As 2008 is coming to an end. It's a great time to reflect what an interesting and eventful year we've had. Here are some highlights from the year 2008:
- Earlier this year, the financial market continued to take a toll on the housing market that started to emerge with the sub-prime crisis in 2007. Foreclosure rates increased at alarming rates all over the nation. Many were watching the presidential election closely and particularly on the candidates' plans on how they would bring us out of this financial crisis. McCain-Palin proposed the government guaranteeing bad mortgages while the Obama-Biden team advocated for a general economic stimulus.
- A few planned condos such as Expo 62 (Axis Apartment) and Moda ditched condo plans and switched to renting out units as apartments. Domaine, on the other hand, is scheduled for a foreclose auction (!). Smith Tower will be partially converted to a condo. While a few projects like Alex, Marselle, 1111 E Pike have not made any announcements of changing their original condo plans.
- The 1st quarter numbers showed that inventory in Seattle was more than 50% higher than same period in 2007. Condos were staying longer on the market and home buyers were taking longer to decide on their purchase. Months of inventory on the market rose to 4.8 in the first few months moving quickly from a sellers' towards a buyer's market.
- The 2nd quarter numbers showed that inventory in Seattle was 18.24% more than same period in 2007. However, inventory in Belltown/Downtown actually dipped by 4% over same period. Nevertheless, buyers' unwillingness and/or inability to purchase pushed months of inventory from 4.8 in the first quarter to 6.2 by the end of 2nd quarter.
- Several condo projects were delayed or put on hold with developers (and their banks) taking a wait and see approach. These on-hold projects included AVA, 1 Hotel Residences, Insignia, Icon, 2030 Eight Ave, 2700 Elliott Ave, 1921 2nd Ave, 2021 2nd Ave, Heron and Pagoda, 1519 Minor Ave, Art House, Western and Blanchard, Stadium Lofts and Smith Tower.
- A new state law was passed on June 12 requiring condo associations to disclose to prospective buyers if they have done a reserve study. This provides buyers with an estimate of how much money an association has or will need to set aside to pay for long-term maintenance.
- The increase in gas prices and dip in stock prices only further dampened the housing market.
- Two condos in Capitol Hill (Seventeen07 and Press) went on auction with Press selling 15 of their 18 remaining homes at 80% of their listed price.
- With tightening of the credit market, more buyers opted for renting instead of buying. Even some home buyers who could afford buying continued to pause their searches worried that prices would drop further.
- The 3rd quarter's showed that for the first time this year, inventory was actually shrinking. Total condos for sale in Seattle dropped (albeit, only by 1.83%) over same period last year. However, number of sold condos were almost half of 3rd quarter of 2007. Months of inventory grew to around 7.8 by the end of the quarter.
- Many would-be first time home buyers continued to rent; rents went up 10% more than previous year, reported by Seattle Times.
- Olive 8, Escala, Northgate Thornton Place development, Danielle, 200 West Highland, Marselle, Ruby, Equinox, 1111 E Pike, Harvard and Highland, Enso, and Rollin are on track to complete in 2009.
Phew! What a year 2008 has been. Here are some questions I think we'll need answered to see how 2009 will look for the Seattle condo market:
1. Will the Obama stimulus plan end the recession in 2009?
2. Even if the recession ends in 2009, how quickly would Seattle condo buyers come back into the market?
3. What will be the innovative ideas from developers to get people excited about new projects again?
If I knew the answers to these questions, I'd probably work on Wall Street...but just for giggles, here are my bets:
1. I think things will continue to be spotty in the first 6 months of 2009 and the beginnings of the recovery will start emerging at the end of the year.
2. I believe in Seattle's fundamentals; as such, I think when the national recovery finally begins, our city will be part of the first wave of cities showing year-over-year sales growth.
3. I think developers will bring us a few things such as much more distinctive and original architecture, more valuable common amenities, and perhaps more built-in technology.