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Monday, August 28, 2006

Unaffordability Spotlight: Queen Anne

Despite my prediction that we would not see Bibeka Shrestha's name on another Seattle Times' real estate article, she has resurfaced this weekend with one of those "neighborhood in focus" type articles. The neighborhood in focus: Queen Anne.

Single-family houses and condominiums in the area that includes Queen Anne had a median price of $483,000 in June, up 13.7 percent over the past year, according to the Northwest Multiple Listing Service.

Janet Gabbert, 65, and her husband bought their house on in 1968 for $22,500. "And we thought we were being taken," she said with a chuckle.

"Even for an attorney with a good salary, it's getting difficult" to buy a house on Queen Anne Hill, said Jeffrey Valcik, an associate broker with Windermere Real Estate.
While most homes are single-family houses, condominiums and apartment buildings are going up.

Helen Bigelow, 81, has lived in the area for 13 years and lamented the redevelopment on the hill.

"It's horrible," she said, while taking a break from grocery shopping. "They're tearing down some of the lovely old houses ... they replace it with a lot of boxes with no grass, no flowers."

With the new development comes more traffic and difficulty in finding parking.

But that just comes with the territory of being what Valcik calls Seattle's most sought-after neighborhood.
What really strikes me as crazy is that the price of homes just five years ago on Queen Anne has now become what you can expect to pay in much less desirable neighborhoods like West Seattle, Mountlake Terrace, or even Ballard. It's understandable that a place like Queen Anne will have considerably higher prices than other parts of the county. I just don't believe that it's sustainable for prices to be so high that even affluent people with high-paying jobs have to stretch to afford a home in the "sought-after" neighborhoods.

(Bibeka Shrestha, Seattle Times, 08.27.2006)
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Anonymous said...

No suprise here, the equity influx continues. "Flight to quality"

David Aldrich said...

"I just don't believe that it's sustainable for prices to be so high that even affluent people with high-paying jobs have to stretch to afford a home in the "sought-after" neighborhoods."

I'm not so sure. I just read an article about the luxury condo market in Bellingham. It seems they can't build luxury properties fast enough. I had to chuckle at one of the quotes where a recent resident said he likes the added security of living in a condo. Huh? Unless they assign you an armed guard, condos are about as secure as an open vault.

What I draw from all the commentary is that there is an endless supply of naive people who are buying into a fairy tale, and they are more than willing to pay the price -- even if they whine about it a little bit.

emcityjill said...

However, luxury properties have a tendency to sit for quite a bit longer. In this case, you might say that yes, builders can't build fast enough....but it's more of a "hurry up and wait" than a "product is flying off the shelves" situation.

According to the WCRER report for Q1 2006:
"Based on statewide data, the only price range which would be described as “balanced”, rather than a “seller’s market” is for very expensive homes."

Now: what's the definition of luxury? There's lots of Ballard crapboxes that I consider "expensive" but hardly luxe. For that matter, there are many houses on Q.A. that are also junk, but are on the market for 600K.

S Crow said...

Speaking of Ballard...

I used to live in Sunset Hill and then moved to 77th & Dibble when I got married 14 yrs ago. I was down in Ballard on business/signing some clients and drove my kids around my old stomping grounds. I could not believe the amount of run down property particularly driving down 8th NW. The city was touting that central divider as a beautiful "boulevard." What a bunch of baloney. Garbage along the road and the central divider is chock full of tall weeds and grass. Those trees they planted years ago look about dead.

Sad. I'm so glad I don't own an 80 yr old house will the constant maintenance issues. It's ok for some, but I'm very glad I don't have to mess with it anymore. Our old shack of a house, (yes it is a 670 sq.ft.shack) looks like it's about ready to fall over. Brown grass knee high.

I do miss my after midnight Dick's cravings though.

Anonymous said...

Yes, the $500,000 condos in Bellingham. It makes me laugh just writing that.

meshugy said...

I could not believe the amount of run down property particularly driving down 8th NW.

Yeah...8th is crappy. But so are most arterials (except in Queen Anne!)

Here's my favorite brainless flip. I've posted it before...but it's worth mentioning because it's still on the market (duh) and is just so outrageous.

This couple (who live on Queen Anne) bought this totally out dated Ballard bungalow for $400K(way too much)

7048 19 AVE NW

In addition to the ARM on the house, they took out a 200K Heloc on their own house in Queen Anne. They used that to turn the bungalow into this:

7048 19th Ave NW

It's an amazing remodel...but still a pretty small house (with an extra house in back). Asking price: $825K!!!

It's been on the market for a guess is they put about 150K into it. So they're 550K in the hole...and that doesn't include over 6 months of carrying costs. They have to get at least 600K to break even.

Anonymous said...

Being at the tail end of the "collapse" here in Washington it is interesting to see the last of the "greater fools" being herded into properties for which most of them will be "upside down" within a year.

On a more positive note the gene pool may benefit if they are so strapped that can't reproduce....

BTW...drove thru "legendary" Ballard this weekend. I concur with the above post about "run down" properties. After the sendup on this board by Baby Blue I expected something "special", not tired looking neighborhoods full of "money pits".

The "fruit" in Ballard is so ripe it has become rotten...

meshugy said...

BTW...drove thru "legendary" Ballard this weekend.

Depends where you go...Ballard is the biggest neighborhood in Seattle (the size of Queen Anne, Green Lake, and Ravenna combined). Some areas suck (mostly south of 65th). Some areas give Queen Anne a run for the $ (Sunset Hill and Loyal Heights)

marine_explorer said...

"It's been on the market for a guess is they put about 150K into it. So they're 550K in the hole...and that doesn't include over 6 months of carrying costs."

Yeah, according to Zillow, it was last sold (12/07/05) for $400K. Quite an upside...couldn't one build a larger house for that $425k tacked on?

Anonymous said...

they can't build them fast enough... because they know if they can't finish them this year, they might not be able to finish them at all...

Anonymous said...

meshugy, wow that was a remarkable remodeling. I doubt they will lose money on it.

Anonymous said...

Some areas suck (mostly south of 65th).

Just over half of Ballard lies south of 65th.

I was walking around the area just west of 24th and south of 85th last weekend and was amazed at the number of houses in complete disrepair. One even had a gaping hole in the roof. I'll say the houses along 32nd above 70th or so are nice, but you work in a few blocks from the bluff and it starts looking like the CD.

David Aldrich said...

Another sign of the times:

"Habitat finding new ways to help"
By Stuart Eskenazi
Seattle Times

The vintage Tudor house in Seattle's Central Area had severe dry rot and a hole in the roof. Stench from mold was so strong that workers readying the place for a stripped-to-the-studs remodel could barely breathe and had to cover their mouths.

It's a common occurrence in the Puget Sound housing market: A new buyer comes in to transform a fixer into a treasure. But this remodel is being done by an unlikely purchaser — Habitat for Humanity.

Habitat is gradually moving away from the affordable-house model upon which it earned its reputation — the modest one-story bungalow, built from the ground up on a single lot. Land in King and Snohomish counties is just too expensive to make that kind of house pencil out anymore, Habitat officials say.

"Over the past 10 years, the land we have purchased has gone up in price by 400 percent and our costs of construction have gone up 300 percent, but the incomes of the families we serve are staying relatively flat," said Dorothy Bullitt, executive director for the Habitat affiliate in Seattle and South King County.

Anonymous said...

couldn't one build a larger house for that $425k

Indeed. The lot isn't big, but one could easily build a nice 2-story there. Conversely, for less than that extra $425K, one could do a craftsman restoration the right way, staying true to that period--and possibly attracting more craftsman buffs.

But of course, these buyers wanted a quick + "nice" remodel, versus something that exudes quality and history. They set their sight too low, and hopes too high.
Thanks for posting this example.

Anonymous said...

Ballard has to be the biggest dung heap around. Once the bubble popping is in full swing Ballard will easily be the hardest area hit as it has been the area with the most investor speculation

Anonymous said...

re. rundown properties:

One of the sadder things that is happening because of this bubble is that people have spent so much money to buy that there's not much money left for upkeep after they move in.

It's a trend that is being noted in many cities.

Anonymous said...

Ballard vs Queen Anne.

A quick search on John L Scott website for houses over $1 million:

Ballard: 8
Queen Anne: 35