Downtown Condos | Seattle Condo Review by Wendy & Marco

Seattle Bank Owned and Short Sales Update

Thanks Marco on the great wrap up for 2012 Seattle Condo Market!

For those of you who are still curious about distressed properties and their impact on the market (bank owned and short sale inventory), this is for you. More than 6 months ago, we pulled some data from NWMLS on bank owned and short sale condos. At that time, bank owned and short sale condos made up about 19% of the total listings. Last month's data shows that it was almost the same. However, if you compare that to almost 2 years ago, distressed assets as a percent of all on the market went down significantly.

In the first half of 2012, we had a total of 315 distressed condos, during the 2nd half, it went down to 259 sales. Interestingly, bank owned properties sales dropped from 186 to 93  in the 2nd half of last year while short sale condos went up by almost 30% from 129 to 166 sales perhaps an indication of banks starting to work with owners when a short sale is proposed.

In summary, we had fewer distressed condos coming on the market in 2012 than in 2011; so far we are not seeing any influx of bank owned properties coming on the market. I agree with Marco's prediction that we are not likely to see an increase in them in 2013; this will be a good news for sellers.  

( Data extracted from NWMLS on 01/29/2013 and are deemed reliable but not guaranteed. 

By Wendy Leung with Seattle Condo Review: A guide to Seattle Condos and Downtown Seattle Condos exclusively for buyers and sellers.

Related posts:

Seattle Bank Owned and Short Sale Properties July 2012

Seattle Bank Owned and Short Sales Properties April 2011

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)

Seattle Condo Neighborhood Comparison

I recently looked at some current MLS data to see how different key Seattle condo neighborhoods compared at different price points.  

Below is the chart and some key takeaways from my point of view. Hope it's helpful and interesting to you!

• Except for the >$800K segment, we are definitely in a sellers' market with only a few months of inventory for condos <$800k.

 

• The $300-500K price point in Belltown/Downtown and entry level price points in Capitol Hill, et al. are the hot segments right now from a number of units sold point of view.

 

• The one pro-buyer segment is the top end.  If you are a buyer and are looking for a condo >$800K in Belltown/Downtown, you've got almost 50 units to choose from and sellers bracing themselves to have the units be on the market for almost half a year so take your pick.  Everyone else in the <$800K segments will be more worried about finding a unit and real buyer competition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Data from NWMLS and are deemed reliable but not guaranteed. Co-op's are removed from the data. Sold listings refer to listings sold over the last 6 months. )

By Wendy Leung wwith Seattle Condo Review: A guide to Seattle Condos and Downtown Seattle Condos exclusively for buyers and sellers.

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.

Cosmopolitan's Views Under Attack (again)?

Looks like the Cosmopolitan, which suffered from a loss of views by a taller project a couple of years ago, may be affected yet again by another construction project.  The Department of Planning and Development recently approved a proposed 400 foot tower in the Denny Triangle. The new project, designed by Weber Thompson will be on the corner of Lenora St and 8th Ave (2030 8th Ave). The current site is a two story commercial building while the proposed new structure calls for a 39 story high rise with 350 apartment units. Read more here.

There are several high rise condos located within a two blocks radius of the new project: Cosmopolitan, 2200 Westlake and Enso. If the giant building goes up, it will probably have the biggest impact on Cosmopolitan.  A couple of years ago, soon after Cosmopolitan was built, it had an office project going up on its western side. The plan initially called for a lower building (13 stories) with smaller impact on the Cosmo but the plan was later on revised to go much higher (33 stories). After the completion of that project, the new height affected Cosmopolitan residences living on the higher western floors.  

This latest new proposed project is probably something Cosmo residences won't be looking forward to either.  According to the spoke person representing the new project's owners, there is no plan to start construction yet. The building permit is good for 6 years. So, we might not see this new building coming up for a while (or at all) but it's worth keeping an eye on.

Related posts:

Cosmopolitan View
Cosmopolitan
2200 Westlake
Enso Update

 

By Wendy Leung with Seattle Condo Review. A guide to Seattle condos exclusively for buyers and sellers.

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?

 

Getting some broader perspective on the Seattle market

Even the most bullish Seattle real estate watchers will agree that the market has slowed dramatically versus a few years ago when sellers were reviewing multiple offers, comparing escalation clauses, and essentially selling property sometimes in a matter of a few short weeks.

But it's also easy to forget how things are going in Seattle relative to the rest of the country. Regardless of whether you're expecting the market to go up, stay the same, dip, or crash -- one thing that's hard to dispute is that at least so far, Seattle has been holding up really well compared to the rest of the country.

Of course, it's possible Seattle is just about to experience more of what our neighbors in other states' have been through for a year or so; on the other hand, the longer Seattle muddles through this, the less likely we'll see the magnitude of impact seen elsewhere (e.g. 20-30% price drops).

In fact, Business Week recently named Seattle one of the fastest selling housing markets in the nation (#9 to be exact).

The Seattle area is home not only to some of the world's most famous companies, including Microsoft and Starbucks, but also to the Space Needle and Mt. Rainier. The real estate market has slowed in Seattle but hasn't declined as much as in other major cities.

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. 

The Standoff Continues as Sellers Refuse to Roll

Here's a good article in the Seattle Times describing "sticky pricing" and the fact that Seattle sellers are largely refusing to make giant price reductions -- even as most buyers refuse to pay 2007 prices. 

As most SCR readers know, I happen to believe that we are more likely to be in a balanced market by the end of this year than an all-out buyers' market.  In fact, it seems to me that the biggest factor will be if the rest of the country's economic jitters drag Seattle down since the local fundamentals (job growth, interstate immigration, foreign investment / weak dollar, baby boomer downsizing, etc.) bode well for demand keeping up with the supply.

Of course, I suppose I'd be retired in the south of France if predicting prices were easy and can see why others feel prices will drop further.  There certainly is no shortgage of lively discussion -- if you didn't see it, check out a recent SCR reader exchange here.   

-Wendy