Wavepacket Blog

Wavepacket Blog
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Thu Oct 22 22:30:14 2009
The Dream Tour
My guide to Seattle-area real estate.

Beautiful! But not for me...
Image courtesy of Luke van Grieken (wiki)

Well, my own real estate journey is slowly coming to a close. Earlier this year I decided to sell my home and buy a different one. I had three motivations:

First, I wanted to move closer to downtown.

Second, I think gas prices will climb dramatically again, so I wanted to be in an area where I could walk everywhere, even work.

And third, the depressed housing market is an awesome time to trade up. My personal opinion is that most people didn't realize that. So I think I was able to save a lot more on my purchase than it cost me to sell in a down market.

I put an offer in on a house in May, and put my own home up for sale in June. Only now in October have I finally got an offer on my house, and only now in October does it look like my May purchase could (maybe, hopefully) come through! So with a big dose of luck I'll close on both the sale and purchase in November.

That means I've been watching the real estate market closely in Seattle for almost a year (I started looking well before I made an offer). I'm not a real estate agent or an expert! But I like looking at what's out there, and seeing what I think the deals are.

So here is my own personal tour of Seattle's Best Properties. These aren't the prettiest homes, or the nicest inside. But these are the homes that I think have the most potential, and are the most underpriced. These aren't cheap homes, but they are either close to the median King County price, or are hugely discounted.

WARNING: Although I have spent many days looking in and around homes in the greater Seattle area, I have seen very few of these particular homes in person. So take this as an overall tour of how I see the market through my own twisted lens, and not an endorsement of any one property.

General Principles

First, I prefer homes that need some work. Sure, you have to do some work to improve them, but you get a discount on the purchase price. That means you may pay about the same price in the end, but you can have renovations done to your liking. And I don't even mean large renovations: many homes see significant improvement just by ripping out old carpets, removing funky fixtures such as accordian doors, and repainting. My last home had large security gates on some of the doors (but only some, thereby defeating the entire purpose of the security gates!). When we ripped them off, a friend said "Congratulations, you just added $5K to the value of your house."

Second, the bones of the house should be solid. That is, you can put up with funky interiors and bad paint jobs, but poor foundations, settlement, or rot can be very expensive to fix. Stay away from those unless it's a real bargain.

Third, look for good lots. I often see very nice homes on tiny lots, sandwiched next to each other with no privacy. Or I'll see nice homes on a very busy street with a lot of noise. Look for lots that have a balance of privacy and space, as well as accessibility. Those lots are out there! They don't even have to be large, they just have to be well laid out.

Underappreciated View Homes

These are my personal favorite sort of properties. A protected view is rare, and therefore has the potential to appreciate more than other lots. An unloved home on a lot with a protected view could be worth much more in the long term than a beautiful home on a nondescript lot. But I find that homes that need work are really underpriced, so you can find great bargains in this category.

Some of the properties I'd look at in this category:

$499K on Queen Anne
Image courtesy of Redfin website

Here's one ( MLS listing 29143300) on Queen Anne with a good view to the west. I don't think this home is well marketed! The view photos are tilted (even more than the photos I take). You can see the house needs some updates, but if the bones are solid, then this is a steal at $499K. According to Zillow, this home is worth around $570K now. Zillow isn't very reliable, but that gives you an indication.

Also, I like the lot for that property (check the Redfin listing link above). It's narrow, but long. That means there is a long slope which protects the view.

$800K in Magnolia
Image courtesy of Redfin website

Here's another view property to consider. Yes, it is expensive! It is listed at $800K. I don't think this is a fixer: it's just feeling the impact of the market. Even so, it is a bit overpriced where it is. But the price is now coming down to a reasonable level (it listed at $900K!). If it gets to the low 700s I think it will move--and I think the sellers are probably aware of that and would consider an offer in that range now!

This is a big house (3400 square feet), far too big for me. But if you needed the space, this is a good one. The lot is a good size for Seattle (5000 square feet) with front and back access. There is a bit of a slope, so that plus the street means the view is well protected.

Zillow values this property at over $900K now, and valued it over $1 million in 2008. Again, Zillow isn't perfect. But it is an indication.

$495K in West Seattle
Image courtesy of Redfin website

And finally, there's this neglected gem in West Seattle. There could be a lot wrong with this one! But it is worth checking out.

If the description is even close to accurate, this could be worth a lot more with some straightforward investment. Look at that lot! It's close to 11 thousand square feet (!), really protecting the view.

Large single-floor homes are rare (this one is over 1900 square feet) and you could possibly add a second story if you wanted to.

This definitely looks like the classic case of buying the most beat-up home in a neighborhood of very nice homes. Check out the nearby home values on Zillow! Again, that gives you an idea of the potential upside. This is worth significant remodeling and maybe even a rebuild.

Underappreciated Waterfront Homes

I've never owned waterfront. Partly because I don't know if I'd have time to truly enjoy boating. But mostly I've never owned waterfront because it is too expensive! But now there are waterfront properties in Seattle available at reasonable (non-stratospheric) prices.

$650K on Lake Washington
Image courtesy of Redfin website

This property on the south end of Lake Washington is a good example of something to look for. It has a lot of deep waterfront for moorage. The layout of the house is good: the top floor is for entertainment and gathering (living, dining, kitchen) with three bedrooms on the cozy lower floor. It needs updating but the bones look solid. And it has it's own boathouse! If you are a rower you should really look at this one.

In general, it has more privacy than many of its neighbors, and there is a lot of storage in and around the property. Worth a look!

$795K by Discovery Park
Image courtesy of Redfin website

And there's this waterfront house, close to the Ballard locks. I think it is still fairly overpriced! The lot is small, as is the house (although not bad at over 1500 square feet). The property is laid out about as well as you could hope for a small narrow lot, and I really like the area by the water--it is pleasant access to the water from the house, and with minimal landscaping you could do a lot there.

In general, it is much more private than its neighbors, which is remarkable given how close the houses are there.

I think the price has a ways more to go, but I think it will start being attractive in the 650-700 range. Take a look at the values of nearby properties on Zillow. Again, that gives you an idea of the potential upside.

Underappreciated Neighborhoods

What are the most prestigious neighborhoods in Seattle? I don't know, but I'd guess Capitol Hill, Fremont, and Queen Anne. Lately Ballard and West Seattle have gotten popular, and Magnolia, Wallingford, and Ravenna have cachet and appeal.

But what are the neighborhoods that will be hot in 10-15 years? Buying in those now will probably result in bigger appreciation.

I think one neglected neighborhood is Beacon Hill. It is close to the city, has views, and now also has Seattle's only underground lightrail station. It is very cool having convenient access to light rail!

$649K in Beacon Hill
Image courtesy of Redfin website

Here's an interesting listing on Beacon Hill. This is a home with eastern views, just a few blocks from the light rail station. It is perched on a hill, near a golf course.

Of course, it also has very nice views, another reason that I like it. It has a very large lot (almost 9000 square feet!) with a reasonable layout.

It may be priced a bit high, but I think Zillow's valuation of $479K is far too low. Zillow's algorithms break down when someone renovates a house, and I'm guessing that's what happened here.

I think a price in the mid- to upper-500s would be a bargain. This is one of the more expensive homes in the neighborhood (which is also a bit of a risk), but it has clear value being such a large lot with a great view.

$479K in Seward Park
Image courtesy of Redfin website

Here's a cute house in Seward Park. I really like the layout of this property: you enter on the uphill side, and then enjoy the view on the downhill side. That tends to give you the most privacy.

The house is slightly on the small side (1600 square feet), but it has had a lot of renovations. If the bones are solid, then something under $450K strikes me as a good price in an area that continues to be popular.

$350K in Upper Rainier Beach
Image courtesy of Redfin website

Here's a house near where I live. This is kind of a cool neighborhood--nice older homes on a slope with a few distinctive streets cutting through.

This is a good-sized house (2200 square feet) on a large lot (6100 square feet) with good views. One risk is the house to the east: that is a funky lot and someone could build bigger homes there.

The biggest risk is the "Sold AS IS" tag in the description. It could be a perfectly nice bank-owned house that just needs interior updating! In which case, $350K is a ridiculous steal. Or it could have major structural problems, in which case you are really just paying for the land.

Looking at the value of neighboring homes on Zillow you can see that there is real upside to the neighborhood!

Farther Out

Okay, so that's what $350-$750K buys you in Seattle. What if you are willing to go a bit farther out? Then a lot more options open up. I wanted to be close to downtown, so none of these were options for me. But sometimes I wonder...

$679K in Burien
Image courtesy of Redfin website

Okay, so Burien isn't exactly a hotspot... yet. But the little town has a lot going for it! It is near the airport but not in the main flight paths, and is accessible north to Seattle and south to Tacoma.

And look again: this is Puget Sound waterfront for under $700K. That's pretty good! The house looks funky, but may be funky in a good way.

Zillow values this house much lower, at closer to $550K, but that could be due to the renovations that have occurred since the last sale. But that does indicate you may have some room to bargain the price down a bit more.

$699K on Vashon Island
Image courtesy of Redfin website

And if you're looking at Sound waterfront, how about Vashon Island? This property is probably overpriced at $699K, and it needs work. So you could probably make a much lower offer. It's possible that under $600K would get you a great waterfront location on Vashon, with views north and south, and over a half an acre of land. That would definitely be worth the necessary updates (and by the looks of it, you may need to add central heating...).

$425K on Vashon Island
Image courtesy of Redfin website

And finally, look at this waterfront home on Vashon Island. At $425K, it is around the King County median sales price--and you can probably make a lower offer than that! Sure, it's small (1260 square feet), but it looks livable, and I like the layout of the waterfront grounds.

It is probably a lot of work. The house needs updating. The exterior woodwork (docks and railings) probably need treating or replacing. But this is probably a good deal in the $400K range, if there aren't serious problems.

Thanks...

And finally, thanks to Redfin for such a great website! It definitely became my favorite, for its wealth of information and easy navigation. It was the only website to remember my searches reliably, and I loved the property overview and prior listing history.

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