How much of the Seattle area real estate market is made up of distressed sales, sales in which the property is bank owned or a seller is required to obtain approval from the bank in order to sell?
In the third quarter of 2011, Seattle and the eastside suburbs were holding their own in the distressed sale market, while Pierce and Snohomish Counties had the toughest time. There’s a huge difference in how each of the 4 counties surrounding Seattle were doing with respect to distressed home sales. Almost 50%, 47% to be exact, of the real estate sales in Snohomish County were distressed properties. Snohomish County is directly north of King County, which is where you’ll find Seattle. Snohomish County is home to a Boeing plant, shipping, biotech firms, and a navy base. Pierce County is home to Tacoma, with its huge waterfront devoted to shipping, and Fort Lewis, the army base.
Although each of the counties has an economic center, King County with Seattle and the eastside cities of Bellevue and Redmond is the true economic hub of the region. These areas are home to Boeing, Amazon, Microsoft, Costco, Starbucks and a host of other companies. Consequently, the Eastside and Seattle have the smallest number of distressed sales. More jobs and a good commute equal less distressed sales.
Does Microsoft still have a positive affect on Seattle’s eastside? Yes! Microsoft still has a huge impact on the eastside.
The map below shows only some of the eastside campuses:
Recently, the news has focused more on layoffs. There are a number of people who have been laid off and are struggling, which is truly unfortunate. This post is not an attempt to minimize what those who are without jobs are going through, but to focus on the strong influence Microsoft still has on Seattle’s eastside.
There’s little said about the increase in the number of Microsofties on Seattle’s eastside since 2007. There are now over 40,000 employees in the area. Back in 2007, there were just over 35,000. Imagine the impact these additional 5,000 employees and their families have on the eastside economy and quality of life. Imagine the impact of 40,000 people on the local economy. Since 2007, these five thousand more people are renting or buying homes, going out to eat, buying goods at stores and using local services.
Microsoft has had a huge impact on the real estate in the surrounding neighborhoods. The Bellevue and Redmond neighborhoods near Microsoft have consistently performed better than any other area on Seattle’s eastside. The number of homes that sell compared to the number that are for sale, the absorption rate, is almost always the strongest on the eastside. Most every month of the past few years, the Microsoft area of Redmond and Bellevue has had more homes selling when compared to the number for sale.
Does this make this area more expensive?
No, not by a long shot. The good news is there’s been a huge benefit to the whole eastside because of Microsoft and there are homes in most price ranges in the area.
The least expensive home in Bellevue is on the market for $227,000. The most expensive Bellevue home is a waterfront property on Lake Sammamish for $4,250,000. Most of the homes in the area are priced under $500,000. Most homes for sale right now, almost 1/2, fall into the $300-500,000 price range.
These 40,000 jobs help keep our economy and our real estate market going, even with the lay offs. The real estate market is still challenging, but homes are still selling. Clearly, the competition is tougher for the sellers right now as pricing and condition are everything. This very realistic real estate market should continue for a year or so.
The eastside, particularly near Microsoft, should fare better than many other parts of the country as the economy improves. People will continue to move in and out of the area for jobs.
What do you think?
The first part of 2010 is going to be the best part of the year for Seattle area real estate.
This was the message over 2000 Windermere Real Estate agents heard at last week’s kick off meeting held at Seattle’s Benaroya Hall. The good news, according to economist Matthew Gardner, is “the recession is behind us.” However, the last 6 months of 2010 are “murky,” said Gardner.
Here are some highlights from his talk:
- Home sales skyrocketed by 25% in the fourth quarter of 2009.
- There was some stability in home pricing in late 2009.
- The stimulus package has not been as effective as hoped.
- Jobs will be a prime concern.
- Banks need to start lending again.
- Rates should be about 6% later this year.
- Foreclosures will still be a concern.
- Boeing’s move of the Dreamliner and layoffs at Microsoft will not have a huge affect on the economy.
- Seattle unemployment to peak at 9.5%
- Seattle was late to the recession and is later on recovery.
- Prices and sales will continue to improve in the first half of 2010.
But as Mr. Gardner said, the rest of the year looks murky. With changes in FHA guidelines, projected increases in interest rates, and costly jumbo loans, the latter half of 2010 is not clear.
Given the information available to us now, I think Matthew Gardner is right. I’ve been recommending to potential home sellers to make a move early this year, since the latter half of the year is so unclear. We may be doing just fine with our economy and with real estate, but no one knows where we will be once the second half of 201o begins. Our crystal balls are a bit “murky,” as Mr. Gardner said.
What do you think about his predictions for 2010 Seattle real estate? What are your predictions for 2010 and beyond? Of course, when 2012 arrives, we only have to worry about surviving, never mind real estate or the economy!