Month: January 2025

This just in…

A retired Microsoft software engineer and product architect sold his home in Hunts Point on Jan. 7 for $16 million, according to King County records.

The home, which is appraised at $10 million by the King County’s assessor’s office, had only been listed for one day, according to Zillow.
[…]
The 3261 Hunts Point Road [home] is 4,340 square feet and was constructed in 1962. It was remodeled in 2005, which is the same year that Blinn and Leslie Brewer bought the home for $3.5 million.

The home has four bedrooms and [4.75] bathrooms. It sits on three-quarters of an acre of Lake Washington waterfront property. The property includes an entertaining deck and cabana.

Speculation in land values is and has always been a driver of wealth here. But this is just another reminder that a 1962 PNW-style rambler, even as a 4 bedroom, is not worth $16,000,000. What is worth that is the 3/4 acre of lakefront property it sits on. How many people/families could live on 3/4 of an acre and how many would love to, given its location? Tax the value of that location and all the waterfront and mountain view properties and see how the budget pencils out.

So what happens next? At that price, it’s a teardown with a massive megamansion replacing it. The land is valued at twice that of the house and the combined total is about 2/3 what the buyer says it’s worth after one day on the market. Assume the additional valuation went to the land, making it worth $13,000,000.
Land: 6,809,000 Improvements: 3,144,000 Total: 9,953,000

Looking around the increasingly impoverished neighborhood where I have lived for far too long, I decided to look into some of the recent closures, to see who owns the land and what it’s worth.

First up, the abandoned Starbucks. Closed years ago, fenced off, completely disused. The land value is about $1.9 million, the building is a teardown ($1,000 valuation). Not big enough for a grocery (something we could use here in our intown food desert).

Next, the closed LA Fitness across the highway…land valued at $9 million, the building also a teardown.

And these are not the only disused or vacant parcels along that stretch of road. But at those valuations, the sales price to buy and develop any of them would be prohibitive for anything the neighborhood needs. Trader Joes is unlikely to buy in, especially not with a new location in Greenwood to cover the north end. Whole Foods? PCC? Unlikely. This neighborhood can’t even support a Bartell Drug, with that location, purpose-built as an anchor for a mini-mall in 2007, now closed as well. With a $10M valuation, it might sit there awhile as well.

So what would happen if these properties were turned into ground rents/leases? What would happen to the valuation and the cost to acquire the rights to develop them? You could buy that LA Fitness parcel for $9M with an annual property tax liability of $94,000 (financing it at current rates of 6% and 10% down is $582,763.08/year) for a combined annual payout of almost $700,000/year before turning over a shovel of dirt, to say nothing of demo-ing the existing structure.

But what it you could rent/lease it for $270,000/year for 99 years with a modest 1% annual increase? Over the course of 99 years, it would remit $45,306,904.35 in land rent just on the land, not counting any tax on the building or sales and payroll taxes from whatever happens there. 99 years of property tax at the current valuation would sum $9,306,000, about 20% of what a ground rent would yield. And a ground rent would get the land into productive use faster since it has a lower upfront cost, no need to finance.

Is this perfect? No, but is what we have any good at all? Vacant/disused land all over the city, not just here, attracting grafitti (and the mayor hates graffiti a lot more than empty city blocks or idled land), making no money beyond property tax — no jobs, no sales tax, no services like electric or water, just deadweight.

I wonder what it would take to create some of economic empowerment zone in this stricken part of the city and reclaim these parcels. Anything left untouched for a year ought to be reclaimed under eminent domain…if you can’t find a productive for your land in this economy, you need to let someone else have a turn.