Financing Trends for Waterfront Single-Family Homes on Lake Washington
King County’s Lake Washington is home to some of the most sought-after waterfront real estate in the country. As waterfront home inventory has declined over the past five years along Lake Washington, sale prices have skyrocketed. From 2016 to 2020, median monthly inventory levels decreased by 45.9%. Across the same timeframe, the transaction volume of Lake Washington waterfront home sales increased by 80.25%, and the median sold price rose 28.1% from $3.22M to $4.125M.
If you’re looking to buy or sell waterfront property on Lake Washington, it’s important to understand just how common cash sales are. According to our proprietary Washington waterfront home data, cash sales represent over 50% of all waterfront home sales on Lake Washington.
Read on to learn more about current and historical financing trends for waterfront single-family homes on Lake Washington.
Financing Trends For Lake Washington Waterfront Houses For Sale
Waterfront homes on Lake Washington have always been sold at a premium. Over the past five years or so, they — like waterfront homes throughout Washington state — have attracted much higher prices. As described above, between 2016 and 2020, the median sold price for Lake Washington waterfront single-family residences rose from $3.22M to $4.125M. In the first quarter of 2021, the median sold price was an impressive $6.55M.
Even more remarkable? Almost every waterfront home on Lake Washington that sold in the first quarter of 2021 was paid for with cash — 94% of the total sales volume of $71.48M. In 2020, with almost $728M in total transactional sales, 56% of all Lake Washington waterfront homes sales were cash sales. Here’s some greater detail on financing data for waterfront houses on Lake Washington.
All-Cash Purchases for Waterfront Property on Lake Washington are on the Rise
Cash sales have played a significant role in waterfront home transactions on Lake Washington for years, but it’s not the only market where cash is king. Here’s a look at Lake Washington’s percentage of cash sales along with a handful of other parts of Washington with median sold prices over $1M: Mercer Island, San Juan County, Seattle, and Lake Sammamish. For comparison, some data is also provided for some areas in Washington where waterfront median house sold prices are under $1M: Whidbey Island, Pierce County, and Kitsap County.
| 2016 | 2018 | 2020 | Q1 2021 | |
| Median Sold Price > $1M | ||||
| Lake Washington | 59% | 58% | 56% | 94% |
| Mercer Island | 57% | 66% | 53% | 100% |
| San Juan County | 59% | 35% | 38% | 44% |
| Seattle | 60% | 50% | 55% | 64% |
| Lake Sammamish | 45% | 65% | 56% | 43% |
| Median Sold Price < $1M | ||||
| Whidbey Island | 41% | 52% | 44% | 49% |
| Pierce County | 18% | 29% | 31% | 18% |
| Kitsap County | 40% | 39% | 48% | 45% |
As you can see, cash sales are dominant in those parts of Western Washington State where median sold prices are higher than in other parts of Washington State. (For more examples, see these financing trends for Hood Canal.) For buyers looking to purchase a home on Lake Washington without the ability to use cash, this can present some challenges. We’ll discuss strategies for buyers with traditional financing below.
Median Sold Prices and Price Per Square Foot for Lake Washington Waterfront Homes is Increasing
Lake Washington home prices are on the rise and have been for a while. Here’s a look at historical and current median sold prices on Lake Washington, as well as the price per square foot ratio, compared to other popular waterfront home locations, including Seattle, Bellevue, and San Juan Island.
| Median Sold Price | 2016 | 2018 | 2020 | Q1 2021 |
| Lake Washington | $3,372,500 | $3,743,000 | $4,200,000 | $6,700,000 |
| Seattle | $1,200,000 | $1,400,000 | $1,650,000 | $1,625,000 |
| Bellevue | $3,950,000 | $3,840,000 | $4,800,000 | $8,994,000 |
| San Juan Island | $1,200,000 | $1,395,000 | $1,742,500 | $1,395,900 |
| Price/Sqft | ||||
| Lake Washington | $925 | $1,094 | $1,329 | $1,679 |
| Seattle | $739 | $903 | $978 | $1,108 |
| Bellevue | $880 | $923 | $1,261 | $1,770 |
| San Juan Island | $549 | $559 | $618 | $727 |
As you can see, for many parts of Western Washington State, waterfront home median sold prices and price per square foot ratios are increasing rapidly. It’s worth noting, however, that the current inventory crunch is not wholly responsible for high sale prices — especially on Lake Washington. 2016 data reveals that even five years ago, waterfront home sellers were able to command high prices. For buyers and sellers of Lake Washington waterfront property then, investing in a waterfront home on Lake Washington has long been and will likely remain a sound financial decision.
Lake Washington Waterfront Inventory is at Historic Lows
Low inventory levels are, perhaps, the most dominant story in the housing market — not only regarding waterfront homes in Washington State but across the country. The table below compares Lake Washington’s annual monthly median inventory of waterfront property with other in-demand waterfront markets, including Seattle, Bellevue, Olympia, and Mercer Island.
| 2016 | 2018 | 2020 | Q1 2021 | |
| Lake Washington | 61 | 45.5 | 33 | 14 |
| Seattle | 26.5 | 32.5 | 29 | 23.5 |
| Bellevue | 11 | 13.5 | 4 | 4 |
| Olympia | 47.5 | 39 | 17 | 8 |
| Mercer Island | 22 | 15.5 | 12 | 2 |
Low inventory levels, of course, affect many aspects of home buying and selling. In addition to increasing competition among buyers, which can result in higher sale prices, low inventory levels can also shorten the length of time between listings and offers. Low inventory levels also tend to change buyers’ strategies — especially those seeking to finance waterfront purchases with traditional mortgages.
It is likely that waterfront home inventory in Washington will increase soon but not dramatically. This means the remainder of 2021 and 2022 should provide an ideal market and climate for homeowners looking to sell their homes.
Financing Lake Washington Single-Family Residences — Key Takeaways
Cash is a major player in the Lake Washington waterfront home market. With that in mind, here are some key takeaways for individuals looking to buy waterfront property there.
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Sold prices for houses on Lake Washington have been on the rise for more than five years.
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It is common for cash sales to outpace conventional financing for Lake Washington waterfront home purchases.
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Because inventory is at an all-time low, current conditions make for a very competitive market for homebuyers.
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Homebuyers without the cash to buy their dream waterfront home outright will need to act creatively and aggressively.
Home Sellers Prefer Cash — But That’s Not The Whole Story With Lake Washington
Waterfront home sellers tend to prefer to be paid in the way that is quickest and most secure (so long as it also provides the highest price), and cash is certainly the fastest and most secure. But it isn’t just homesellers’ cash preferences that account for the large percentage of cash sales on Lake Washington.
Simply put: There is a lot of wealth in King County and on Lake Washington in particular. Making a purchase in cash — if you’ve got it — is an easy way to purchase a property at what amounts to a discount, since there is no lender involved to collect interest on a mortgage over time. There’s also tax deferment considerations for individuals who have recently sold an investment property and need to reinvest that cash in another investment property to avoid paying capital gains and recapture taxes.
How Buyers With Traditional Financing Can Maximize Offers on Lake Washington
For buyers without the ability to make a cash offer on a waterfront home on Lake Washington, here are some effective strategies to sweeten a conventionally financed offer:
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Obtain a pre-underwriting approval letter from a respected, local mortgage lender before looking for a home, so you know — and can prove — the amount of funding you’re working with.
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Provide a sizable down payment.
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Obtain a pre-inspection with a licensed home inspector prior to the offer review date so that you can waive the home inspection contingency with your formal offer. (Only do this if there are no visible issues with the home’s condition.)
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Offer well above the listing price.
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Along with your offer, include an appraisal gap guarantee. This lets the homeseller know that even if your lender’s appraisal comes in below your offer, you have funds available to make up the difference, so there will be no need for further negotiation.
Make sure you choose to work with a knowledgeable and experienced Washington waterfront real estate agent.
When to Buy or Sell a Waterfront Home on Lake Washington
Competition for Lake Washington waterfront property is high right now — as are prices. It is a true seller’s market, so if you’ve been considering selling your Lake Washington waterfront home, now is a great time.
If you’re looking to buy, current conditions don’t necessarily mean you should wait to purchase your dream home on Lake Washington. Here’s why:
- Prices for waterfront homes on Lake Washington have been high, will most likely stay high, and will almost certainly move higher in the future.
- Mortgage rates are at record low levels, so you’ll pay more in the long run than if you wait and mortgage rates rise — even if home prices do come down a little.
- Low inventory levels might continue for a while; if a home is listed that you know you’ll love, you’ll want to move on it to ensure you’re able to buy what you want.
If you’re interested in purchasing a home on Lake Washington, we can help. Contact a Washington Waterfronts team member today.
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