Downtown Condos | Seattle Condo Review by Wendy & Marco

2012 Seattle Condo Market in Review - The Year of Dwindling Inventory

As we start off 2013, every year in January we like to take a quick pause to take a look back and recap the major events, trends, and milestone from the previous year and for the heck of it, make some forecasts and predictions for the upcoming year.

Trends of 2012 and Events Worth Noting

We saw our condo market absorption rates increase and inventory dwindle to the point nearly all segments of our Seattle condo market were leaning toward a seller’s market with less than three months of inventory. 

Multiple offers returned but interestingly enough we did not see a sharp incline in pricing. This is likely due to buyers who were much more conservative and resistant to overpaying in light of the recent market crash. This could also be due to more stringent appraisal review practices by lenders, which many applaud.

2200 Condominiums in South Lake Union reached the largest construction defect settlement in state history with its developer for $26 million dollars.

We saw the return of investor buyers. An increase in all cash purchases seemed to indicate investors gained confidence in spending again.

Many newer condominium buildings entered litigation with their developers in accordance with the Washington State Condominium Act’s construction warranty time frames. This further limited available condo units on the market because units that are for sale in buildings with pending litigation have a very hard time obtaining buyer financing.

Client Question of the Week: I want to sell, but don’t know if I’ll find anything to buy

This email directly from a new client of ours speaks to a very common question and concern we are hearing regarding the Seattle condo market.

“Hey Marco, I'm still on the fence, but am leaning towards staying put until later this year. The lack of inventory is a concern, as I don't want to be 'homeless' for an extended period.”

Great question and valid concern “Mr. If I sell, will I find a new place?”

It’s no secret we don’t have a lot of inventory in Seattle condos right now.  This presents an opportunity and a challenge to those condo owners who would like to move up and sell their current condo and purchase something different.  In this client’s situation, he is a young professional that has some equity in his condo and would like to take advantage of lower mortgage rates and buy while prices are still affordable (compared to pre-recession prices). However, the concern is that with hardly any options on the market, can he find something he likes.

In general, my advice is have some confidence in the fact that new inventory will be coming on the market.  Many people are in the same situation, and if we can in affect, break the log jam of on the fence sellers, we will in turn, see more options for buyers to choose from.

We turn to a couple graphics from the stats and data team at Windermere to illustrate the inventory levels here in the area month over month from 2008-2009 and 2011-2012  (click on the images below to make them larger).
                                                                     (Click to see larger image)

2200 Condominiums in South Lake Union Settles with its Developer

After approximately two years of warranty investigation work and negotiation, the 2200 Residential Homeowner Association and the 2200 Master Association (that represents the hotel, retail and the Whole Foods) received an early holiday gift of sorts. A settlement was reached for the 2200 Association's claim for repair of construction defects. The settlement summary was discussed with owners at the annual meeting of the HOA held earlier this week. The $26 million dollar settlement represents what is rumored to be the largest construction defect settlement of its kind in the state for a residential condo building.

This settlement comes at a good time for the owners in the 2200 complex who have been somewhat limited from being able to refinance or sell condo units for some time due to the fact the resale certificates and condo questionnaires needed by lenders disclosed issues related to the construction defects and its mediation.  These can now be changed, which should open up some possibilities for sales and refinances to happen since buyers and their lender might be more confident about the long term financial health of the building and the HOA.

Early indications are that the 2200 community will start to see the work start some time in 2013 but it’s not known exactly when, nor exactly how long the work will take.  It also remains to be seen which of three condo towers will be first and if a full wrap of each building will be needed. The board indicated at the meeting they will be working hard with the project contractor to try to make the repairs as efficient as possible and with the least amount of impact on the residents and businesses within 2200 as possible. It is not yet officially known who that contractor will be.

Although none of us owners at 2200 are looking forward to the inconvenience of the repair work that follows, it is likely that the settlement amount will cover the expenses of the needed repairs and there will not be a need for additional funds from the owners through an increase in dues nor a special assessment, which is the silver lining to the whole thing and a relief for many. In fact, the new budget for 2013 reflects a decrease in dues now that the settlement has been finalized.

By Marco Kronen with Seattle Condo Review: A guide to Seattle Condos exclusively for buyers and sellers

Insignia Towers Gets Second Construction Crane Installed

Today crews are finishing erecting the second of two cranes that will be used to build the two 41 story condo towers, called Insignia Towers, in the Denny Triangle neighborhood.  It's amazing seeing how these brave workers crane the pieces into position hundreds of feet up in the air!  It takes a huge mobile crane to build and erect the onsite crane that will build the foundation and condo tower for the north building. Wild right!?

I plan to give periodic updates on the the construction process of Insignia to help illustrate how condo towers are built and constructed.   Plus I'm a sucker for big machinery, and the whole high-rise construction process myself.

As mentioned in our previous posts, the south tower will be built first and the developer has indicated they will start marketing them likely Summer or Fall of 2013, with the entire project taking a total of three years to complete.  It is not yet known exactly when they plan to release any pricing or start pre-sales but Wendy's last interview with them in August indicated they were likely at least 18 months away from that at that time.  That would roughly be early 2014.

By Marco Kronen with Seattle Condo Review: A guide to Seattle Condos exclusively for buyers and sellers

Amazon Buying Vulcan's South Lake Union Buildings They Currently Lease

Well this is certainly some good news for us downtown dwellers as it looks like Amazon is buying the 11 buildingsthey lease in South Lake Union that Vulcan recently announced they were selling.  The PSBJ is indicating the sale will be for a reported $1.16 billion.  This recent news by Vulcan that they planned to sell the buildings caused a bit of a stir in the SLU and Downtown neighborhoods since everyone was wondering how the sale of those building might affect the area with a new owner coming in.  But this may put fears at ease knowing Amazon is the potential buyer. Nearby condo buildings such as 2200 Westlake, Carbon 56, Enso, Veer Lofts, and Cosmopolitan have been enjoying new vibrancy from the restaurants, bars, services, and the like all popping up mainly due to the new larger tenants coming into the area.  Amazon obviously being one of the main draws of these new businesses.

Read the PSBJ article here:  Amazon to pay $1.16B for 11 Seattle buildings

By Marco Kronen with Seattle Condo Review: A guide to Seattle Condos exclusively for buyers and sellers.

Vulcan Putting Amazon Headquarter Buildings Up for Sale in South Lake Union

Vulcan Real Estate recently announced that they put the 11 building Amazon campus in South Lake Union up for sale. Their reason? The sale will allow them to continue to build on the remaining 30 acres they own in the neighborhood and it will help to diversify their portfolio by liquidating some of the office space they own. Right now, they are constructing a new apartment building, the Stackhouse, and the next phase of the UW Medical Research facility in the area. And, announced yesterday, they will be starting construction in January on a two building expansion for Amazon at Westlake and Mercer. More info here and here.

What this likely means for the South Lake Union neighborhood in the future is more development, more businesses moving in, and, who knows, maybe a condo building will be in the mix. Only time will tell what Vulcan will do with their remaining land in the area but we can be sure that whatever they do will continue to help this neighborhood grow and expand.

By Marco Kronen with Seattle Condo Review: A guide to Seattle Condos exclusively for buyers and sellers

Homeless shelter in Belltown?

I received this flyer today in my building. I'm not sure if this is true. If it is, it could be a cause for concern for Belltown residents and investors. Has anyone else heard anything about this?

UPDATE : I called up the planning department today and they couldn't tell me what the building will be used for. I left the applicant a voice message and will post an update if I hear from him.

UPDATE#2:  Based on Gil's last comments below, it looks like the future of this land is still up in the air and there were misunderstandings due to land use action signs not being updated on the property.  Also, I should point out that my previous use of the term "cause for concern" may have been too loaded.  Frankly, I am most interested in a transparent community development process where all stakeholders have an opportunity to participate.  I respect everyone's right to their own opinion on the matter. 

-Wendy

Technorati Tags: First United Methodist Church, Belltown Video, Belltown homeless, Moda condo

Seattle Street of Dreams

Even though this blog is all about condos, I recently attended the Street of Dreams event and thought I’d share some observations.  For all you condo owners out there looking for an affordable country retreat, these are probably a bit more than you need ;-)

The Seattle Street of Dreams was held at Allen Lake this year. The event started on July 15th and will be ending today at 9.00pm. This year’s event featured 6 luxury homes sitting on a ranch consisting of 30 + arces of land with natural features including a stream, access to private lake, grassy fields, towering evergreens, and beautiful wetlands.

 

          

 

-The moment you step into the homes, you are greeted by soaring halls and grand stairways. Ladies, you can find your most perfect kitchen in these homes that are beautifully tiled with 6 burner gas cooking stoves and a massive kitchen island. Some of the top of the line appliances includes a $13,000 stainless steel and glass door refrigerator and a $2,900 built in coffee system.

If you like to spend a lot of time in the bathroom, the spa-like designs can definitely relax you after a hard day’s work. There are seemingly endless varieties of sinks, faucets and fixtures in these homes.                                         

      

                              

Multiple fireplaces both indoors and outdoors can be found in the homes. Most of the homes come with walk in wine cellars as well.

                     My favorite home was house number 3, “The Retreat” at Water’s Edge. There is a central skylight that brings natural light into the house, an outdoor pool and spa patio. There is also a hidden spiral staircase behind a bookcase leading to a bar and wine cellar. I also loved the separate clubhouse that opens out to the lake with an outdoor fire place.

 

Each home had its own unique personality. Even thought the prices were in the multi-millions (house #3 was ~$5.5M) this is a great annual event to get some inspiration on design, use of color, and see the work of many talented people.

-Wendy

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Positive outlook for Seattle housing market

• Microsoft plans to hire more employees over the next few years. It will spend $1 billion to expand the campus by more than a third, or 3.1 million square feet, during the next three years. That includes new leases and the purchase and construction of 14 buildings. This is definitely going to be a boon for the Seattle housing market. Read more.

• Nearly 1,000 condos, apartments planned for Qwest Field. A team of developers headed by Seattle firm Nitze-Stagen is expected to pay King County $10 million for 3.85 acres of the parking lot to the north of Qwest Field. Key details of the development:

- 394 condos and row houses

- 562 apartments, including 140 units considered affordable to renters  earning $35,000 a year.

- 1,035 parking stalls, including 500 spaces to fully replace public parking now on the property.

- 25,000 square feet of street-level retail, including a grocery store.

- 862,000 square feet of building space.

- $270 million estimated development cost

This is definitely good news for Pioneer Square residents. Read more.

-Wendy

Technorati Tags: Seattle housing market, Seattle condos, Seattle condo market