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Every 10 Miles May Cost You Money

By
Real Estate Agent with RE/MAX Metro

Will there be an unraveling of the housing market in the suburban fringes of Seattle?  That is what is happening in other parts of the country according to a recent article in BusinessWeek.  The article says that most of the overbuilding took place in the outer suburbs around the country in the last few years and now that the market has turned down, these areas are being hit the hardest.

We have been advising our clients for years to buy as close in to the city as possible.  The idea of "drive until you can afford what you want" didn't make any sense to us.  For the home buyer that was only going to be in their home for only a few years and they worked in or close to the city, going out to the suburbs didn't make any sense for them.  Instead, we advised them to "buy what you need as close in as possible."  They had to make compromises in what they got but you know what they say about real estate, location, location, location.  With gas prices now well over $4.00 a gallon those 30 minute commutes with no traffic turn into a 1 hour commutes in normal rush hour traffic, and the impact on family budget is quite difficult.  It's happening all over the country.  During the housing boom, many suburban areas were overbuilt and are now suffering.  Some areas around the country have seen home prices go down by as much as 32% in the last year.  Add to that the huge number of Foreclosures and some of those areas could be in free fall for the next year.  Fortunately Seattle is not one of these hard hit areas, but it has been effected.  However, while the number of sales have decreased greatly over the past several months, in some areas prices have actually stayed pretty stable and even in some neighborhoods increased slightly.

The BusinessWeek article went on to say that they asked Zillow to do a analysis of how home prices have been doing in the city verses the suburbs and the results seem to support what we are saying here.  Zillow looked at New York, Los Angeles, Chicago, Miami, San Francisco, and Seattle, and found that home prices have been more stable within a 10 mile radius of the center of the city, and have generally worsened with each 10 mile radius ring moving out from the center of the city.  There were some cities where this didn't apply but Seattle is one where it has been the case.

We recently received a sales analysis from one of the Title Companies we work with here in Seattle and the following numbers are very interesting.  These are resale numbers for homes in different locations and neighborhoods around and in Seattle.  These are sales figures from May of 2007 through May of 2008

Area...................................# of Sales YTD...................................................Average Price YTD

...............................2008................2007.......% Change.................2008.................2007...........%Change

Ballard.......................231..................316.............-27%..................$518,242..............$525,907..........-1%

Bellevue.....................376..................617.............-39%...................$900,769.............$931,086..........-3%

Federal Way................227..................361.............-37%...................$320,164.............$333,990..........-4%

Green Lake/ U District...450...................647............-30%...................$630,758.............$601,366..........+5%

Issaquah....................181...................226.............-20%...................$587,158.............$632,334...........-7%

Kent.........................400....................647............-38%...................$330,833.............$363,762...........-9%

Magnolia....................180...................264.............-32%...................$821,126.............$804,701..........+2%

Mt Baker....................249...................409.............-39%...................$839,440.............$751,435.........+12%

N Bend/ Snoqualmie.....116...................164.............-29%...................$477,729.............$504,367...........-5%

Renton......................445...................695.............-36%...................$405,149..............$447,133..........-9%

Vashon Island...............45....................54..............-17%..................$464,354..............$491,971..........-6%

 

Interesting numbers aren't they?  While the number of sales in each area has fallen, there are areas where prices have not fallen much at all or have slightly increased.  Interesting as well is that some of the areas with higher average prices went down like Issaquah, and some areas actually when up like Magnolia and Mt Baker and Green Lake.  We all have to be very careful when we look at statistics and especially housing numbers at this time.  There are so many headlines painting gloom and doom but those are usually in other parts of the country.  You shouldn't use a wide brush to paint the Seattle Real Estate Market.  Seattle has been effected but no where near like other areas but peoples fears that are created from all these negative headlines artificially add to a slumping market here in our opinion.  If you want to read the perfect example of this read our Blog: #mce_temp_url#

The Seattle Real Estate Market holds some really good opportunities at this time for the smart buyer.  Over the last couple of years for example, there have been a very large number of Town Homes built in close-in neighborhoods.  Some of these Town Homes are in good locations and some are not, but what they all have in common is that you now have a very motivated seller and good inventories to choose from.  The same is true for many condo buildings so there are some very good deals to be had, but you have to understand pricing in this market and know how to get the best property at the best price.  There are great opportunities but you have know what you are doing.  And because of the traffic and now the cost of fuel, the close in neighborhoods will experience even more demand over the next several years.

 

Comments (3)

Dominick Dina, MA, REALTOR®
Christian Realty San Antonio - San Antonio, TX
GRI, e-PRO, TAHS, SFR, Notary Public

David and Karen,

I did a blog post on my blog www.dominick.featuredblog.com talking about how the price of gas will change real estate.

Downtowns around the nation will be revitalized as they become more desirable and that long drive to the suburbs less so. 

Everything changes or is it everything stays the same....no, I remember when...no that's not it...back in the old days... .

Dominick

Jul 14, 2008 05:46 AM
David Bell
RE/MAX Metro - Seattle, WA

Dominick,

I read your post and yes this will happen.  Close-in neighborhoods will be the best investment over the next several years and with the increased demand these neighborhoods will appreciate the most.

David & Karen Bell

Jul 14, 2008 06:05 AM
Charles Perkins
Charles G. Perkins, CPA - Burien, WA

It is my belief that many in the Seattle area will continue to live in the suburbs.  There are very nice homes and these days a lot of the work is not concentrated in Seattle itself.

Oct 25, 2009 09:42 AM