Downtown Condos | Seattle Condo Review by Wendy & Marco

How Will the New Seattle Tunnel and Removal of the Viaduct Affect Condo Views and Values? Part 2 of 4

In Part 1 of this Blog Series we covered how the Seattle waterfront is undergoing an epic change that will forever change the face of the city from the water’s edge.  That change is the replacement of the aging Alaskan Way Viaduct with a deep bore tunnel, and the revitalization of the Alaskan Way waterfront.  Condominiums near the south portal of the new tunnel in Pioneer Square were highlighted along with the likely impact on them, both good and bad.

Hopefully, this series will bring some clarity and help folks make decisions about where they might want live if they are looking into buying. Or if you currently own a Seattle condo in the affected areas, if and when you might want to consider selling and moving up to something different or staying put and enjoying what’s to come.

For part 2 of this series, we move north from the South Portal of Tunnel (Pioneer Square and the Stadium District) up to the West Edge and Market neighborhoods. We felt it was perfect timing, as within the last couple weeks the famed boring machine, named Bertha, arrived at the Seattle Waterfront by way of ship.  She will soon be placed in service to start boring the tunnel beneath our city. Isn’t she massive?
Photo courtesy of WSDOT

For reference:  The West Edge is considered the neighborhood that borders downtown Seattle’s business district on the west “edge” along 1^st Avenue with Pioneer Square to its south, and the Pike Place Market to its north.

First off, both of these neighborhoods will have the new deep bore tunnel running directly beneath them in some areas.  Some condo buildings including One Pacific Tower, in fact, have sold underground easement rights to allow for the tunnel to be bored beneath it.  It remains to be seen if any of the underground work will even be noticeable.  But it might be worth the occasional vibration from construction and Bertha to benefit from the future view outlooks, traffic noise reduction once the viaduct is gone, and access improvements to the waterfront.


Buildings Most Likely Affected in:
The West Edge Neighborhood 

How Will the New Seattle Tunnel and Removal of the Viaduct Affect Condo Views and Values?

 The Seattle waterfront is undergoing an epic change that will forever change the face of the city from the water’s edge.  That change is the replacement of the aging Alaskan Way Viaduct.  After nearly a decade of debate, deliberation, public comment and vote, as well as even legislative action, the decision was made last year in 2012 to move ahead with the deep bore tunnel option as the replacement method for the two level elevated viaduct that currently runs along the Seattle waterfront.

I am going to do a blog series talking about the good, the bad, and the ugly from the condominium owner and buyer’s perspective with regards to this project.  I’ll hold my opinions until the end of the series, but I want to take you on a photo and map journey through the neighborhoods around the current viaduct that will be most impacted. Hopefully, this series will help bring some clarity and help folks make decisions about where they might want to live if they are looking into buying. Or if you currently own a Seattle condo in the affected areas, if and when you might want to consider selling and moving up to something different, or even staying put and enjoying what is to come.

We will start with where the tunnel is starting and where the viaduct has already partially been removed, which is Pioneer Square and the Stadium District (also called the south portal). This is the area where you see most of the construction going on currently.  What’s happening here?  They have basically temporarily rerouted highway 99 around an area where they are actively digging and constructing the south portal of the tunnel (aka, the Pit). This is where the big boring machine will be starting its dig to the north deep beneath the city.  You can consider this ground zero, where it all starts.

Building Most Likely Affected In:
PIONEER SQUARE & STADIUM DISTRICT

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)

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.

Viaduct and Seattle Condos

As I was driving South on 99 to the Stadium, it was great to see some progress with the Alaskan Way Viaduct Replacement project. The south end of the Viaduct had been demolished and the traffic has been shifted onto a new bridge near the stadiums. After more than 10 years of discussion, planning, design and prepping work, we can expect the deep bore tunnel work to begin next year. Yes, finally. With the removal of the Viaduct along the waterfront, which is estimated around 2016, I had to wonder which condos would benefit from it.

Well, I think a few of them like Belltown Court, Belltown Lofts, Pomeroy, Site 17, Fix Building, HillClimb, and Our Home Hotel condo will be better off. Let's take a closer look on why that's the case.

Comparing Seattle Condo Market Sentiment from Early 2011 to Late 2011

Earlier this year we had a poll asking readers how the condo market would do in 2011. Last month we had a similar poll asking for sentiment about 2012.

So has the vibe changed from last year to this year?

Seattle Condo Appraisers Sound Off

The last three years have been an interesting ride for most Seattle condo watchers.  When the market started slowing down in the fall of 2008, a lot of people believed (in retrospect, hoped) that the slow down in prices was just a small correction.  However, when prices continued to slide over the next few years, condo owners were and still are faced with a tough decision of either holding on, renting the unit out, selling it at a loss, or short selling.

With a higher proportion of shorts sales and bank owned properties on the market versus four years ago, we are seeing a split value in comparable data from the distressed and non-distressed properties.  Pricing your condo correctly today has become more critical than ever.  This important job lies mainly with your Realtor (assuming you're not doing it DIY).  If you have a buyer for your home, will it pass the buyer's bank appraisal?  How are appraisers valuing properties in this market and what has changed?

I interviewed two appraisers who shared their perspectives. This may be worth taking into account as you select what pricing strategy to use for your condo.

2011 Predictions for Seattle's Condo Market

Have we hit bottom in the Seattle condo market?  My expectation is things will be flat to ever so slightly up this year from a pricing point of view and up materially from a volume point of view.

What do you think?

 

Brix and Gallery Auction Events

Yesterday was an exciting day for some home buyers eagerly packed into the Grand Hyatt for Brix and Gallery auction events.  I just came back from vacation and missed the Brix event but managed to get in just in time for Gallery.  Probably 400-500 people were in the room with about 1/3 as bidders.  So how good of a deal did these home buyers get?  Here are some thoughts and observations: