Maybe you’ve been in your home for a while, you’re eyeing the equity you’ve gained and considering cashing it in to buy your family’s dream home. Or maybe you’re planning a move to Washington from out of state.
There are many reasons people move to Washington and many of these newcomers want new construction homes. Washington State boasts some of the strongest companies in the country: Amazon, Microsoft, Costco, Starbucks, Boeing, and many others. The climate is mild, Mt. Rainier is gorgeous, and Puget Sound is stunning. The temptation to get outside and explore is ever present. And sun seekers find plenty to do east of the Cascades, where lakes, rivers, deserts, and a bevy of national parks entice nature lovers.
Arts, culture, and culinary attractions abound in major metro areas like Seattle, Bellevue, Tacoma, and Spokane but can also be found in off-the-beaten-path destinations. A visit to Washington’s fabulous wine country is a bucket-list worthy adventure. And Washington’s once floundering sports teams now give fans plenty to cheer about from the collegiate level to the pros.
Whether you’re an out-of-state buyer or a move-up buyer, if you’re looking for new homes in Washington State it pays to understand the ins and outs of this desirable real estate market.
For starters, you need to understand four trends.
Many builders left the market in the Great Recession. With fewer builder's new construction simply isn't keeping up with demand in Washington. But the recession did weed out some of the less scrupulous builders.
Seattle's home market value gained over 15% over the past 12 months (at the time of this writing). Another 8% gain is predicted for the next 12 months.
# 1 - Real estate everywhere is hot
CoreLogic, a leading firm for real estate analytics recently released a report the reveals that the residential real estate market went up in all 50 states in the U.S. between April 2017 and April 2018. The national average was a 6.9% increase in home prices. In 2017, the rate of home ownership also increased for the first time since 2004.
# 2 - Real estate in Washington is even hotter
According to the same CoreLogic report, home prices in Washington state rose 12.8%, nearly 6% more than the national average. What’s driving this hot market? The stock of homes on the market is historically low and a new, large generation of homebuyers — the millennials — is entering the market, further driving up demand.
In King County, Washington’s hottest real estate market, the inventory of homes for sale is at a record low. According to the Seattle Times, King County has had 1 home for sale for every 230 residents historically. Not anymore. The current inventory is 1 home for every 1,060 people. Naturally, the competition for these homes is fierce.
# 3 - New home construction isn’t keeping pace with demand
New homes in Washington are even harder to come by than existing homes. In March of 2018, the Wall Street Journal published an article titled The Next Housing Crisis: A Historic Shortage of New Homes. It revealed that new home construction in the U.S. remains very near the lowest rate of construction in 60 years.
Driving this trend is the surging cost of both land and construction and a home building industry that is still drastically smaller than it was before the bust a little over 10 years ago. According the same article, enrollment in the National Association of Home Builders has hovered around 140,000 members since 2012, down 100,000 members from its height in 2007.
Vice President of Communications at Windermere Real Estate, Shelli Rossi, notes that 60% of Washington’s local builders folded in the 2008 economic crisis. Many of them haven’t come back. There just aren’t as many outfits building new construction homes in washington state — or anywhere.
# 4 - Major metro areas have the stiffest competition for new homes in Washington State
Home buying in Seattle is not for the faint of heart — or the little of funds — but it has some major rewards. Seattle is one of the most desirable cities in the country with its majestic water and mountain views, its laid back vibe, and its hot tech marketplace. And though not cheap, real estate in the Seattle area is a fairly solid investment, similar to other markets where desirable jobs and limited land in a water-bounded region conspire to drive prices up (New York, San Francisco, and Boston come to mind).
At the time of writing, the median price for a home in Seattle is $767,000, according to the Zillow Home Value Index. This is a 15.4% increase over the last twelve months, and prices are predicted to rise another 8% in the coming year. The Seattle Times reported that the median down payment on a King County home now lies north of $100,000, a figure that’s the product of steady 10% growth over the past five years. The same Seattle Times article reported that 23% of offers accepted in this marketplace are full cash offers. That’s nearly 1 in 4.
Last summer, the median price for a newly built home in Seattle was 37% more than for a resale home, a differential that has grown due to interest from foreign investors (Seattle is ranked the third-best city for foreign real estate investment), low interest rates, and the desirability of new-built homes in a tight market.
So how do you nab the home of your dreams in a market this hot?
Just across the lake, the East Side is a hot market for new construction homes, Washington State's rarest residential commodity.
With easy driving distance to Seattle, Issaquah's Pickering Estates offers timeless craftsman touches with a pallet and materials perfectly suited to the Northwest.
# 1 - Know your bedroom communities
With a market this white hot there’s a lot of action going on in bedroom communities like Seattle’s Eastside. Just on the other side of beautiful Lake Washington, and anchored by the well- established city of Bellevue, WA, the Eastside has seen rapid growth over the past few decades. Originally spurred on by the presence of Microsoft, the Eastside is home to many desirable cities. Topping this bedroom community wishlist? New homes in Issaquah, Woodinville, and Sammammish.
Real estate activity in Seattle’s bedroom communities is growing in every direction: north (Everett), west (Bremerton), and south (Tacoma), but the Eastside remains at the top of many a homebuyer’s list. Its popularity stems from more than Seattle-real-estate spillover. The Eastside is home to some of the state’s best schools, tranquil neighborhoods boasting larger lots, and lots of quality new construction homes. Washington State home buyers looking for the right balance between the new home they want and a commute they can live with, often land in the Eastside for good reasons.
# 2 - Get a smart local broker and lender
With a real estate market that moves as fast as it does in the Seattle area, you need an established and savvy local broker. This is one of the top pieces of advice in a recent Seattle Time’s how-to guide on Seattle home buying.
Real estate agents who have a team around them, including a stable of showing assistants, can make sure you see properties right when they hit the market and that your offer gets made fast enough to be in the running.
If you’re drawn to new homes in Washington State, but you’re buying from out of state, set up a time with your broker to spend a weekend in Washington touring a list of new homes in the communities and price ranges in which you’re interested. Let your real estate agent know what you like and what’s a “hard pass” for you.
If you find something to make an immediate offer on, great. If not, your agent will have gained valuable insight into your wants and needs. This will empower your agent’s team to find you the house of your dreams even if you can’t be there in person to see it, and it will help you trust your broker’s instincts.
Some real estate pros will also use this get-to-know you time to sit down and write a “practice offer.” This gives you a template from which to work in the heat of the moment when you need to make an offer quickly. If you’ve chosen your real estate team wisely, they should be able to help you tour homes virtually using cell phone video even if you’re across the country.
If an experienced real estate agent is your best friend when buying a new home in Washington state, a smart and responsive local lender is your second best friend. Sellers in the Seattle area typically have their pick of multiple offers, so any whiff of weakness can make an otherwise strong offer go into the “pass” pile. Experienced lenders will not only pre-qualify you, they will underwrite your loan in advance so that sellers know that your offer is a slam dunk.
# 3 - Know the local buying strategies
Experienced Seattle brokers understand what’s going on in the area — cash offers, ballooning earnest money payments, waived inspections and contingencies, offers well above asking price, and escalation clauses. These real estate pros will know how to position your offer to garner serious consideration.
Outline a clear game plan before you even think about bidding on a home. Talk with your agent about which of these “sweeteners” you’re willing to use to make your offer attractive. A good broker won’t push you out of your comfort zone but they will be candid with you if they think your offer is too weak or too aggressive.
A good real estate agent is a consultant. Pick a trustworthy agent who focuses on building long- term client relationships and warm referrals. This will allow you to invite and trust her feedback. Listening to your agent can save you from making a poor purchase or from missing out on a home you would have loved if you stretched just a little bit more.
Hint: most buyers in the market are making 5 to 6 failed offers before making an offer strong enough to win. Getting a good agent and listening to him can shorten your learning curve and save you some heartache).
# 4 - Find a builder you love and get on its mailing list
With the new construction inventory so low, it just makes sense to find a Washington home builder with homes you love and get on its email list. Get real-time updates about construction phases and new releases, so you’re ready with an offer at just the right time. At Summit Homes, we mostly focus on building smaller communities or filling in pockets of larger communities. This allows us to focus our inventory of homes on quality not quantity.
As you consider your builder, learn their philosophy. Our motto is live without compromise. And we mean it. With people spending more and more time in the car commuting, we feel strongly that location and lifestyle matter.
If you have the resources, you shouldn’t have to choose between a home that works for your family’s lifestyle and hours spent in the car getting to and from work. Thankfully, we’ve been living by the old adage that “they aren’t making anymore land” for many years now, so we’ve been able to secure locations that are truly desirable.
We’re building in some of the most sought after Seattle bedroom communities: Issaquah, Woodinville, Sammammish, and Renton. And we’re building with a trusted team of craftsmen that have been with us for a very long time.
Good luck on your quest as you research new homes in Washington State. We look forward to showing you how good life can be at the Summit.