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January 15, 2017 - January 21, 2017

The Answer to Why Condo Prices Are So High

GridironThese crazy prices—it’s not a demand problem, it’s a supply problem.

This may not be news to some, but this recent article from the Seattle Times further illustrates what I have been saying is the issue for a long time now and that is that there are simply not enough condos for sale for buyers to choose from.

According to the article, Seattle has the 2nd “tightest” real estate market in the entire county with regard to inventory.  Only behind San Francisco.  Further, with inventory levels being 14.3% lower last year in 2016 than they were in 2015, this tells me that people aren’t selling their condos (and houses), and builders just aren’t building enough to offset the shortage.

For buyers in today’s Seattle condo market, it’s competitive, expensive, and frustrating at times.  So what can you do??  Well one thing you can consider are pre-sale condominium purchases.   These are condos that are not yet completed and are under construction. You can select a unit, lock in pricing, and secure a unit that will be completed in the future.  The benefit is that not every buyer can do a pre-sale. So it cuts down on your competition.  Even though the pricing can seem expensive, it’s an option a buyer can consider to avoid the hyped up bidding wars that are being encountered often on condos listed on the market.  In the end, even though a buyer is likely paying more for a pre-sale than they might for re-sale today, it still may be a better option than fighting to find a condo for 6 months to a year while pricing is going up, in the meantime.   

Currently, in Seattle, there are only three pre-sale condo options that are actively selling their condos and each has pros and cons.  In a previous blog post we covered them.  They are Nexus in the Downtown/Denny Triangle area,  Gridiron in Pioneer Square (pictured in this post) and Hendon condos in the Phinney Ridge neighborhood.  All the other cranes and construction sites you see all over the city are either building office space, medical research facilities or rental apartment buildings.  So, you can see even for new construction condo options, the choices are very limited.  There are potentially 3 more condo projects breaking ground in 2017, but until they do, we never really know if they will be built and if they will be condos. We are the 2nd tightest real estate market in the county. Wow.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.