Much has been said on CHS about the increasing un-affordability of renting on Capitol Hill. But if you’ve been looking to buy a house in the neighborhood in the past five years, you know the apartment game is basically child’s play. Capitol Hill is among the most competitive home buying markets in the city and likely among the least affordable for its own residents.
The result is a marketplace where many homes are not being bought by those who have lived in the neighborhood, says Windermere real estate agent George Beasley. Beasley, who focuses on Capitol Hill listings and runs residentialcapitolhill.com, said the nearing 100-year-old Craftsman and Tudor homes hold great appeal to an older, more affluent and, more often than not, new-to-Capitol Hill buyer.
“Many (buyers) have owned two to three homes, a lot of relocation buyers looking to move into the city,” Beaseley said. “They’re not afraid of a little work, and frankly they have the resources to handle maintenance and some remodel work.”
A recent report from Trulia showed that Seattle metro wasn’t the toughest place to house hunt — we ranked as the 23rd most un-affordable market in the nation to buy a home for its middle class residents. According to that report, 55% of homes in the Seattle metro area should be within reach for a household earning the median income of $68,5000. An affordable middle class house in Seattle, according to Trulia, would be $338,000 or less.
Meanwhile, only 14% of homes in San Francisco were within buying range for the city’s median income earners. Trulia determined a house to be affordable if the monthly 30-year mortgage payment and taxes fell below 31% of the household median income.
Looking at sales data for the three zip codes that cover most of Capitol Hill shows an affordability environment that skews toward SF’s. Last week on Redfin, the median home price in (greater) Capitol Hill was around $573,00, which included condos. The average price jumped to $867,000 when the search was limited to just single family homes and townhouses (note: CHS removed one outlier — an undisclosed $8.5 million mansion, if you’re in the market).
Real estate blogger Tim Ellis has been running seattlebubble.com since 2005 — it is mandatory reading for anyone interested in housing trends in the Seattle area. Seattlebubble’s commonly used index tracks relative affordability of houses in the Seattle area (our calculation include condos and single family homes). Like any model, the affordability calculator makes several assumptions about interest rates and down payments* but it offers some insight into how “affordable” buying a house is in Capitol Hill — or really, how affordable it isn’t.
Affordability in this case will be considered a mortgage that is less than 30% of household income. To analyze housing affordability in Capitol Hill** we used income data from the U.S. Census and sale price listings from the site Redfin.com.
Central Capitol Hill/Central District (98122)
Out of the three zip codes that cover Capitol Hill, the area including Pike/Pine and the Central District is the least affordable place to buy a house for its own residents. The median household income for all residents here is $47,405, nearly half of the median income of households in 98112. On that income, the most expensive “affordable” house would be $294,500, meaning only about 30% of homes currently up for sale in the area are within reach for median income earners.
Western Capitol Hill/Eastlake (98102)
The northwestern chunk of the Hill, including Eastlake, turns out to be the most affordable housing market for current residents. Half of the households in this area can “afford” to purchase a $364,000 home (median sale price) in their neighborhood today. Around 44% of homes are “affordable” to median income earners, who take in $55,311.
Eastern Capitol Hill/Madison/Montlake (98112)
East Capitol Hill is the wealthiest of the three sections of the area by far, with a median household income of $89,504. The houses are the most expensive as well — the median sale price in the area was $687,500. The most expensive house in the “affordable” range for median income earners would be $553,129, meaning about 27% of home currently listed would be within reach for middle income earners. Around 40% of households could afford a $415,000 house — the median sale price currently listed.
Despite the fact that some 40% of Capitol Hill residents may be able to afford a house in the neighborhood, doesn’t mean shopping is easy. Beasley said finding “deals” on single family homes is extremely rare. Even through the crash years, foreclosure and short-sales were tough to come by on Capitol Hill. Beasely said that even if homeowners went belly up, banks saw the value in the neighborhoods and weren’t so quick to dump Capitol Hill homes.
“Inventory is very, very tight right now. If you’re looking at the ideal price range, you’re going to be waiting and you’re going to be in a competitive situation,” he said. “Be prepared to compete, and if you don’t have the stomach, you’re going to have problems getting into a home.”
*Using a 30yr mortgage with a 4.4% interest rate, 20% down payment.
** The U.S. Postal Service wasn’t kind to Capitol Hill when drawing up zip code boundaries, splitting the neighborhood into three zones. Unfortunately, most demographic data is calculated by zip code which makes a proper Capitol Hill analysis difficult. However when delving into the housing market, the larger region is probably a good approximation of where those looking to buy in the “Capitol Hill area” might consider.