irregular reminder: land/location is where the money is

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