Single Family Residence Trends in Washington State Waterfront Property: Predictions for the Rest of 2021 and Beyond

The United States’ housing market has seen a remarkable recovery since the 2008 recession. So much so, that across the country, the median sales price for houses sold has been increasing steadily and is at an all-time high thanks to historically low mortgage rates, intense competition, and low inventory.

In many ways, both here in Washington and throughout the rest of the U.S., the current lack of available homes on the market can be traced to both the ripple effects of 2008 and the ongoing COVID-19 pandemic. Overbuilding in the years leading up to the 2008 recession led to a dramatic cessation in new home construction in its wake. While demand has increased, the supply of new homes has not yet recovered enough to meet that demand. In addition, fewer homeowners listed their homes for sale amid the economic uncertainties of a global pandemic. Just how tight is the housing market? Less than half a million single family residences were listed nationwide in April of this year, down from just over a million homes in April 2020, an already incredibly low number. 

The inventory crunch is beginning to ease slightly, but it’s unlikely that home prices will slow down anytime soon. We’ve done a deep dive into proprietary data to show how current market conditions are affecting buyers and sellers of Washington waterfront property, from lakefront to oceanfront to everything in between. Read on to find out more.

Washington State Waterfront Homes in 2021

Western Washington waterfront houses have long been among some of the most desirable in the country. In addition to thousands of miles of waterfront in the state, the concentration of wealth here has allowed for the construction of impressive homes that offer a combination of view, waterfront access, amenities, and privacy found nowhere else.

Of course, the real estate market realities facing the rest of the country have also affected waterfront realty in Washington. Here are some of the more salient details in the Washington waterfront housing market, and for the most part, the insights here hold true throughout western Washington — from Seattle to Bremerton to Lake Sammamish.

Waterfront trends over the past five years in Washington State

To get a more thorough understanding of the waterfront housing market in Washington state in 2021 and beyond, it's important to look at data that precedes the unique conditions of right now. Here are some broad but notable trends in the Washington waterfront real estate market as a whole from 2016 through the first quarter of 2021. 

A quick note: While our proprietary data set only includes the first quarter of 2021, when looking at the overall trends of the previous five years, we can still draw some meaningful conclusions about what the rest of the year and into 2022 will likely bring. More on that later.

Median Sales Price vs Listing Price (SP/LP) for Western Washington State

2016 2017 2018 2019 2020 1st Q, 2021
95.82% 96.51% 96.78% 96.63% 98.50% 100.00%

Median DOM (Days on Market) for Western Washington State

2016 2017 2018 2019 2020 1st Q, 2021
43 35 27 29 16 10

Annual Monthly Median Total Inventory for Western Washington State

2016 2017 2018 2019 2020 1st Q, 2021
1471 1174 1073 957 544 241

Financing Trends for Western Washington State: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
29.5% 28.9% 31.9% 30.8% 30.3% 33%

The overall trends for waterfront homes in Washington state show a real estate market that, over time, has been consistently what we refer to as a seller's market — even before the pandemic. The subtle but meaningful rise in cash purchases coupled with the dramatic drop in the length of time a house is listed before it's purchased (DOM) creates a less than advantageous climate for buyers with conventional mortgages, although there are numerous strategies that can help waterfront home buyers with traditional financing compete with cash offers.

Read on to gain waterfront home insights specific to popular areas in Washington.

Washington State Waterfront Property Trends: King County

The most populous county in Washington, King County is also home to some of the most sought-after waterfront residences in the entire state. Seattle waterfront homes, including downtown Seattle waterfront condos, often provide breathtaking Puget Sound and mountain views, while simultaneously offering access to all the cultural and entertainment offerings of the city. 

King County has also seen a remarkable drop in inventory coupled with high sales prices, decreasing DOM, an overall increase in cash purchases, and a rising SP/LP.

Median Sales Price vs Listing Price (SP/LP) for King County, WA

2016 2017 2018 2019 2020 1st Q, 2021
97.89% 97.56% 98.31% 97.18% 98.93% 100.00%

In 2016, King County had a SP/LP ratio of 97.89% — the highest that year in all the 18 western Washington counties surveyed in this report. To highlight just how intense competition is for waterfront property throughout the region: As of Q1, 2021, 10 of the 18 counties had SP/LP ratios of 100% or better.

Median DOM (Days on Market) for King County, WA

2016 2017 2018 2019 2020 1st Q, 2021
19 19 15 19 10 11

Annual Monthly Median Inventory for King County, WA

2016 2017 2018 2019 2020 1st Q, 2021
185.5 155.5 155 174 112 54

Annual Median Sold Price for King County, WA

2016 2017 2018 2019 2020 1st Q, 2021
$855,000 $1,090,000 $1,000,000 $1,227,500 $1,249,888 $1,247,250

Financing Trends for King County, WA: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
46% 35% 43% 43% 44% 71%

Cash sales represented a sizable portion of King County real estate sales long before the effects of the pandemic and the current inventory squeeze became realities. For buyers without the cash to buy King County waterfront property outright, competition from cash buyers can represent a significant obstacle in purchasing the home of their dreams. Our skilled and experienced team can help

As you can see, even before the extreme inventory lows of 2020 and 2021, King County waterfront property sales prices were consistently rising. This trend indicates that waterfront property in King County will remain a solid and reliable investment for the foreseeable future.

Washington State Waterfront Property Trends: Pierce County

Home to Tacoma, Lakewood, and Mount Rainier, Pierce County offers city lovers and those looking to escape the city plenty of one of a kind waterfront homes, including stunning lakefront homes on Bonney Lake and Lake Tapps.

Here is a closer look at some of the waterfront home trends in Pierce County, WA over the past five or so years.

Median Sales Prices vs Listing Price (SP/LP) for Pierce County, WA

2016 2017 2018 2019 2020 1st Q, 2021
95.38% 96.36% 96.30% 96.20% 98.87% 100.00%

Median DOM (Days on Market) for Pierce County, WA

2016 2017 2018 2019 2020 1st Q, 2021
49 33 31 30 13 6

Annual Monthly Median Inventory for Pierce County, WA

2016 2017 2018 2019 2020 1st Q, 2021
167 139.5 117 86 60 26

Annual Median Sold Price for Pierce County, WA

2016 2017 2018 2019 2020 1st Q, 2021
$580,000 $610,000 $675,000 $709,375 $820,000 $950,000

Financing Trends for Pierce County, WA: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
18% 31% 29% 22% 31% 18%

Pierce County, Washington, as these numbers show, then, is also seeing a significant rise in waterfront home sale prices, along with depleted inventory. Waterfront buyers in 2020 and the first quarter of 2021 have proven especially aggressive, purchasing property in 13 days or less and 6 days or less, respectively. Another important note: For prospective buyers of waterfront property who will be financing their purchase with a conventional mortgage, Pierce County remains a more hospitable purchasing climate than King County — even in the midst of outsized demand and reduced supply.

2022 will likely see inventory expand. Prices, too, will likely continue to rise, although probably not at the current pace.

Washington State Waterfront Property Trends: Thurston County

Thurston County waterfront property real estate listings include stunning Olympia shoreline, lakefront along Long Lake, as well as beachfront along Carlyon Beach and other highly desirable areas. 

Here are some of the current trends for waterfront homes in Thurston County:

Median Sales Prices vs Listing Price (SP/LP) for Thurston County, WA

2016 2017 2018 2019 2020 1st Q, 2021
96.27% 97.86% 96.57% 97.64% 98.19% 97.38%

Median DOM (Days on Market) for Thurston County, WA

2016 2017 2018 2019 2020 1st Q, 2021
26 27 23 24 10.5 7

Annual Monthly Median Inventory for Thurston County, WA

2016 2017 2018 2019 2020 1st Q, 2021
62 47 48.5 43 22 12

As you can see, inventory in Thurston County, WA has undergone the same depletion as other counties, affecting DOM, buyer behavior, and list and sold prices.

Annual Median Sold Price for Thurston County, WA

2016 2017 2018 2019 2020 1st Q, 2021
$438,750 $507,500 $550,000 $600,000 $620,137 $831,250

Financing Trends for Thurston County, WA: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
20% 19% 24% 33% 27% 17%

The jump in waterfront home sale prices in Thurston County between 2016 and the first quarter of 2021 is 89.46%, which is one of the most significant in western Washington state. While home sale prices could continue to rise in Thurston County throughout the rest of 2021 and into 2022, it’s unlikely they will rise at the pace seen here. Regardless, Thurston County waterfront houses are becoming increasingly valuable and represent a valuable investment opportunity for buyers who desire waterfront property in Washington state.

Cash financing has not been as prevalent in Thurston County as it has been in other Washington counties. For buyers looking to finance, this means a waterfront home in Thurston County, WA might be more easily attained than in areas where cash makes the market more competitive.

Washington State Waterfront Property Trends: Puget Sound

Puget Sound is a large body of ocean water nestled between the Olympic Peninsula to the west, Seattle and the Washington State mainland to the east, Tacoma to the south, and Admiralty Inlet and the Strait of San Juan de Fuca to the north. Puget Sound waterfront offers a diversity of shoreline, including cities like Seattle, Bellevue, and Everett; as well as islands like Bainbridge Island, Fox Island, and Vashon Island; and less populated areas such as Agate and Suquamish.

Median Sales Prices vs Listing Price (SP/LP) for Puget Sound

2016 2017 2018 2019 2020 1st Q, 2021
96.66% 97.35% 97.56% 97.30% 99.01% 100.00%

Median DOM (Days on Market) for Puget Sound

2016 2017 2018 2019 2020 1st Q, 2021
32 23 20 22 12 7

As the median days on market have dropped considerably, the sales price to list price ratio has steadily risen.

Annual Monthly Median Inventory for Puget Sound

2016 2017 2018 2019 2020 1st Q, 2021
62 47 49 43 22 12

Annual Median Sold Price for Puget Sound

2016 2017 2018 2019 2020 1st Q, 2021
$545,000 $599,900 $650,000 $700,000 $782,000 $800,000

Financing Trends For Puget Sound: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
24.71% 24.56% 26.63% 26.48% 25.52% 30%

There has not been a significant change in the percentage of waterfront property in Puget Sound purchased with cash over the past five years and into 2021. However, certain areas in Puget Sound — King County, for instance — have seen considerably more cash purchases and will likely continue to.

While waterfront homes for sale on Puget Sound have long been desirable, current market realities have compounded to create an environment of intense competition. While we anticipate that current inventory levels will rise throughout the rest of 2021 and into 2022, waterfront homes in Puget Sound will still continue to list and sell at historically high prices — and quickly, too — for the foreseeable future.

Washington State Waterfront Property Trends: Hood Canal

Separating the Olympic Peninsula from the Kitsap Peninsula, Hood Canal offers over 212 miles of diverse shoreline that includes everything from forests to wineries to coves. Waterfront homes in Hood Canal offer breathtaking views and unparalleled privacy in a part of the state known for its wilderness, its excellent fishing and shellfish hunting, as well as its year-round outdoor recreation.

Here are some of the current trends in the Hood Canal waterfront housing market.

Median Sales Prices vs Listing Price (SP/LP) for Hood Canal

2016 2017 2018 2019 2020 1st Q, 2021
94.67% 96.49% 96.24% 96.03% 99.89% 101.50%

Median DOM (Days on Market) for Hood Canal

2016 2017 2018 2019 2020 1st Q, 2021
73 53 34 26 14 7

As we’ve seen in other areas, as the median days on market have dramatically dropped, the sales price to list price ratio has steadily risen, indicating a competitive market that favors sellers.

Annual Monthly Median Inventory for Hood CaNAL

2016 2017 2018 2019 2020 1st Q, 2021
107 78 61 45 25 11

 

Annual Median Sold Price for Hood Canal

2016 2017 2018 2019 2020 1st Q, 2021
$383,000 $437,000 $470,000 $560,501 $610,000 $800,000

Financing Trends For Hood Canal: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
33.14% 36.76% 31.87% 29.71% 35.80% 28%

As was to be expected, the trends in the Hood Canal waterfront housing market reveal themes that are common throughout most of the state: Home prices are steadily rising, and waterfront home sellers on Hood Canal are increasingly getting what they ask for their homes. Competition is fierce. Although we expect the historically low inventory numbers to increase in 2022, even if mortgage rates rise as expected, houses on the water in Hood Canal will continue to sell fast and at excellent prices.

Cash financing of waterfront property in Hood Canal has stayed relatively consistent at about one-third of all purchases. That trend will likely continue, meaning there is more room in this area for homebuyers with traditional financing than in some other areas.

It should be noted that the total number of waterfront homes sold in the first quarter of 2021 was just 25 — a small sample size, but not an insignificant one, given the fact that low inventory levels have been and will continue to be a major factor in purchasing and selling trends on Hood Canal well into 2022.

Washington State Waterfront Property Trends: Lake Washington

Located in King County, Lake Washington is the state's largest freshwater lake. Situated right between Bellevue and Seattle, owners of Lake Washington waterfront homes enjoy an unbeatable location, which is just one of the reasons why Lake Washington homes are among the most sought after in the state. There is also the reason of the homes themselves, which often feature stunning designs, luxurious amenities and awe-inspiring views of the city and mountains. Whether used as a primary residence or a vacation home, Lake Washington waterfront property, in many ways, sets the standard for waterfront homes in Washington state.

Median Sales Prices vs Listing Price (SP/LP) for Lake Washington

2016 2017 2018 2019 2020 1st Q, 2021
94.24% 94.82% 98.05% 95.43% 97.83% 93.08%

Median DOM (Days on Market) for Lake Washington

2016 2017 2018 2019 2020 1st Q, 2021
35 42.5 15 47.5 14 43

Annual Monthly Median Inventory for Lake Washington

2016 2017 2018 2019 2020 1st Q, 2021
61 53.5 45.5 54 33 14

Annual Median Sold Price and Price per Sqft for Lake Washington

2016 2017 2018 2019 2020 1st Q, 2021
Annual Median Sold Price $3,220,000 $3,034,000 $3,412,500 $3,112,500 $4,125,000 $6,550,000
Median Price Per Sq Foot $925 $1,046 $1,094 $1,084 $1,329 $1,679

Financing Trends For Lake Washington: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
59% 44% 58% 49% 56% 94%

The exclusivity and desirability of waterfront property along Lake Washington's shores is hard to overstate. While the sales price to list price ratio and days on market may seem to suggest a more sluggish housing market compared to other parts of the state, the reality is that homes on Lake Washington are listed at a much higher premium than waterfront houses in other areas. As such, their SP/LP is lower, but — as you can see — they still command a much higher price per square foot and, overall, sell at a much higher price than waterfront homes in other areas. As Lake Washington waterfront inventory has decreased, that trend has only gotten more pronounced. 

We expect Lake Washington homes on the water to continue to command high prices and to attract cash buyers well into 2022 and beyond.

Washington State Waterfront Property Trends: Mercer Island

Nestled inside Lake Washington, Mercer Island is connected by a bridge to Bellevue on the east and Seattle on the west, which makes for an easy commute to either metropolitan center — just one of the many reasons Mercer Island is one of the premier locations for waterfront homes in Washington state.

Median Sales Prices vs Listing Price (SP/LP) for Mercer Island

2016 2017 2018 2019 2020 1st Q, 2021
93.81% 96.69% 97.76% 95.95% 97.24% 92.41%

Median DOM (Days on Market) for Mercer Island

2016 2017 2018 2019 2020 1st Q, 2021
60 4 15 41.5 10.5 34

Annual Monthly Median Inventory for Mercer Island

2016 2017 2018 2019 2020 1st Q, 2021
22 19 15.5 18 12 2

Annual Median Sold Price and Price per Sqft for Mercer Island

2016 2017 2018 2019 2020 1st Q, 2021
Annual Median Sold Price $3,285,500 $3,576,000 $3,180,000 $4,230,000 $4,555,000 $8,398,000
Median Price Per Sq Foot $981 $969 $1,000 $935 $1,086 $1,834

Financing Trends For Mercer Island: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
57% 42% 66% 26% 53% 100%

The Mercer Island waterfront home market has much in common with Lake Washington's; in large part, because of its location, exclusivity and the luxury quality of homes on the water there. A highly competitive climate has pushed home prices higher, but Mercer Island waterfront property was among the most expensive and competitive even before the current pressures of the Covid-19 pandemic, low mortgage rates, and low inventory. Home prices on Mercer Island will stay high into 2022 and beyond, although they will likely not appreciate at the rate we've seen in the last couple of years.

Washington State Waterfront Property Trends: Bainbridge Island

One of the most beautiful natural places in all of western Washington state, Bainbridge Island lies to the west of Seattle in Puget Sound. Just a ferry ride away from Pier 52 in Seattle, it is connected on the northwest side to the mainland via a bridge. It is a place with an abundance of forest, farms, wineries, trails, and much more.

Median Sales Prices vs Listing Price (SP/LP) for Bainbridge Island

2016 2017 2018 2019 2020 1st Q, 2021
95.55% 96.18% 97.92% 96.63% 98.07% 95.05%

Median DOM (Days on Market) for Bainbridge Island

2016 2017 2018 2019 2020 1st Q, 2021
28.5 32.5 15.5 24 15 19

Annual Monthly Median Inventory for Bainbridge Island

2016 2017 2018 2019 2020 1st Q, 2021
27 19 17.5 27 11 5

Annual Median Sold Price and Price per Sqft for Bainbridge Island

2016 2017 2018 2019 2020 1st Q, 2021
Annual Median Sold Price $1,220,000 $1,467,500 $1,400,000 $1,825,000 $1,855,000 $1,380,000
Median Price Per Sq Foot $515 $573 $589 $552 $684 $769

Financing Trends For Bainbridge Island: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
56% 35% 41% 47% 67% 57%

The past five years have not brought about as much change in Bainbridge Island waterfront home sales as in other parts of the state. Yes, there has been declining inventory, but for the most part, it appears that home prices have only increased nominally. Median DOM hasn't seen a dramatic drop, and cash sales in the first quarter of 2021 were roughly the same as they were in 2016. Still, price per square foot has increased by 49% since 2016, which indicates a very healthy and competitive market. We expect that trend to continue well into 2022 and beyond.

Washington State Waterfront Property Trends: Whidbey Island

North of Seattle, situated in Puget Sound but reaching almost to the Salish Sea, sits Whidbey Island, a lush island of pristine beaches, unforgettable restaurants serving some of the country’s best seafood, one-of-a-kind shops, enviable views, and year-round recreational opportunities. Home to the small and quaint cities of Coupeville, Langley, Oak Harbor, and Clinton, roughly one-third of the island's 69,000 residents live in rural parts of the island. Waterfront homes in Whidbey Island are highly sought after not just for the views they provide, but also because of the genial and comfortable pace of island living.

Median Sales Prices vs Listing Price (SP/LP) for Whidbey Island

2016 2017 2018 2019 2020 1st Q, 2021
96.03% 95.05% 98.35% 97.03% 98.04% 100.00%

Median DOM (Days on Market) for Whidbey Island

2016 2017 2018 2019 2020 1st Q, 2021
53 68 21 33 15 8

Annual Monthly Median Inventory for Whidbey Island

2016 2017 2018 2019 2020 1st Q, 2021
72 61 40.5 46 26 7

Annual Median Sold Price for Whidbey Island

2016 2017 2018 2019 2020 1st Q, 2021 
$650,000 $674,000 $725,000 $725,000 $861,000 $880,000

Financing Trends For Whidbey Island: Percentage of Waterfront Home Sales Made in Cash

2016 2017 2018 2019 2020 1st Q, 2021
41% 47% 52% 48% 44% 49%

The challenges and opportunities that exist for sellers and buyers of Whidbey Island waterfront are in keeping with other parts of Washington. Inventory will slowly begin to rebound toward the end of 2021 and into 2022, but prices will likely continue to be high — competition, too.

Washington Waterfront Single Family Residences: Predictions for 2022

The Washington State waterfront real estate market in 2021 has been more competitive than anything our team has ever experienced. Available inventory was as low as 21% of the last leanest market since the digitization of real estate records (268 actively listed single family waterfront homes in 2021 compared to 1,250 actively listed single family waterfront homes in 2006). Record low mortgage interest rates fueled the already surging demand for waterfront property, and inventory remains very limited at only 35% (442 actively listed waterfront homes) of the 2006 low (1,250).

The Seller’s Market Will Continue

As a whole, our expectation for the 2022 Washington waterfront real estate market is that the record low inventory and readily available resources (cash and/or low interest rate mortgages) will maintain the competitiveness for waterfront properties. Taking into account the Fed’s statements that they will be increasing the Fed Funds Rate, we anticipate that the 10-year treasury will also increase slightly and, subsequently, so will 30-year mortgage rates. While this is likely to occur, because of the percentage of waterfront purchases that are made with cash, and the fact that real estate is an excellent inflation hedge, we don’t anticipate too significant of a reduction in demand for waterfront properties. We also anticipate that more people who currently own waterfront property, who have been thinking about selling but are waiting for prices to “peak,” will list their waterfront properties for sale in 2022, gradually increasing the supply. Broadly speaking, a slight increase in supply and a slight decrease in demand due to marginally higher cost of ownership will move the waterfront market moderately away from being one of the best seller’s markets in history and decrease the competition for waterfront listings very slightly. Having said this, pending any significant economic changes, it will still be a long time before the waterfront market becomes balanced on the spectrum of seller’s market vs buyer’s market. 

Accordingly, our expectation is that waterfront real estate prices will continue to increase through 2022, though potentially not at the rapid rate of appreciation that we have experienced in 2021. The length of time waterfront listings will stay on the market will still be very short; however, this will be a function of the original listing price, location of the property, marketing expertise of the real estate broker listing the property, and the presence of certain amenities on the waterfront property, such as docks, moorage, and bulkheads, to name a few.

Effects of Vacation Home Regulation on Waterfront Property in 2022

One external influence that may impact certain markets is the advanced regulation of vacation rental homes. A homeowner’s ability to subsidize the ownership cost of their waterfront home through vacation rental income while they are not using it has been one of many factors fueling the demand for waterfront properties. Certain municipalities, specifically Chelan County, are actively talking about restricting the ability for homeowners to rent their second homes on a nightly basis. If these regulations are approved, demand for second homes in those markets will reduce; however, we expect the demand will be reallocated to other booming vacation rental markets, such as the Washington Coast, or three-season riverfront destinations like Packwood. 

With our expectation that waterfront real estate prices will continue to go up and mortgage interest rates will also increase, if you are in the market to purchase a waterfront property, our recommendation is to speak with our preferred lender today and be as ready as possible to move quickly on the waterfront property that you believe you will enjoy for years to come.

If you currently own a waterfront property, we recommend selling when you have the least possible competition and the highest amount of demand. Depending on the characteristics of your property, if it has many of the most highly demanded elements, you may be able to realize more in the sale of your property right now (due to escalation clauses and competing offers), rather than waiting for the inherent market appreciation that we expect to occur over the next 18 months. 

Discover more about your options. Reach out to one of our Washington Waterfront specialists today.

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