REAL’S FEBRUARY MARKET REPORT 2024
Prepared By Steve Curran
Hi Everyone, I hope that your 2024 is off to a great start! Back in the spring of 2022, Bellevue had just passed Manhattan as the 2nd most expensive metro market in the country (minimum of 100,000 residents). I predicted in this space that Bellevue would one day eclipse Sunnyvale in Silicon Valley as the most expensive market in the country (Bellevue Will Be The Most Expensive Market In The Country-March, 2022). The timing of this prediction was early, unlike my rosey Mariners predictions which are just flat out wrong. Their slogan of "Refuse to Lose" has morphed into "Refuse to Spend"......moving on for all of our sakes....... I am doubling down on my prediction, that Bellevue WILL indeed pass Sunnyvale in home values by the end of this spring. In fact I believe the passing of the torch (or Rolex?) is happening as I type, the actual statistics will lag reality by 2-3 months. As we have discussed repeatedly over the years, Bellevue (as well as the greater Eastside) is heavily influenced by the performance of the stock prices of local tech heavyweights Microsoft and Amazon and now Meta (formerly Facebook).
Microsoft just recently took the title of the most valuable company on the planet, surpassing Apple and the $3 trillion market cap. This is an especially staggering figure when you factor in that the company did not break the $500 billion market cap figure until 2017. This bears repeating given the impact on our region: Microsoft went public in 1986, it took until 2017 for the company to reach a $500 billion valuation. Since 2017, not exactly long ago, the company has risen in value by an additional $2.5 trillion. This past Friday, Meta posted the largest one day market cap gain in market history: $205 billion. These numbers are frankly hard to comprehend sometimes. Someone please remind me again why the Mariners couldn't sign Shohei Ohtani?!?!
The surge in tech stocks in recent months has significantly increased local homebuyer's purchasing power and confidence. This is especially important given the affordability constraints that the local and national market are experiencing after the rise in both home prices and mortgage rates in recent years. There are not many markets in the country where buyers can shrug off 7% rates and still move forward....ours is one of them. This return of homebuyer confidence, or "swag," as the kids would say, arrives at a time when the market is again underdelivering supply to a market that so badly needs it. Many local submarkets currently have 30-40% fewer homes available for sale when compared to this time last year and it was not like last year's inventory levels were exactly robust. Local and national homeowners continue to sit on their hands, not wanting to part with their 3% mortgage rates or record amount of home equity. It feels like this spring will again be a time period where sellers only go on the market if life is directing or even forcing their decision to do so. Casual sellers will again sit this spring out, demand will exceed supply and home prices will rise.
I deliver this news, not as a victory lap for my hometown, but instead passing along information as I believe it is happening in real time. I too at times find it hard to believe that what was a sleepy suburb in the early 90's is now rubbing shoulders with Manhattan and the Bay Area. The summer I got my driver's license (1993), the intersection of Bellevue Way and NE 8th turned into a 4 way stop, complete with a blinking light at 10:00 pm. The town was that boring! Now that intersection is the center of Eastside (Puget Sound even) retail activity. The changes in the area have happened at breathtaking speed, accelerated by so many technological innovations. I also want to acknowledge that this is not cause for celebration by everyone reading this market update. I hear with increasing frequency the frustrations associated with rising property taxes and that the area is too expensive for some longtime residents, their kids, or grandkids to stay here. The feeling that is punctuated by the acclaimed Bellevue School District proposing a 2nd round of school closures due to declining enrollment. I'm also following the demolition permit closely on the Dairy Queen in Eastgate, the last remaining DQ in Bellevue. I pose the question: can a city truly be world class if it doesn't have a Dairy Queen? While it is early in the new year, it does seem like the spring real estate market is already taking shape. An increase in homebuyer confidence and purchasing power has arrived, without enough homes for those buyers to choose from. Only two questions remain: what month will Bellevue overtake Sunnyvale as the most expensive market in the country and what month will the Mariners break our hearts this season? All the best, Steve Curran