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January 2008

The White House and Your House

WhitehouseThe mortgage and economy seem to be front and center for the Presidential candidates these days. Here are some tidbits I found from the frontrunners' websites regarding the mortgage situation and what they'd do about it.

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Democrats:

  • Barack Obama: Combat Mortgage Fraud and Subprime Loans; Create Fund to Help Homeowners Avoid Foreclosures; Create a Credit Card Rating System to Improve Disclosure; Establish a Credit Card Bill of Rights to Protect Consumers.  (If you're fired up for Obama, there's a unity march in downtown Seattle this Saturday.)
  • Hillary Clinton: Foreclosure Moratorium; Freeze Interest Rates; Require Accountability.

Republicans:

  • John McCain: Cut Taxes; Cut Spending.
  • Mit Romney: Cut Taxes; Cut Spending; Government Guarantees For Larger Loans;  More Disclosure and Counseling for Consumers.

I'm curious what readers think about these candidates' plans? In my opinion, the government's job is to help consumers make decisions with as much info as possible but people who get irresponsible loans for flipping shouldn't really get bailed out.

-Wendy


Have you refinanced yet?

If you haven't already refinanced and you got your mortgage a couple of years ago, you probably should consider calling your lender.

According to this story in the Seattle Times, some bankers are reporting refinancing activity up 50%.  Bottom line: if you're not already paying in the 5's or if your loan is really big, you may want to give your lender a call and see what they can do for you.  It may be the easiest way to save a couple hundred bucks a month or increase your equity for the same monthly payment.

p.s. If I were a betting person, I might wait till next week since I suspect our man Ben Bernanke (below) will cut rates again this week.

Seattlecondoblog


So much for that invisible hand, More conversion inventory on the way

Marlbourough_house_2 Img_1376

   The Marlborough (First Hill)           De Lorges (Capitol Hill)

While some developers are seeing too much inventory on the market and doing reverse conversions (Expo 62) or partial conversions (Smith Tower), Pioneer Property Group has two conversion projects, the Marlborough and De Lorges in the works.  Pioneer specializes in vintage apartments converions and these two projects are currently going through conversion renovations. If you like what Pioneer has done with their other projects (e.g., Queen's Court, the Pittsburgh, the Nord and Betsy Ross) and you are looking a more old school charm, these projects may be worth a look.

-Wendy


The Invisible Hand Continues to Adjust Supply

Adam_smithseattlecondoblogSome folks look at the news regarding Expo62 and the downsized Smith Tower project as reason for panic.  For more on the Smith Tower updated plan, here's the Seattle Times article.  In reality, developers' reduction of future supply is a textbook example of the market adjusting and balancing against demand and great news for owners/sellers (not so great for buyers in the short term).  Kudos to the Intracorp and Walton Street for course correcting and thanks to Adam Smith (pictured to the left) for helping us see the forest from the trees. 

Looking back at history and recent events elsewhere in the country and world, some cities aren't able to throttle supply as nimbly and end up flooding already soft markets and in extreme cases, leaving some areas littered with stationery cranes and unfinished projects.  So far, it seems like Seattle developers are tapping the breaks and going after the much stronger apartment rental market.  This will still impact condo prices since this will reduce rental income capacity but much preferable to adding new condo inventory. 

-Wendy


Reverse Conversion: Expo 62

Expo62seattlecondoblog_2In an interesting twist and contrast to all the aparment-to-condo conversions we saw in 2006 and 2007, Expo 62 has converted from pre-sale condos to "luxury apartment rentals" for summer of 2008. You can see their placeholder one-page website here. Read more on Seattle PI.

This unexpected change is further evidence that developers are not able to unload new condos at the frenetic pace of a couple years ago (seems like yesterday when Cosmopolitan practically sold out in 1 day before the ground was even broken). It's also another data point on the rental market becoming increasingly attractive for investors to pay their bankers' interest and perhaps earn a little income while the sales market takes time to firm up again.  In fact, I wouldn't be surprised if they switch back to condos in a few years.   

-Wendy


SLU Street Car

Img_1349_2The Streetcar has been up and running since last month and I have to say it looks really nice. Residents working in downtown and living in South Lake Union can enjoy the convenience of hopping on the nice shiny new streetcar for $1.50 or use a metro transfer or pass (thanks to reader MM for pointing this out). If you are tech savvy, you can even configure your phone to get actual arrival information. The ride stretches from Westlake Ave and Olive Way to Fairview Ave N (between Ward St and Yale Ave). Anyone buying in the neighborhood may want to give some preference to buildings along that green line below.

.Streetcar_2

-Wendy         


Escala receiving 22 Real Estate Awards

Escala_logo_2Escala announced recently that they have been selected to receive 22 real estate awards on February 13 from the National Association of Home Builders. Here is a list of the awards. Read more here.

Top Honors

Attached Community of the Year (Urban)
Best Attached Home Plan – Condo or High-Rise Residence
Sales Team of the Year

Regional Awards

Best Graphic Continuity
Best Brochure for a Community Priced Over $1 Million
Best Direct Mail
Best Black & White Advertisement
Best Color Ad for a Single Project
Best Radio Commercial
Best Television Commercial
Best Overall Ad Campaign
Best Special Promotion
Best Signage
Best Interior Merchandising of a Model Priced Over $2 Million

Silver Awards

Best Graphic Continuity
Best Brochure for a Community Priced Over $1 Million
Best Color Ad for a Single Project
Best Overall Ad Campaign
Best Website for a Community
Best Signage
Best Attached Home Plan – Condo or High-Rise Residence

Individual & Council Awards

Marketing Director of the Year

The Vine and Fifteen Twenty-One were also the winner for "Attached Community of the Year" in 2003 and 2006 respectively.

-Wendy


Leaky Condos...nope, not Fake Stucco

Seattle_condo_leakMatt has a interesting post on an acid leak in the Trace Lofts garage (albeit, residents were warned the ongoing construction would require people to park at their own risk). Around the same time, a homebuyer commented that 5th and Madison had broken water pipes on the 2nd and 3rd floor. While helping a friend to move into his Mosler lofts home, one of my clients saw wood floors being ripped up in the townhome units and big drying blowers were brought in to dry off the floor. Apparently, there were some water issue in the units.

Having a few leaks isn't a huge deal, no new building is flawless which is why we have construction warranties and typically the first year of any new building includes a good amount of repair work.  The bigger question is to what extent are these the beginnings of a more issues for Trace, Mosler, or 5th/Madison?  We'll have to wait and see.  At the very least, it's probably another reason to consider the developers' warranties when comparing projects. 

-Wendy


Quick Review of the Seattle Condo Market in 2007

Five things we now know that we didn't know before the end of 2007.

1.)  The housing crash did not happen in Seattle despite constant media reports, bearish pundets, and market crises in most other regions of the US throughout 2006.

2.)  It is possible for one of the nation's top mortgage companies, American Home Mortgage, to stop funding approved loans leaving some homebuyers unpleasantly surprised at their closing appointments.

3.)  In Seattle, the biggest portion of new construction inventory, approximately 3500 units is proposed for 2010. However, these inventories may not all come through.

4.)  Homebuyers care deeply and intensely about how developers communicate with them on the delays for their condo and aren't afraid to blog, post, and comment about it. Some of those developers and marketers will probably get more skepticism on their future projects.

5.)  Most buyers went into wait and see mode in late 2007 and, for the most part, sellers didn't budge, took their properties off the market, or made symbolic price reductions.

Five things we suspected were true in 2007 but now we know for sure.

1.)  Seattle strong job growth is keeping the demand up.

2.)  Retiree (65 and above) and baby boomers formed the largest group of home buyers for new condo projects in downtown Seattle.

3.)  There is material demand for previously untested hotel/condo combo projects in the Seattle market.

4.)  Apartment-to-condo conversions decreased the supply of rentals and local job growth pushed up previously stable rental prices. 

5.)  The days of easy double digit appreciation and speculative flipping are over (at least for the next few years).

Five things we need to know as soon as possible if we want to know what is going to happen for Seattle condo market in the long term.

1.)  Will buyers re-enter the market in the first quarter of 2008 or will they continue to wait and see?

2.)  Will sellers continue their relative discipline and patience or will they start a price race to the bottom?

3.)  Will Seattle's employers maintain their growth or will they be affected by slower economic growth as seen in other regions in the country?

4.)  Will rental properties raise rents enough to make waiting less attractive than buying?

5.)  Will the sub-prime mortgage mess spread to the rest of the mortgage industry?

-Wendy