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Summer's hot buy: $1 million-plus homes

By Kristina Shevory
Seattle Times Eastside business reporter

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Fast forward to 2004. Two weeks into the first Quality Street Showcase of Exceptional Homes in Newcastle — which is similar to the Street of Dreams, which was canceled again this year — two of the six homes have sold and another two are pending.

Clearly, the rich are buying homes.

In King County, sales of homes priced over $1 million nearly doubled last month compared with July 2003, according to the Northwest Multiple Listing Service, which tracks home sales in 15 Washington counties.

In Western Washington last month, pending sales — offers that have been accepted but have not closed — rose to 95, one of the highest level in five years. Luxury homes are selling a little faster, too — 93 days on average, compared with 103 a year ago.

"The economy is stabilizing, and the hesitancy of purchasing that multimillion-dollar house is gone," said Teri Herrera, a real-estate agent in John L. Scott's Bellevue Place office who specializes in homes priced at $1 million or more.

Like homebuyers in other price brackets, the wealthy see real estate as a safe investment, especially when the stock market is sluggish and banks are paying low rates on deposits.

So who's buying all these big, expensive houses? Most are people moving to the area from other states, buyers who are trading up, and business owners and executives. High-tech millionaires are now the exception, agents said.

Sales of multimillion-dollar homes have risen partly because more are for sale and partly because sellers have had to drop prices from those of the boom.

The number of luxury homes for sale in Western Washington has steadily climbed since January to 1,153, the highest level since 1999.

Some sellers, expecting to recoup investments in their multimillion-dollar homes, have had to cut prices, said Alan Pope, a Redmond appraiser who tracks the luxury-home market. Those lower prices are helping pull in buyers.

Even rising mortgage rates — typically not important to wealthy homebuyers who often pay cash — have pushed some rich to buy. Rising rates, they believe, will nudge prices out of their reach.

Average interest rates on 30-year fixed mortgages bobbed around 6 percent during July, according to the Federal Home Loan Mortgage Corp.

"Even the very rich don't like to pay cash now," said Nada Sundermeyer, an Eastside luxury real-estate agent with John L. Scott.

Many luxury-home buyers are using cash for down payments and taking out mortgages, allowing them to invest their money in other ways.

In Medina, one home with a water view had 15 showings in the first 10 days it was on the market, but didn't sell because the $2 million price was too high. The agent who listed the property hopes to persuade the sellers to reduce their price.

In Hunts Point, the price of a five-bedroom, six-bath home with a water view was slashed by a third last month, from $25.8 million to $19.9 million but still hasn't sold.

But not everyone has to sell for less. Former University of Washington football coach Rick Neuheisel and his wife sold their Medina home in April for full price — $6.2 million. It was on the market seven months. They paid $4.2 million in 1999.

Kristina Shevory: 206-464-2039 or kshevory@seattletimes.com

Copyright © 2004 The Seattle Times Company

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