Bellevue Market

Posted on January 2, 2019

The Bellevue market manages to keep a coveted place in the top 10 housing markets in the last quarter of 2018, securing the last spot. According to VeroForecast reports, the Bellevue Market will enjoy a 9.3% appreciation rate over a 12-month prediction. It is one of the four Washington markets that made it to the list.

These are the 2018 last quarter rankings, according to VeroForecast:

1. Bremerton-Silverdale, Washington, 11.7%
2. Boise City-Nampa, Idaho, 11.2%
3. Las Vegas-Paradise, Nevada, 10.8%
4. Bellingham, Washington, 10.6%
5. Olympia, Washington, 10.3%
6. Carson City, Nevada, 10.1%
7. Reno-Sparks, Nevada, 10%
8. San Francisco-Oakland-Fremont, California, 9.6%
9. Denver-Aurora-Broomfield, Colorado, 9.5%
10. Seattle-Tacoma-Bellevue, Washington, 9.3%

Neutral market
Bellevue remains a steadily performing market, remaining a neutral market to buyers and sellers. According to Zillow, Bellevue home values have increased to a modest 3.7% in 2018 and is predicted to increase by 0.8% within the following year. The average home valuation value is $916,400. As of November 2018, the average listing price of homes (includes single family, condominium, and townhomes) is at $938,000 with an average sale price of $847,300. The average price of homes per square foot in Bellevue is $190 higher (at $466 per square foot) compared to the Seattle-Tacoma-Bellevue Metro average of $276.

Key points:

● Home buyers have more inventory to choose from
● Demand exceeds supply – growing population and rising income could be a factor
● New zoning regulations allow towers to rise up to 600 feet tall.
● For the first time in more than 30 years, the zoning code has been updated. The recent passage of the Downtown Livability Initiative by the City Council allows for significantly taller buildings and a greater variety of uses.
● As of November 2018, the average rent is at $2,227 per month for the whole Seattle-Tacoma-Bellevue Metro.
● As of November 2018, the average rent is at $2,810 in Bellevue, $583 higher than the whole metro’s average rent.

Breakdown:

● 56.5% of homes are owned
● 43.5% are rented
● People between the ages of 25 and 44 make up the largest age group, this group comprises 30.8% of the population.

Positives:

● The economy continues to be very strong with heavy investment from commercial construction continuing to boost expectations.
● A growing tech economy downtown is influencing a thriving office market.
● Amazon’s long-term lease on Expedia’s current Bellevue HQ and other tech headquarters still spurs on an influx of employees and has had a multiplier effect on the job market.

Negatives:

● While home buyers have more inventory to choose from, first time buyers still don’t have enough affordable inventory – that is not any likely to change in 2019.
Construction boom results in more competition.

Key infrastructure to watch:

● Bellevue Square Expansion – Puget Sound Business Journal reports a planned Bellevue Square Expansion project in 2019. The construction project will add two towers – a combined hotel and apartment building and a dedicated luxury apartment building.
● A $128 million four skyscraper Elev8 project – Stanford Hotels acquired controlling interest in this 4 skyscraper project in the rezoned area of NE 8th St between 108th and 110th. On this site will rise two 40-story towers one would be 351 luxury condominiums for sale and one would be 448 apartments for rent with retail at the base of both. Then in a second phase, a 3rd residential tower and an office building.
● Vulcan Real Estate’s massive half block, 600-foot tall office development to start in early 2020. It will have 937,000 square feet of office space.
● Onni Group of Cos. plans to develop an 850,000 square feet three tower mixed-use project in 106th Ave NE.
● Fanna group of Cos’ 18 storey mixed-use tower building with 420,000 square feet of office space is in “pre-application” status.
● Wright, Runstad & Co, and Shorenstein’s 36-acre mixed-use project – with Facebook reportedly considering leasing Block 16, a 316,000 square feet space.

What’s in store for investors in Bellevue?
The real estate market continues to improve for buyers with an excess in inventory driving a light drop in interest rates and a slow down in price increase. This significant increase in inventory is relative to the record low inventory last year. It is a long way to go from the inventory needed for a truly balanced market. Buyers have the advantage of having more choices and less competition but sellers who price well within current market values will continue to see a strong interest.

Rental market:
The 2018 median rent price in Bellevue is $2,688, which is higher than the Seattle-Tacoma-Bellevue Metro median of $2,250. The average size of an apartment is 879 square feet, with studios averaging 439 square feet, one BR apartment averaging 702 square feet and 2 BR apartment averaging 1,018 square feet.

As with areas with active construction projects, the construction boom could slow down the growth of the rental market. More people still own houses (56.5%) in Bellevue instead of rent (43.5%) with more married people owning rather than renting. This could be due to the fact that millennials, who dominate the Bellevue population and have formerly put off making big life decisions, such as marriage/partnering, having children, buying a house, etc., are now older and have started making those choices.

Forecast:
Real estate prices are still expected to increase in 2019 but more slowly than they did this year. This could be said about the whole nation in general. Bellevue is among the most expensive real estate markets in the Eastside, the other is Sammamish. However, a recent trend is starting to develop where sellers have been reducing their list prices. This coupled with a regional seasonal dip means that home buyers have gained some negotiating ability and a whole lot more inventory to choose from.

References:

https://www.forbes.com/sites/ellenparis/2018/11/29/realtor-coms-2019-housing-forecast-is-pretty-interesting/#7d9c9af016cd
https://www.housingwire.com/blogs/1-rewired/post/47246-this-washington-state-msa-will-see-the-most-real-estate-appreciation
https://www.zillow.com/bellevue-wa/home-values/
https://windermereeastside.com/category/statistics/
https://www.bizjournals.com/seattle/news/2018/12/07/bellevues-office-market-vulcan-trammell-crow-hines.html#g/447027/7