Downtown Condos | Seattle Condo Review by Wendy & Marco

Client Question of the Week: Long Market Times for Condos in Newer Buildings?

Client Question of the Week: “I'm considering selling in the new year but I am seeing long market times in some newer buildings and that concerns me, I thought things were picking up and getting better for condo sellers in Seattle?”

Dear Scared To Sell:

This is a common question these days, and it comes down to a condo unit's ability to be purchased and the risks associated with its purchase.  Condo ownership is a wonderful thing, but like any real estate purchase (house, townhome, land, floating home, etc.) there are risks to that investment. The newer buildings you are seeing with long market times likely are those in the middle of their warranty investigations or those in the various phases of litigation with their developers.

Unfortunately, this is common with new construction condominiums.  Due to the Washington Condominium Act, which was intended, I think, to protect the condo buyer in new construction, developers of new condo buildings have to provide a warranty for certain aspects of a building's construction against defects. Sounds like a great thing right? Well, since our condo buildings are built by humans, none of them are built perfectly. So things do come up that need to be repaired, replaced, fixed etc.  There are limits to how long an HOA can hold a builder/developer accountable for certain construction defects.  I'm not an attorney so my specific knowledge is limited to the exact terms of the state statute, but basically what this results in with nearly every new condo building in our city, is that something in a building will result in a dispute on whose role or responsibility it is to fix it.  If the HOA and the developer do not agree, a motion is filed by the HOA to protect their right to sue if they can't come to agreement.

Seattle Condo Market Update: Soft Landing for the Winter

November 2012 data are in.  Here's some key takeaways and of course, the charts.

• After several year-over-year thumpings of monthly 2011 sales, November 2012 was higher than November 2011...but only by ~15% (versus the ~30% advantages we saw in September and October year-over-year comparisons).  Perhaps the we're finally settling in for our winter hibernation.
• Median prices for Seattle overall saw a soft landing, slightly higher than November 2011 but considerably lower than the banner October 2012 numbers ($245K versus $275K).
• At the neighborhood level Belltown/Downtown remains the most solid overall with sales almost as high as October 2012, median prices up 10% month over month, and inventory still tight.   

 

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

Olive 8 Update - Including its Debut on Top Chef Seattle

You may or may not already know but the Bravo show, Top Chef, was recently filmed in Seattle for season 10, which is now airing.  The chefs compete in a number of challenges that feature local cuisine, restaurants, and events in the host city. The show also puts the chefs up in a posh residence for their stay during the competition.

Guess where the chefs stayed? Downtown Seattle’s Olive 8 Condominiums! The “cheftestants” all lived in a unit on the 38^th floor of the Olive 8 tower giving this condo a great national stage to be seen on. The program showcases Olive 8 with scenes of the chefs lounging around, using the gourmet kitchen and shows off the beautiful view as the chefs sit out on their private deck. Olive 8 was a good choice, I would say.

So what’s going on at Olive 8 in terms of condo sales you might ask? Here is the latest update on Olive 8’s Developer owned condo units:

• 90% sold
• 196 closed sales
• 9 pending sales in November
• 19 developer owned units left: 10 one bedrooms and 9 two bedrooms (all on floor 30 or above)

There are also a couple of units being sold by individual owners (resales) in the building:

• 1 active resale unit
• 2 pending resale units

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

September 2012 Condo Sales Stronger than Expected

I finally got around to analyzing the September Seattle condo sales data!  Below are some interesting observations and those beloved charts.

• Last year we saw a drop in sales from August to September of over 20%.  
• This year we saw as many sales in September as we did in August.
• Prices are holding steady.  Median prices have been exactly $250,000 for the last three months.
• Inventory continues to be tight at about 40% fewer listings than September 2012.
• Capitol Hill / Madison / Central saw the biggest strength with sales jumping 35% versus the previous month.

So overall, we saw a nice September with some encouraging signs that the Seattle condo recovery continues to plod forward.

 

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

2200 Westlake Condos: Humble Beginnings, Bright Future

2200 Westlake is a building that I feel might be misunderstood and I believe this is due to its market timing. Let me explain.

2200 (along with Cosmopolitan and Madison Tower) was one of the first pre-sale new construction projects to hit the scene after the Cristalla (pre-sold in 2003; completed in 2005). When Cristalla was completed it was the first new construction project to have been completed in Belltown since the Bellora in 2003 and buyers were excited to get into something new and shiny. The market was booming and everyone was trying to buy. Oh the good ole days.

When closings began in 2005 Cristalla, owners were being approached to sell their condos for much over their purchase price (I know, because it happened to me!). This created the expectation that if you purchased a new condo, you could turn around and sell it immediately for a hefty profit. Investors jumped on the chance to make a quick buck and were a large percentage of those who bought at 2200 in pre-sale. Unfortunately, by the time 2200 purchases began to close in 2006 and into 2007, the market had started to cool and buyers were wise to the ‘flipping’ that investors were doing in buildings such as Cristalla and they were not having it. So, when the investors went to sell off their units right away, there were not enough takers. As a result, many of these units then became rentals and still are rentals. Other condo owners who needed to sell walked away and foreclosed or short sold, which affected the condo values.

Insignia Update

Several readers have asked about the Insignia project so I reached out to Dennis Serraglio, Director of Sales and Marketing from Bosa Development to get an inside update on this exciting project in Seattle (the first that has broken ground after a multi-year dry spell).  

Here's what we discussed:

Wendy: How has your vision for the project evolved since originally planned versus now?

Dennis: The vision remains the same. An iconic tower in an emerging , centrally located neighborhood. Spectacular views in all directions. To provide larger than average homes that are highly amenitized.

Wendy: What were the key drivers to deciding now was the right time to get back in?

The lack of new condos available currently and none in the immediate pipeline. Neighborhood filling in over the next 3 years with Bentall’s rentals and Amazon Campus. High net worth individuals with high paying jobs nearby. The towers will take 3 years to build and a feeling the market will have large pent up demand as we get closer to completion.


Wendy: What kind of reaction have you gotten so far to the news?

We have received a lot of positive press and enquiries from the press.  We will start teaser ads and site signage with a registration page likely summer next year.