Sunday, March 23, 2014

Madison Park: not hot, but certainly exclusive

When the Seattle Times ran a story earlier this year on the Puget Sound neighborhoods with the hottest real estate markets, Madison Park did not make the list. Trendy neighborhoods such as Belltown and Beacon Hill saw huge spikes in median home values during 2013, a stunning 24% in the case of Beacon Hill.  Madison Park’s appreciation last year was about 7%. Not bad, but certainly not on a par with many Seattle neighborhoods that are considered “affordable.”  Beacon Hill, for example, had a median price of only $320,000 for houses solid there in 2013. Madison Park, by contrast, recorded a median price of $1,350,000 for the 103 single-family homes sold here.

But in spite of our not being “hot,” Madison Park has proven over time to be an excellent neighborhood in which homeowners can benefit from long-term gains on their residential property purchases, assuming their properties were not bought at the height of the market. Real estate website Zillow reports that Madison Park had a 7.1% increase last year in our median home value, based on neighborhood sales. The Zillow Home Value Index for a median Madison Park home (single family residences and condos combined) now stands at $925,200 (the median being the point where half the houses have a higher value and the other half a lower value). Unfortunately, Zillow excludes Broadmoor in its calculations, which somewhat distorts the overall picture for Madison Park, since Broadmoor represents about one fifth of neighborhood single-family housing. Nevertheless, Zillow’s calculations are useful for taking a long-term look at appreciated values in the area.

Zillow’s records go back to 1996, when Madison Park’s median house value was just $266,300.  Five years later, in February 2001,the Zillow Home Value Index for the neighborhood had risen to $570,900 (up 114%); and at the ten-year mark in February 2006 the median home here was valued at $839,400 (up an additional 47%). The height of the market in Madison Park came in September 2007, when a median home topped $1 million for three months, peaking at $1,005,700 in September. The decline from that point was swift, with the median value hitting $715,200 in February 2011, before the recovery finally began.

From the low point, according to Zillow, Madison Park’s homes have appreciated 29% overall. That seven-year increase may seem modest relative to the go-go years around the turn of the century, but it brings the Zillow Home Value Index to just 8% below the neighborhood’s all-time high.  Zillow is predicting a 4.8% increase in values during the coming year, which will place the median list price per square foot at $529. Today’s $505 per square foot is 59% higher than the $317 for the city as a whole, according to Zillow.

The takeaway from all of this is that Madison Park has already lived through the cycle of rapid appreciation that certain other Seattle neighborhoods are beginning to experience, post Great Recession.  The now-rarified nature of Madison Park precludes this kind of ongoing frothiness, though Madison Park’s many virtues will continue to make the place a sought-after place to live for those who can afford it. Gentrification continues apace, with cottages coming down and mega-houses going up. All of this puts the neighborhood further out of reach for typical Seattle families, lessening the size of the audience for homes in the Park.  Even rentals here are astronomical compared to Seattle overall ($2,950 per month at the median in Madison Park versus $1,615 for the city as a whole, says Zillow).

From This: a 42nd Avenue E. Cottage

Proving Madison Park’s exclusivity, Zillow ran some numbers for us earlier this year comparing Madison Park’s pricing today with that of other Seattle neighborhoods. Madison Park’s $925,200 median value came in third of the 99 neighborhoods Zillow analyzed, topped only by Laurelhurst at $1,011,800 and Windermere at $943,800. If only single-family residences are included, however, Madison Park tops the list at a median value of $1,242,300 (Lower Queen Anne comes next at $1,115,700, followed by Windermere and Laurelhurst, the only other Seattle neighborhoods with median house values exceeding $1 million).

To This: a 42nd Avenue E. Mega-House

Madison Park’s year-over-year increase in its median single-family home value, 12.6%, was exceeded by the annual increases of 29 other Seattle neighborhoods (21.7% for Highpoint and more than 17% for both Windermere and Laurelhurst, for example). Further reinforcing the conclusion that Madison Park is at the top of the exclusive zone is the fact that the current median list price per square foot here is now $660, a 38.8% increase over the same point last year. There’s no inventory left in Madison Park, and what’s available is expensive (just 11 houses currently on the market, Broadmoor included, with list prices ranging from $1.4 million to $3.5 million).

Zillow currently rates Madison Park’s real estate market as “Very Cold” (in other words, an extreme buyer’s market).

[Upper photo: 1510 37th Avenue E., courtesy of Windermere Real Estate via Redfin.]