which provides a glimpse of how the following sales season will respond. The following matrix for April 2015 compares waterfront listing activity with the prior year, according to Trendgraphix research:
FOUR COUNTY WATERFRONT HOMES FOR SALE IN APRIL 2015: 756 PROPERTIES
- Up 16.3% compared to the last month
- Down 10.3% compared to the last year
FOUR COUNTY WATERFRONT CLOSED IN APRIL 2015: 163 PROPERTIES
- Up 28.3% compared to the last month
- Up 53.8% compared to the last year
FOUR COUNTY HOME PLACED UNDER CONTRACT IN APRIL 2015: 235 PROPERTIES
- Up 23% compared to the last month
- Up 50.6% compared to the last year
For the central Puget Sound region including King, Kitsap, Snohomish and Pierce counties the long term trend has been for fewer new listings, increasing sales and expanding demand since the market rebound began in 2012. From a macro perspective median home prices along the water’s edge have increased at least 5-percent per annum but far more extraordinary trends can be found when exploring microclimates such as West Bellevue where demand for waterfront has reached a boiling point. For example the greater Eastside lakeside market has experienced an 87.5-percent increase in homes placed under contract in April compared to the prior year and that’s only what is published with the Northwest Multiple Listing Service – private and off-market transactions only add to the spectacle. By numerous accounts wealthy Chinese nationals are amongst the top consumer group. It helps too that the local economy and the surrounding single family home markets are robust allowing move-up buyers to successfully sell their current house and explore the waterfront lifestyle they’ve long desired.
“It seems like the proverbial blinking contest is over – many high profile properties that have been on and off the market for years have finally found their buyers,” suggests Jones. “We also note numerous custom home and speculative developments popping up along the shoreline.”
Jones also points to notable transactions including a $9.8M property on Bainbridge Island, which is now pending after more than a 1,000 days on market and another $13.8M estate on Mercer Island, which recently closed after 773 days on market.
The most expensive waterfront remains the eastern shore of Lake Washington including North Mercer Island, Newport Shores, Enatai, West Bellevue, Medina, Hunts Point, Yarrow Point and Kirkland. Currently there are 19 available properties priced above $5M with 7 sales pending and 8 closings year to date. Home values range broadly depending on age and construction quality from below $700 per square foot to more than $3,000 per square foot. The typical value of a luxury waterfront home is $1,000 per square foot.
“That might sound pricey to a local resident but from a global perspective we are still considered a relative bargain – for now,” adds Jones. “Homes along Lake Washington, even in the most prestigious areas may be valued up to $25M but that same property would cost more than twice that along English Bay in Vancouver, BC; in Marin County in San Francisco; or along the Pacific Ocean coastline in Los Angeles or Orange County. The best part is much of our waterfront is fresh water while still offering access to the Pacific Ocean. We also enjoy a favorable tax climate too. It’s no wonder we are seeing so much demand from out of State and out of the country.”
The rising tides of buyers are also driving waterfront demand elsewhere within Puget Sound. Savvy homebuyers are seeking out alternative markets to the Eastside’s luxury juggernaut. Take Bainbridge Island for instance – it has equally beautiful, if not even more dynamic waterfront landscapes; it also boasts nationally ranked schools; an enviable lifestyle; and it remains a similar distance (albeit half hour ferry ride) from downtown Seattle’s expanding employment center. Yet the waterfront real estate on Bainbridge Island is roughly half the price, typically fetching $500 per square foot. That might explain a recent run on waterfront home sales that has dwindled active inventory to just 21 properties amongst the 53 miles of coastline. Furthermore the demand spillover of Bainbridge Island has primed the market for Poulsbo, Port Ludlow and Sequim waterfront as well, where greater values can be found and residents enjoy a rain shadow affect from the Olympic Mountain Range. Similar trends can also be found in the South Sound regions, especially around Gig Harbor and Fox Island, which has become known as the Medina of Pierce County.
The Sotheby’s International Realty Luxury Lifestyle Report measures trends and preference for luxury real estate by surveying affluent consumers in the United States, Canada, the United Kingdom, Brazil and China and determined that overall waterfront was the top lifestyle search (42-percent) followed by mountain properties (21-percent), country living (13-percent), farm and ranch (5-percent) and historic properties (5-percent). To learn more visit: click here.
Meanwhile, on SIR.com – the leading world-wide website for luxury property searches – the global affiliate network confirms that waterfront is the top search in the US (47-percent) and in Canada (57-percent). Not only are more North Americans using SIR.com to explore new lifestyle property but so are international consumers. Today SIR.com commands an average of 1 million unique visitors per year and 45-percent of this traffic is originated from international markets.