What A Tight Waterfront Housing Market Means for Buyers
A Tight Waterfront Housing Market Gets Tighter: What it Means for Buyers
Nationwide, the real estate market is in an unprecedented territory — that’s especially true for waterfront properties for sale in Washington State.
The recent real estate boom is mostly favorable for waterfront property sellers making it more difficult for buyers to find and close on their dream home on the water.
In this guide, we discuss:
- Historical Washington state waterfront home sale trends
- The current market for homes on the water in Washington
- Why buyers are feeling the pinch
- Best options for buyers in the current market
- How to win a bidding war for a home on the water
If you’re in the market to buy a waterfront property in the state of Washington, we can help. Our team of waterfront specialists has more than a decade of experience helping clients buy their ideal home on the water.
Search our interactive waterfront property finder or contact us to speak with a Washington Waterfront real estate specialist today.
Waterfront Property Buyers Are Feeling The Pain — Here’s Why
Homes on the water in Washington are not the only type of real estate experiencing a boom. It’s happening all over the nation, regardless of location or property type. Waterfront real estate experts say that it is more challenging than ever to close on a waterfront property because:
- Prices for newly constructed and existing homes on the water are on the rise
- Record low inventory levels
- The effects of COVID-19
- There are more cash buyers than ever before
Continue reading to learn what a tighter waterfront real estate market means for buyers in Washington.
Waterfront Real Estate is in High Demand
Right now, prices for single-family residences on the water are at an all-time high. When inventory is low and demand is high — as it is right now with waterfront homes in Washington state — it increases any type of asset’s value. For perspective, look at examples of historical price trends below for waterfront residences in popular areas of Washington.
| 2016 Median Sold Price |
2018 Median Sold Price |
Q1 2021 Median Sold Price |
|
| King County | $855,000 | $1,000,000 | $1,247,250 |
| Pierce County | $580,000 | $675,000 | $950,000 |
| Island County | $595,000 | $675,000 | $919,000 |
| Jefferson County | $440,000 | $574,235 | $829,500 |
| Snohomish County | $417,050 | $550,000 | $680,000 |
In some cases, Washington waterfront real estate prices have surged by more than 60% within five years.
Historically Low Inventory Levels
Record low inventory levels are impacting both waterfront and traditional single-family residence buyers. Low waterfront property inventory in Washington creates an environment with fewer choices and more competition for available properties.
Compare historical and present median monthly waterfront inventory levels in the table below.
|
2016 Median |
2018 Median |
Q1 2021 Median |
|
|
King County |
185.5 |
155 |
54 |
|
Pierce County |
167 |
117 |
26 |
|
Island County |
109 |
63 |
10 |
|
Jefferson County |
63 |
32.5 |
11 |
|
Snohomish County |
99 |
72.5 |
12 |
In addition to the examples provided above, inventory levels for homes on the water in Washington have experienced a significant decline in just about every county.
The Effects of The Pandemic
Many factors have helped create and accelerate the current waterfront property buying environment. However, COVID-19 has played a particularly prominent role in the recent surge in demand for single-family residences on the water in Washington.
More people are working from home. As a result, families want more space — which often requires purchasing a new, larger property. In addition, interest rates are at an all-time low. So, homebuyers are scrambling to lock in a mortgage rate with favorable terms before things change.
These two factors have accelerated the homebuying timeline of many seeking a home on the water.
More Cash Buyers on The Market
In 2016, about 37% of all waterfront home sales in Washington were made by cash buyers. The numbers from Q1 2021 illustrate that about 45% of waterfront property sales are cash offers. However, in certain areas, well over 50% of waterfront property purchases are cash offers.
While the increase in cash sales might not seem like much at first glance, it can have a major effect when there is already low inventory and high demand. (Learn more about how cash buyers are affecting the Washington waterfront landscape.)
Should I Wait to Buy a Waterfront Property?
It depends. At Washington Waterfronts, our waterfront specialists encourage our clients to move fast but wait patiently. That means that you should be prepared to move on a property with your best offer at any moment. Still, you should also wait for a waterfront property for sale that you are comfortable with aesthetically and financially.
Further, mortgage rates are at historically low levels. If you plan on buying a waterfront home in Washington with a conventional mortgage, many experts suggest that there may never be a better time.
Lastly, and potentially most importantly, property values for homes on the water in Washington State have increased year-over-year for the last five years. If this historical precedent continues to hold true, the longer you wait to purchase a home on the water, the more you will likely have to pay.
Tips For Winning Bidding Wars For Homes on The Water
Low inventory plus high demand equals bidding wars. With so much competition for luxury waterfront property in cities like Seattle, Bellevue, Kirkland, Hansville, etc., you can expect a healthy amount of competition.
Listed below are a few tips to help you win a bidding war for your dream waterfront property.
Move Fast
Five years ago, the median days on the market (DOM) for Washington waterfront properties for sale was 43 days. In the first quarter of 2021, Washington waterfront properties stayed on the market for just 10 days. In the hottest markets, homes can sell even faster.
In other words, you have to act quickly with your best offer for a home on the water — especially if you are making an offer with a conventional mortgage.
Offer More Money
Obviously, the easiest way to win a bidding war is to offer more money. However, it does come with some complications. If you plan on offering more money for your dream waterfront property, our Washington Waterfront real estate specialists recommend:
- Keep your offer within reason
- Double-check your finances to be sure you can afford a larger mortgage
- Have enough cash to make up for the gap in appraisal value and approved mortgage amount (if any)
Offering more money for a waterfront property can be an excellent strategy unless you are up against a similar cash offer. Learn more below.
Make a Cash Offer
If you’re in the midst of a bidding war, nothing speaks louder than cash. Generally, homeowners are more likely to accept reasonable cash offers over higher priced conventionally financed offers.
However, if you don’t have enough liquidity to make an all-cash offer, you can still offer to increase your down payment. Depending on the situation, it can help sweeten the deal a bit to entice the seller to accept your offer.
A few ways you can make your waterfront property offer more attractive include, but is not limited to:
- Propose a sooner closing date (i.e., instead of 30 days, you propose 10 or 15)
- Remove home inspection contingencies
- Remove the home appraisal contingencies
- Offer a higher down payment than the next highest bidder
There’s perhaps only one thing that can compete with a reasonable cash offer, that’s a buyer who builds a personal relationship with the seller. Continue reading to learn more.
Get a Mortgage Pre-Approval
A mortgage pre-approval doesn’t always result in mortgage approval. However, it does offer many potential advantages. Waterfront property buyers who have a mortgage pre-approval can confidently search for their dream home on the water.
Additionally, a mortgage pre-approval also decreases closing time while enhancing your credibility as a viable waterfront homebuyer.
Build a Relationship With the Seller
Many home sellers don’t want to sell their homes to just anybody. They want to know that they are selling it to people who will take care of the home and benefit the neighborhood.
Taking steps to build a relationship with the seller can help to differentiate you from others who make similar offers on the home.
Some ways that can help you build a better relationship with waterfront property owners include:
- Writing a personable offer letter
- Offering to rent the property back to the sellers while they search for a new home
- Having your waterfront real estate agent schedule a one-on-one meeting with the seller
Washington Waterfronts — Your Dream Home on the Water
The waterfront property real estate market in Washington State is competitive, investor-friendly, and unique. With that in mind, it pays dividends to work with an experienced real estate agent for homes on the water.
Our real estate specialists at Washington Waterfronts are creative solution finders who work tirelessly to help you achieve your goal of owning a Washington waterfront home. Contact us today to begin your journey to waterfront property ownership.
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