Wednesday, July 26, 2006

Neighborhood Report - Capitol Hill

Seattle’s real estate market continues to thrive in spite of the nay-sayers’ dire bubble predictions. Other markets around the country are cooling or are already flat, but that’s not the case with Seattle’s real estate market.

Seattle’s strong demand for mid-level and high-level employment and the geographic restrictions on our housing supply work together to create a shortage of housing. The recent easing of height restrictions on high-rise condominiums and increased density allowed in a number of Seattle’s urban neighborhoods will help ease the tension in our real estate market, but the full effects won’t be felt for a few more years. Even then, there will be only so much room between Lake Washington, Elliot Bay and the communities north and south of Seattle.

Our local economy doesn’t show signs of cooling any time soon. In an article for the Seattle Post-Intelligencer, John Cook explains that venture capital investment is higher in our state right now than its been in five years. Dan Richman recently wrote another article for the Post-Intelligencer where he talks about the stability of our labor market.

The continued strong demand for homes is evidenced by the high appreciation rates that homeowners and investors continue to enjoy. Multiple offers to purchase condominiums are still making many transactions look like sealed bid auctions, and the average time it takes to sell a house continues to be historically low.

Capitol Hill is a particularly strong market because of the innovative new condos being constructed there, and also because of its popularity among Seattle’s left-leaning urban professionals, hipsters and anyone else who wants to enjoy the central location, live music venues, clubs, bars, funky retail shops and pedestrian-friendly density.

From June 27 through today, three multifamily properties, 25 houses and 87 condominiums sold or were under contract. During the same period last year, five multifamily properties, 22 houses and 54 condominiums sold. This means that overall sales volume has increased on Capitol Hill by 42%.

The median price for Capitol Hill condos that sold this month was $313,450. Capitol Hill houses that sold this month had a median price of $729,000. The median price for Capitol Hill condos that sold during the same period last year was $262,500, and the median price for houses that sold during this month last year was $652,011. Over the last year, the median price of condos on Capitol Hill has increased by 19.4%! The median price of houses appreciated by a respectable 11.8%.

This is great news for anyone who already owns a home on Capitol Hill, but it’s not so great for renters who want to buy their own home instead of helping their landlord get rich. First-time homebuyers would do well to buy a home as quickly as possible so they don’t get priced out of Seattle’s housing market and so that they can start reaping the benefit of Seattle’s historically high appreciation rates.

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