Wendy Leung's Seattle Condo Blog

Seattle Condo Market Fairs Well In November 2011

November 2011 data is in for the Seattle condo market and all things considered, it was a pretty good month -- considerably more promising than October.

Highlights:

• Sales month over month were flat (which is actually good since we're now entering the holiday season) but when you compare year over year, we saw about the same number of sales from October 2010 to October 2011. November, on the other hand, saw sales go up a strong 44% from November 2010 to November 2011.
• Median prices recovered 7% from $226K in October 2011 to $240K in November 2011.
• Supply remained stable with only 824 units for sale (versus over 1,127 in June).

Have a Happy Holiday!

Wendy

 

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's August Condo Sales Bump Up after Dip in July

•  NWMLS reported 172 condo sales in August, a gain of more than 20% from the same period last year and 26%  higher than the previous month. The neighborhood with the biggest gain in condo sales is in Belltown/Downtown with 50 condos closed, twice the amount than last year.
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• The median price for closed condos was at $246,000, This is down by 17.17% from tweleve months ago and staying around the $250,000 level for the last three months. Interestingly, If we look at June, July and August 2010, median price was staying at around $290,000 level.
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• We had 244 new units of inventory added to the market last month totalling 1,048 condos on the market, a drop of 29.76% from a year ago and 3.5% from the previous month. August was the 2nd lowest inventory level for this year. January 2011 was the lowest level with 1041 condos on the market.
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• Months of inventory (how long it would take to consume all the available units based on current run rate) is showing improvement from August 2010.  Last month, we had about 6 months of inventory on the market based on closed sales and 5 months based on pending sales. Compared that to a year ago, it was at 10 months and 8 months respectively.

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.

Million Dollar Condos in Seattle Reach 2007 Prices

I was curious how much of a hit the >$1M condo market in Belltown and Downtown (98121 & 98101) have taken since the peak in 2008.  Below are some charts and some observations.

• The average price per square foot on >$1M condos has fallen below 2007 levels (10% below 2010).  
• The average price sold so far this year is still above 2007 levels (buyers are getting a lot more for their >$1M money).
• Total sales of >$1M condos in 2011 will likely be lower than 2007 and less than half the 2009 peak.
• The most expensive condo sold was in 2008 at Four Seasons (#1703) and it sold for $11,386,525.

                      

Seattle Foreclosure Auctions

Last week, I attended a foreclosure auction at the parking garage near an office building in Bellevue. Unlike most condo auctions where you will see a crowd of a couple hundred people showing up, there were only around 50 people attending this auction. Half of them were realtors just like myself trying to get an better understanding of how foreclosure auctions work. The other half were individual investors, aspring investors, and professional group investors assisting their clients in the bidding.

For those of you who are interested in a foreclosure auction, this is how it works. When a bank forecloses on a property, they will hire a trustee (individual or company) to facilitate the foreclosure process. In King County, Trustee sales take place at two locations. One of them is in Bellevue and the other one is at the King County Courthouse in Seattle. They are required to be held in a public place so that members of the public can have access to view the auction. Auctions are held every Friday at 10am and 2pm. You can find a list of foreclosure homes on the USA-Foreclosure website. On this particular day that the auction was held, there were over 200 homes on the list. Three auctioneers were calling out in alphabetical order by the foreclosure owners' names, followed by address and then the minimum bid. 

Olive 8's Video & New Reset Pricing

Olive 8 announced reset pricing for their remaining homes.  According to their latest email, the reset pricing is 15-25% off the most recent list price and 30-40% off presale pricing.  More than 10 new sales have occurred in the past week.  

The website recently posted a video  hosted by Tom Kelly, a nationally syndicated real estate columnist and author discussing about the reset of Olive 8 and the downtown condo market.

The video pointed out that we are not going to see a new condo coming up in Downtown over the the next few years and Olive 8 represents 25% of the new inventory for all condominiums in downtown Seattle.  I agree that Olive 8 is one of the few newer projects available in downtown Seattle.  We have in fact seen several new condos in the city selling most of their inventory like Enso, Gallery, Marselle and 1521 and the condo market has lost some projects which were converted to apartments (it wasn't that long ago when all the apartments were planning to convert to condos!).

No new condos pouring into the market is a good news for sellers.  On the other hand, buyers have definitely taken their time coming back and bank lending remains pretty tight in general.  We should also keep in mind the new wave of apartments coming onto the market.  This will have an impact on the first-time buyer condo market who will have lots of apartments competing for their business as well as investor condos who will need to offer more competitive rents. That's just my take.  Any thoughts?

Related posts:

Olive 8's New Pricing 
Olive 8 Auction Results
Olive 8 & 5th and Madison Update
Olive 8 going Auction

Should You Refinance Your Condo's Mortgage?

Refinancing is a hot topic for homeowners these days.  Given the condition of the market, many folks have decided not to sell their home but would really like to keep their payments down (especially when the value of the home has dropped quite significantly from a few years ago).  Here is a pretty common, generalized scenario and questions that homeowners are asking these days which I presented to two mortgage brokers. 

I bought my condo back in 2007 for $500,000 and have two mortgages on it. The first mortgage was $417,000 and my 2nd mortgage (HELOC) was $50,000. Recently, my Realtor told me that my condo is probably worth $400,000-$430,0000.  I don't want to sell it now but would like to refinance my condo.  How can I go about refinancing my home?  What kind of documents would I need to provide?  Do I need to send my own appraiser first before talking to a mortgage broker/lender? If I can't refinance , can I qualify for loan modification?

 

Olive 8 going Auction

 

Olive 8 is going on Auction on September 19th (Sunday).  34 homes will be auctioned by Kennedy Wilson, who was also responsible with the auction for 5th and Madison, Press, and Queen Anne High School.  The 34 homes were previously priced from $395,000 to $1,235,000.  Starting bids will range from $160,000 to $440,000.  Click here for more info. 

Related post:

5th and Madison and Trace Lofts Update 
Queen Anne Auction- By the numbers
Lumen Auction Results
Brix and Gallery Auction Results
Press Auction: Going once, Going twice, Gone!

Seattle Condo Market Update

July figures continue to show a slowdown in activity in Seattle.  Total active listings for July were 2.3% lower than the previous month but still 14% higher than same period last year. Even though the rate of new inventory added every month has gradually decreased, it is still a buyers' market.

Median prices in Seattle have dropped by 4.45% from $313,945 to $299,975.  This is the biggest drop for this year versus the same time last year.  As for Belltown/Downtown area, total active listings remained the same as same period last year and 5% lower than the previous month. If this trend continues, we may see a gradual shift from a strong buyers' market to more a balanced market.

Sellers who were holding firm on the their price earlier are now more open with a price reduction to move their condo with many of them opting to continue renting out their homes to wait for the market to pick up.  Home buyers on the other hand are putting offers with 5-10% reduction in the price taking full advantage of the market conditions.

Seattle Condo Market Update

Anxious about what is happening to the condo market over the next few months in Seattle?  Join the club.  May numbers are in and here are some highlights. 

The bad news is we continue to see high inventory compared to the same time last year and pending sales were down compared to the same time last year.  The good news is median prices actually went up 4%. There was also a small increase in median prices of 2.5% compared to last month.

From Flipper to Landlord?

With so many condo buyers still sitting on the sidelines, it appears they're driving up rental prices.  If you were planning to sell an investment property this year but are worried about all those bearish buyers, you may want to rent your place out.  Chances are your condo will command very attractive rents.  One report is suggesting rents are already up 6% over last year and apartment vacancy rates are below 5%.

Seattle Condo Market Update

The April numbers are in and there's good news and bad news.  Let's start with the bad news.

• For the first time in a long time, median prices in Belltown dropped.  If you remember my last update in March, we saw median prices rise over 13% versus March 2007.  In April, we saw median prices drop by 7%.  We'll have to see how the next few months play out to determine if this is the adjustment we've all been waiting for so that buyers on the sidelines can come back in or if prices drop further.

The good news:

• April over Apil inventory (April 2008 as a proportion of April 2007 inventory) has come down compared to March over March numbers.  In March, Belltown inventory was 51% higher than March of 2007.  In April, Belltown inventory was 41% higher than April of 2007.  If this trend continues, it would suggest that there while we are certainly seeing more units on the market than last year, there does appear to be a ceiling in terms of how much more supply is entering the market and as a result (all else equal), we will have a floor on how low prices will ultimately go. 

Conversions and Rental Market Report

Dupre + Scott Apartment Advisor has reported on the rental market for King County and Seattle for March 2008. Here are some interesting highlights from their report.

1. In March, 4.1 percent of King County apartments and 3.1 percent of those in Seattle were vacant, only up a smidgen from March 2007 when vacancies were at 3.9 percent in the county and 2.8 percent in Seattle and still less than half of the 2003 vacancy rates.
2. One big reason vacancies have started increasing is that the housing slump has dramatically slowed down new conversions of apartments into condominiums.
3. 2006 conversion bonanza: conversions hitting the market went from 900 in 2003 to 1,800 in 2004; 3,600 in 2005 and more than 6,000 in 2006 -- fueled the drop in the vacancy rate during those years. But conversions fell to 2,800 last year (subtracting 1,200 units that started to convert, then reverted to rentals) and just 168 units have converted or are scheduled to convert so far this year.
4. Conversions in the past three years outpaced new development by a total of 5,400 units.
5. Apartment rents averaged $1,026 in King County and $1,071 in Seattle in March 2008, up about 8.5 percent in both cases from March 2007.

Overall, this is good news for condo owners who are already renting out their units or considering renting them out in the near future.  For renters, it appears that while rents won't be going down anytime soon, they are not likely to be continuing to increase as much as they did last year.

-Wendy

Quick Review of the Seattle Condo Market in 2007

Five things we now know that we didn't know before the end of 2007.

1.)  The housing crash did not happen in Seattle despite constant media reports, bearish pundets, and market crises in most other regions of the US throughout 2006.

2.)  It is possible for one of the nation's top mortgage companies, American Home Mortgage, to stop funding approved loans leaving some homebuyers unpleasantly surprised at their closing appointments.

3.)  In Seattle, the biggest portion of new construction inventory, approximately 3500 units is proposed for 2010. However, these inventories may not all come through.

4.)  Homebuyers care deeply and intensely about how developers communicate with them on the delays for their condo and aren't afraid to blog, post, and comment about it. Some of those developers and marketers will probably get more skepticism on their future projects.

5.)  Most buyers went into wait and see mode in late 2007 and, for the most part, sellers didn't budge, took their properties off the market, or made symbolic price reductions.

Five things we suspected were true in 2007 but now we know for sure.

1.)  Seattle strong job growth is keeping the demand up.

2.)  Retiree (65 and above) and baby boomers formed the largest group of home buyers for new condo projects in downtown Seattle.

3.)  There is material demand for previously untested hotel/condo combo projects in the Seattle market.

4.)  Apartment-to-condo conversions decreased the supply of rentals and local job growth pushed up previously stable rental prices. 

5.)  The days of easy double digit appreciation and speculative flipping are over (at least for the next few years).

Five things we need to know as soon as possible if we want to know what is going to happen for Seattle condo market in the long term.

1.)  Will buyers re-enter the market in the first quarter of 2008 or will they continue to wait and see?

2.)  Will sellers continue their relative discipline and patience or will they start a price race to the bottom?

3.)  Will Seattle's employers maintain their growth or will they be affected by slower economic growth as seen in other regions in the country?

4.)  Will rental properties raise rents enough to make waiting less attractive than buying?

5.)  Will the sub-prime mortgage mess spread to the rest of the mortgage industry?

-Wendy