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April 2006

Economics of Remodeling Your Condo

I came across this good article in Remodeling Online which looks at the cost recovery of remodeling projects.

The big takeaway is that most do not yield a positive ROI when you exclude the enhanced quality of life the owner/resident benefits from after the remodel is done and before the property is sold.  An excerpt of the Top 3 ROI remodeling projects are below -- notice the ROI is less than 5% not including cost of capital and inconvenience factor.  For the whole list of other remodel efforts, check it out here.

Project Job Cost Value at sale % Cost Recovered 2005 Rank 2004 Rank 2003 Rank
Siding Replacement - Upscale $10,393 $10,771 103.6% 1 n/a n/a
Bathroom Remodel - Mid-Range $10,499 $10,727 102.2% 2 5 6
Minor Kitch. Remod - Mid-Range $14,913 $14,691 98.5% 3 2 n/a

-Wendy

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Trio 123

28036740It’s hard not to miss the massive construction hole on the corner of Denny Way and Western Ave. The Trio project is a new condominium scheduled to be completed in the Spring of 2007 features exciting work/live lofts and flats halfway between Belltown and Queen Anne. (The same builder also has another project going on in Ballard called Noma.)

How should we think about Trio?  If Lumen is like a BCBG boutique, the Trio would be like a United Benetton – a bit more fun but probably not as high end. To its credit, the Trio does have a lot of color palettes and material combination options for home buyers.

Standard and optional finishes include bamboo flooring, cork flooring, terrazzo tile kitchen counter tops, slab granite, Caesar stone, aluminum /glass and laminate cabinets, ceramic and metal tiles on the kitchen walls, and glass and porcelain tiles in the bathrooms.

From the 5 standard color palettes to 2 different upgraded palettes, home buyers will be pampered with choices to make each unit a perfect fit. I can easily see a home buyer looking at customizing their unit and enjoying the selection process like spending a day shopping and picking out a new outfit.

One thing to note about the Trio is that they will be using metal and hardy plank for the building exterior. We are seeing more of hardy plank being used in condo construction. The product is supposed to have a longer life expectancy than traditional and synthetic stucco (EIFS) (which has a higher chance of trapping moisture in the wood) but probably isn’t as desirable as a concrete exterior.

So for whom is the Trio a good fit?  If you are someone who likes the proximity to Queen Anne and Downtown Seattle and prefer a variety of finishes to create your own palette, Trio may be a good choice. Lastly, looking at Trio’s price range, it doesn’t look like a bargain.

One more thing: In some new construction projects, the grout (mortar for filling gaps) is actually not sealed since it isn’t a requirement for builders. As an example, one of my clients purchased a unit in Avenue One and we had to send it someone in to seal the grout. The few hundred bucks was not a big deal to him. However, you would imagine if you’re purchasing a unit that costs close to $500,000, the unit should come finished; apparently not for Avenue One (The same builder of the Parc). Luckily, in the case of Trio, you don’t have to do that for your kitchen and bathroom : )

-Wendy

UPDATE: Urban Living has some good comments on the Trio as well.

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Tribeca - lessons learned

Tribeca_1With all the new and innovative urban living projects in Seattle, looking at the history of the Tribeca is an interesting excercise.  When it was put on the market back in late 2003, it was really one of the earlier thought-leading experiments in mixed use construction in Seattle.  Concrete and steel and built to commercial standards atop a Safeway in Queen Anne with a fairly low supply of total units, many investors and buyers considered this an ideal project and one that would rise in value like a rocket ship. 

In practice , it actually took some time to sell through and the builder went through two marketing firms.  Certainly, the property is wonderful and owners have definitely made gains.  However, what's thought provoking is that on paper, this was and continues to be an almost perfect property that some anticipated to do even better than it has thus far.  Location, construction, limited direct competition in immediate vicinity, uniqueness, etc. all pointed to a bidding war property. Nevertheless, many units did take a little while to sell -- even while the real estate market was white hot.

What lessons can be inferred?  It's ok to pay a premium for premium property -- just understand that regardless of how much you feel it in your gut, there's always a risk that future buyers may not always have the same intensity of appetitite as you do.   How do you make sure your enthusiasm and that of the sales center are calibrated for future demand?  That's definitely an art as much as a science. 

Some things that I always make sure I do with my clients and you should ask from your own realtor:

  • Look at comparables from a product as well as a price point of view (I call this a backwards and forwards CMA)
  • Research any potential yellow flags that might create resale friction (e.g., litigation, new projects planned nearby, crime, builder track record, design flaws, new zoning discussions, etc.); these are rarely easy to find but can often be critical to avoiding future headaches
  • Pick the right unit and right layout -- sometimes it's better to have a great unit in a good building than a good unit in a great building
  • Look at historical sales data for that building as well as its neighbors,
  • Consider the local economic drivers within a few square blocks of the property, etc. 
  • Get a good, unbiased buyer's representative.  Remember, the sales center works first and foremost for the seller.
  • Make sure your realtor knows the lay of the land and does his or her homework.

There are a number of other things to keep in mind but the ones above should get you off to a good start.  Also, every buyer and realtor are different so consider this post all personal opinion and I'll be the first to admit there are a lot of ways to skin a cat.  There's no guarantee you'll pick a winner but I think these are some good pointers to mitigate your risk.  Hope this helps!

-Wendy

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Seattle named most educated city

Just learned on Upfront and on the PI that Seattle was named most educated city in America.  Given there's a good correlation between education and income, and income and demand for nice condos, this is reassuring news for downtown homeowners, investors, and realtors ;-)

-Wendy

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The Parc

The_parc I went to the Parc presentation center when it first opened several months ago.  While the construction plan looked solid and we were impressed with Avenue One (built by the same team that will be doing the Parc), it has struck me that the Parc is notably nondescript.

What I mean is that there seems to be so many new projects all over the city and each one has a distinct flavor.  Looking around, you have hotel / luxury condo combinations like Madison Tower, forward thinking efficient design places like Lumen, and parts of the Vulcan empire in South Lake Union like the innovative Veer Lofts

The Parc, on the other hand, is more like your standard modern concrete and steel condo project straight from central casting.  Sure, it's got a great location in Belltown, arguably more desirable than some of its competition but there's certainly no Whole Foods underneath, movable walls, or luxury hotel attached.  Of course, the Parc's more memorable competitors are not cheap.  Interestingly enough, from memory I wasn't particularly impressed with the Parc as a value play either.  It seemed like it was a bit cheaper but if someone is gonna pay a few hundred grand for a condo, you might as well pay a little more for a more unique, more downturn resistant design or go for an older building and get a much bigger discount.

In some ways, the Parc may be in this oddly uncomfortable place.  Too pricey to be a great value play but not really that memorable to make for a hot resale opportunity a few years down the road.  On the other hand, perhaps the Parc is as close as we can get to a reasonable, no-nonsense project where some of the better heeled new projects will be considered a relic of mid 2000 condo extravegance?  Personally, I think I'd look for a resale unit  at the Vine or even Avenue One if I'm looking to stretch the dollar or go for the gusto with one of the newer loft or more interesting condo projects that will have a more spirited resale market.

Related posts:

Parc Incentives
The Parc Update
Pre-Construction Marketing versus Reality
Rent a condo or hotel?

-Wendy

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Belltown Court

Copy_of_img_0720_2A lot of you may have noticed that Belltown court is a giant white plastic monstrosity these days.  Enveloping the entire block of First and Second ave between Battery and Wall, it is distinctly not a concrete and steel marvel like so many of it's newer neighbors.

Nontheless, Belltown Court may be one of the best investments this summer.  Why would someone consider a leaky, wood-framed, condo when architectural marvels are popping up like mushrooms?  Before we go into the positives, let's call out all the negatives.

  • It's a wood framed building.  When you walk the hallways or your upstairs neighbors move their furniture, you'll be able to tell.  For some people, like me, it's the difference between closing the door in an Audi and a Honda.  There's nothing wrong with wood framed buildings but they just don't feel as vault like as concrete and steel.  For first time home buyers, buyers on a budget, or investors - this is probably fine but for people who can spend an extra $50-100k for a more solid feeling building, it's something to keep in mind.
  • It's in the heart of Belltown but it's in the heart of Belltown.  Weekends nights are full of people trying to paint the town red -- depending on your age, this is a great source of energy and color or an annoyance.  There's usually at least one panhandler within a block of the front door though they're fairly passive.
  • The construction won't be done till the fall.  So if you move in now, you're not gonna have any windows (you'll get some light since the plastic is semi translucent) and you're gonna be surrounded by construction teams banging away at the walls.

Still reading?  If you haven't been scared off yet, here are the reasons why I think it's still a great place to live and invest.

  • Location, location, location.  Belltown Court is essentially in the epicenter of Belltown.  Kitty corner from El Gaucho, above Macrina Bakery, Lampreia, and Saito's, on 1st between Battery and Wall, this is the heart and soul of Belltown living.  Veer, Mosler, Lumen, and all the rest are kind of on the periphery of the Belltown core.  Site 17 isn't too bad, but still not on 1st avennue itself.
  • Price per square foot probably 25% less than what you'd pay for new construction like Lumen.  For the price of a 600 square foot Lumen studio, you could get a 2BR 2Bath 900 squarefoot unit in Belltown Court.  If you can get a hold of one before the construction is complete this fall, you might be able to get an even better deal. 
  • Brand new roof, stucco siding, and windows (hence the plastic wrapping). 
  • Great little things like an indoor pool, sauna, hot tub, cozy courtyard, the Belltown Market downstairs, and nice floorpans make a big difference.

-Wendy

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Out of town, see you in a week

I'll be out of town for about a week so probably won't be posting till I get back.  When I do, I will be posting a review of the Trio.

UPDATE: I am also getting some readers asking for me to review the Veer Lofts project, one of the new Vulcan properties in the South Lake Union which I profiled in a previous post here.  If there are specific questions people have about Trio or Veer, feel free to comment and I'll try to cover those areas too.

Veer_5      

-Wendy

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Feng Shui 101

FengshuiI have been asked on many occasions by some of my clients, "What is Feng Shui?" They hear people talking about it and how it is supposed to enhance your home and make it harmonious for everyone in the family. Not only are most Chinese believers of Feng Shui, I’ve noticed more and more non-Chinese are interested in this ancient practice as well.

Feng Shui in direct Chinese translation means wind and water. They are the energy that surrounds us that shapes our environment. Positive and negative energy affect our daily life when we are at home or at work. In ancient China, Feng Shui Masters used Feng Shui to located good grave sites (for the emperor or the wealthy) or to improve existing ancestor sites. In modern society, it is not a common use and is mainly used in homes or work places.

Applying Feng Shui in our home/condo can help us to improve our living space energy. There are a few Feng Shui do’s and don’ts that are pretty commonly known which you can apply to your home or condo.

The entrance door should be free from clutter/blockage.

The door to your home is where the energy (chi) enters. It should be free from clutter to prevent any blockage of energy to the rest of your home. It shouldn’t have items hanging over your door blocking the entrance. (I went to one of my best friend’s homes last year and her mom hung 3 potted plants on the top in front of their door with leaves hanging down. This is considered bad energy. The energy is flowing downward right in front of the door. They removed the plant immediately)

Your door should be easily visible to your guests.

A color that stands out and can be easily seen by visitors is more preferred. Most condos might not allow you to change the color of your door but you may be able to enlarge your unit number to make it more visible.

Your bed should be in a commanding position.

Since most people spend 1/3 of their time in bed sleeping, the bedroom is one of the most critical areas to make sure the energy is positive. Having the door facing the bed is a big big no no. The energy comes in from the door and immediately goes right to the bed. The energy is too aggressive for someone trying to get some rest. Your bed should be placed furthest from the door. Sometimes the layout does not allow you to do that.

You should try to position your bed against a wall (that gives you strong backing) and in a position where you can see the door (and allow you to see who is coming into the room). This is what we call a commanding position.

Remove mirrors in the bedroom that are facing the bed.

Mirrors reflect energy and in a bedroom where you are resting, you do not want to have them facing you. Mirrors also act like a knife. For a married couple, you definitely do not want the mirror to be in the middle facing both of you that is cutting the union. You should either remove them immediately or use a curtain to cover it.

Don’t leave the toilet cover open

This is something that I tell my husband all the time. I think it is harder for men to remember than woman. An open cover allows energy to leak away and especially for someone who has their own business, they definitely don’t want their fortune to leak away. I know some of you may think that this is ridiculous but think about a time when you stepped into a room and you immediately felt safe and secure, or scared and uncomfortable. Energy is around us; you may not be able to see it but you can definitely feel it.

Remove dead plants.

If you love plants, always remember to take good care of them. Dead plants give negative energy in the house. If you have dry plant decorations, replace them with real plants instead. Plants are living energy and affect your living space as well. It is ideal to have living energy at home to help us to circulate the energy. For example, keep a fish tank or pets at home.

Our home/condo is where we find comfort after a long day of work. A little change can easily enhance our living space making it more safe, comfortable and relaxed for us mentally and spiritually.

-Wendy

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Lumen or Mosler Lofts?

Lumen_actualSo my husband and I are thinking about selling our condo in Belltown to move into a bigger place. We are constantly on the look out for new construction projects. There are two condos that caught our eyes, Lumen and Mosler Lofts.

Lumen is located at the corner of 5th and Mercer St, sitting on the former site of Tower Records. They had their public opening on Sat. Hewitt is the architect for Lumen as well as many Seattle's highly stylized building including The Klee and The McGuire in Belltown, and  Harbor Steps in downtown Seattle. It is a concrete, steel and glass construction. The interior is design by renowned local designer, Garret Cord Werner who also designed the Avenue One condo and The Vine in Belltown.

The cool thing that I like about this construction is the clean look.  From the exterior that has floor to ceiling glass to the interior, the moment you walk into their one bedroom model, you feel very comfortable with the wide hallway, tall ceilings and polished concrete floors. The layout is very functional. It reminds me very much of The Klee but with a higher end design. When you are purchasing new construction, the nice thing is the ability to customize the unit to your preference. Lumen definitely offers home buyers many options for upgrades. As an example, if you like more privacy for your bedroom, you can upgrade to a movable opaque glass wall. Worry about not having enough storage space?  There’s always a Garret Cord designer bed and cupboard that has room for all your personal items.

If you don’t like the traditional wood finishes for your kitchen cabinet, go with the white enamel. Both are going to give you a clean look with the refrigerator and dishwasher hiding behind them, even the kitchen electrical outlet is encased into the unit, very clear and sleek looking.

The only thing (and a pretty big thing) that will keep a home buyer from picking Lumen is the price. Let’s take their one bedroom courtyard unit with the patio as an example. The asking price is $500,000 for a 676 square feet unit. I mean it’s nice to have a patio but for $739/square feet?  It seems way over priced. I can purchase a bigger place for less money like the one bedroom in Mosler Lofts which starts at low $400,000. Or pay 5% more for a huge one bedroom which is 45% bigger and comes with a balcony.

Mosler_lofts_2So what about Mosler Lofts? This condo project is located on 3rd and Clay in Belltown. Since their opening in February, they have sold about 63% of the units. This is a high rise condo project. It has features similar to Lumen, the high ceiling, concrete and steel design. Mosler Lofts focuses more on using eco-friendly finishes. It also features hardwood flooring, exposed concrete ceiling and stainless steel appliances. Mosler Lofts has a great location. It is on a quiet street of Belltown, easily accessible to restaurants, cafes and stores and yet residents do not have to deal too much with the weekend noise coming from the bars and pubs along 1st Avenue.

If you are looking at investing, Mosler Lofts is a better buy than Lumen. In fact, I feel that Mosler Lofts should price their units higher. If they go 2-5% higher, I think the market will still be receptive to it. I was told the developer is going to raise their prices soon. Well, we’ll see how much higher.

Quick snapshot

Lumen :                
Completion date end of 2006- early 2007
500-1,200 square feet
$200,000 to over $900,000
100 units

Mosler Lofts:          
Completion Summer 2007
12 story project with 160 units
Low $200,000 to over $700,000
148 units 

Both projects require 5% earnest money to write up an offer.

-Wendy

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