(Source: King County Assesor)
It won’t come as a surprise to anyone house hunting on Capitol Hill that it is still very much a seller’s market. Property values on Capitol Hill have gone up 15% this year — the largest single percentage jump in at least a decade, according to data from the King County Assessor’s office.
On north Capitol Hill, the average property value (includes land and structures) reached $976,400 in 2015. The “Capitol Hill” area as defined by the assessor is roughly bound by Roy St up to the Montlake Cut, and Interlaken Park to I-5.
In the “Central Area,” which includes a good chunk of Capitol Hill, average property values rose 14% in 2015 to $516,800. The area is roughly located south of Roy St to I-90 and west east of I-5 to 32nd Ave.
The County’s Localscape tool allows users to draw their own boundaries to research average property values and census information.
The $1 million mark is nothing new to Lake Washington neighborhoods like Madison Park and Madrona, where 2015 average values rose 12% to $1,249,700. Property values increased the most in the Eastlake/South Lake Union/Queen Anne area, where a 20% uptick in 2015 brought average property value to $839,800.
The downside for homeowners on Capitol Hill will be a higher property tax bill. Property owners won’t know their final tax bill until levy rates are set after the November election. All things being equal, increased assessed values mean higher property taxes.
The huge uptick in property values and corresponding sales prices has some believing Seattle is reaching a tipping point.
This month’s Northwest Multiple Listing Services report, which tracks most real estate transactions in the region, warned that the current trends wouldn’t last much longer:
The latest statistics from the MLS show a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago, prompting one industry leader to say the trends aren’t sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. “We’re on the cusp of a housing market slowdown,” he predicts.
Meanwhile, Mayor Ed Murray backed off a plan earlier this summer to loosen zoning restrictions in single family home areas to allow for more multi-family style development. The Housing Affordability and Livability Agenda committee came up with the recommendation as part of its plan to add 20,000 units of affordable housing over the next decade. The City Council will reportedly take up a new proposal that would allow single family homes to be divided into multiple residences in an effort to increase density throughout Seattle.
I’m curious what percentage of the purchases driving up Capitol Hill property values are made by those who intend to inhabit the homes, and what percentage are made by investors seeking to profit on rising prices.
It’s worth noting almost all condo associations limits the max # of units which can be rentals. (i.e, not owner-occupied). The FHA sets a max of 50%. Below 50% owner-occupied, the purchaser can not get an FHA loan. Many banks do this too. Also, mortgage interest rates for rentals are higher than owner-occupied. Obviously this doesn’t impact people who pay all cash, since they don’t need a mortgage. But condo assns strive to stay above 50%, else the bldg becomes less attractive to owner-occupants (who usually take better care of the property than renters).
It is VERY odd that the Assessor uses Roy St as the dividing line between “Capitol Hill” and the “Central District,” because that leaves out a large part of what is considered Capitol Hill. And it also gives a very misleading (and inflated) picture of average home prices for our neighborhood, because obviously north Capitol Hill is the more affluent area. There are plenty of modest/moderately-valued homes on Capitol Hill, mine included. The inaccurate figure of $976,400 provides fuel for those who are always claiming that Capitol Hill is a neighborhood of “rich” homeowners.
By the way, Bryan, in describing the Assessor’s definition of the Central District, I think you meant “…..east of I-5”, not west of.
“what percentage are made by investors seeking to profit on rising prices.”
Absolutely.
http://www.motherjones.com/politics/2014/01/blackstone-rental-homes-bundled-derivatives
These people pay in cash and get into bidding wars. i’m not looking forward to a near-term purchase.
The answer to higher land prices is to allow for more intense of use in said land in order to get cheaper per unit apartments. Not increasing supply is to increase price.
“‘We’re on the cusp of a housing market slowdown,’ he predicts.” — I think it is important to note that this refers to a slow-down in sales rates, not prices. Real estate agencies care about sales rates since that affects their revenue stream directly (they get 6% of almost every sale!) and because sales rates are even more volatile than prices, but we citizens of Seattle care more about price changes. Lowering inventories forces a slowdown in the market in terms of sales (less houses to buy!), yet a continued increase in prices (less houses to go around!).
This article confuses property values with assessments. There is always a disconnect between the two. There are many reasons for this, including the fact that municipalities regularly effect tax increases by increasing assessments rather than increasing property tax rates. Any economist will tell you that can’t look to assessments to understand trends in market value.
Assessments are a good tool for looking at the widest spectrum of housing values. Also, if we’re getting technical, County officials don’t actually set the property tax rate.