Seattle goes vertical. The Greater Seattle housing market update, December 2024
Welcome to the latest edition of the Greater Seattle Housing Market Update. As always, to skip right to the stats you can do so by clicking here. But for more valuable information, continue reading below!
As the title suggests, the city of Seattle is going vertical! This isn't exactly new, but they're trying to go even more vertical than before.
With the passage of last year's House Bill 1110, residential lots within Seattle are now permitted to accommodate 3 units (on a single family lot). You've likely seen these, or remember me mentioning them in past market updates. These new structures are being referred to as "condominium-ized" properties. The Council, Mayor, and other legislatures are considering an amendment to the proposal that would not only allow for 4 units per lot (possibly more in some situations), but also allow for greater diversity in the types of structures that can be constructed on these lots.
If you're a Seattle resident, not only can you learn more about the proposed changes, but you can also comment on them by going here. Even if not a Seattleite, I'd encourage taking a peek. It's pretty interesting stuff.
Some highlights of the current proposal:
- A max of 4 units are allowed on all lots, regardless of lot size, and up to SIX lots if the property is located within a quarter mile walk of major transit OR if two of the six units are "affordable". What exactly affordable means, I've yet to find.
- Lot coverage would increase to 50%, compared to 35-40% for most lots today. This would help accommodate two story buildings, which are less common today because the current lot coverage limit requires three-story buildings to achieve the maximum FAR (floor to area ratio).
- Front and rear setbacks would be reduced, which would allow a wider range of layouts and more usable open spaces. New rules would encourage porches by allowing them in the front setback.
- Unit lot subdivision would be permitted, allowing a more straightforward, fee simple sale and ownership of homes, compared to the more complex condominium-ized arrangements currently in use. Editorial opinion, this would be fantastic!
- Depending on the zoning, new requirements could increase the maximum number of stories per structure. For example, anything zoned LR-2 will potentially allow a structure up to four stories high. LR-3 will allow up to five stories. NC2-55 will allow a mix of retail, office, residential, etc and to a maximum 55ft height limit.
Let the arguments, name calling, and brawling begin!
Pro-density proponents will advocate this will help to bring down housing costs by adding more supply to the market. I don't disagree, but would recommend they temper their expectations on how impactful these changes will be. It's not like this bill will pave the way for $400,000 starter homes or anything close to it. Whatever is constructed will still be expensive, and if there's relief provided, I'm of the opinion it's more likely to be felt by renters as opposed to home buyers. At least that's what appears to be the effects of the current HB-1110.
Opponents might argue these buildings are likely to take away from the aesthetic character of their neighborhoods, possibly bringing down resale value. I don't 100% disagree, but also think this is an overreaction. You can get ideas on what some of these 4-5 stories look like and I think they're pretty sharp! Additionally, here's what we do know. If your lot is capable of being developed into a multi-unit site, you're lucky. Developers will pay premiums for lots that can offer this potential so it benefits the homeowner financially when they're ready to sell because not only is the property going to be desirable for buyers looking to buy the home and occupy it for themselves, but it will also be appealing to developers. The more buyers, regardless of their intentions with the property, the more likely that home can sell for more and more.
The reality is that, in some areas of Seattle, lots are pretty small (under 4,000sqft). Even assuming this amendment passes and these changes take place, it's not like every single family lot will suddenly be conducive to development. And even the ones that do, maybe some homeowners won't want to sell to a developer. Or, maybe when they're ready to sell, their agent doesn't understand the full scope of possibilities that can be done with that lot and therefore miss out on marketing to developers. Whether you're a proponent or opponent, I'd recommend taking a deep breath because change does not happen overnight.
Especially when it comes to building in Seattle, a city infamous for excessive regulation. This directly impacts building costs and timelines. If the city really wants to accelerate the impacts of this initiative, they're going to have to loosen up regulations, especially when it comes to tree preservation.
The regulation involved in which trees can be removed to create housing has essentially created an ideological tug of war between housing affordability and tree preservation advocates. Can both exist, or does one have to concede to the other in order to maximize the effects of this amendment? The city needs to decide which is a stronger priority.
One thing is for certain, we need more homes. King county added over 30,000 new residents over the last year, 18,000+ of which settled in Seattle. If roughly 3 out of every 5 new King County residents settle in Seattle, and we have NO LAND on which to build new inventory, we need to do everything we can with existing land to create more inventory. Personally, I don't think we'll ever get ahead of the curve given our region is so far behind building (and limited topographically) and we have an amazing regional economy attracting highly educated, skilled, and strong wage demanding populations to settle here, from all over the world. Pending any major natural disasters and/or massive regional economic shakeups (god forbid), I forever see our housing dynamics as being in one version of a seller's market or another.
Onto the stats:
Seattle: November 2024 median sale price of $968,000. That is up 2.5% YoY and down slightly MoM from $972,500. Inventory is up 12.6% YoY while the months of inventory statistic was flat MoM.
Eastside: November 2024 median sale price of $1,537,312. That is up 9.8% YoY and down slightly MoM from $1,555,000. Total inventory was up just .6% YoY and months of inventory declined to 1.17 from 1.28 months.
King County: November 2024 median sale price of $925,000. That is up 4.5% YoY and down MoM from $960,000. Inventory is up 14.2% YoY while the months of inventory statistic dropped to 1.49 months from 1.58.
Have a wonderful Holiday season and New Years. See you in 2025! Onward!
