Downtown Seattle Condos | Blog & Reviews by Wendy & Marco

Client Question of the Week: My condo's tax assessed value went down, does that mean my condo value decreased?

Recently a client emailed me a great question that we felt many people would benefit from knowing the answer to.

“Marco, I recently received a tax assessment notice in the mail and it showed my condo value has gone down since I bought it earlier this year. But I'm seeing condo prices in the area are increasing. Should I appeal to the tax assessor’s office to increase my tax assessment to be more in line with recent market sales, as I'm afraid this might hurt my condo's value now and in the future? I realize this might mean my annual taxes may go up, but I'm just not sure what is best.”

Great question!

To Sell or Not to Sell...That is the Seattle Condo Question.

As the market is showing a little bit more buying activity and inventory is reaching new lows, many owners can't help but wonder if now is finally a good time to unload their properties.  This is especially true for those who have been renting out their condo where the current tenant is moving out in a few months.  

To sell or not to sell...  

Recently, a client of mine who owns an one bedroom, 850 square foot condo in Belltown in a fairly new building was contemplating this very same decision. He is an out-of-state owner with a tenant moving out in the summer. Unlike some sellers who bought during the peak and are carrying two mortgages on their condo, he only has one mortgage.  So even if the value still has not returned to his original purchasing price, if he sells it, he doesn't need to bring any cash to the closing table. 

So, it comes down whether he should continue renting it or selling it and moving onto something else. Let's look at some hypothetical numbers for his case. 

Cristalla versus 2200 Westlake...

A few years ago, it was most interesting to see which condo buildings were getting the most pre-sale interest.  Now that new projects are rare and the projects from the condo boom are changing hands for the first and sometimes second time, I thought it would be interesting to see if certain buildings took longer to sell than others.

Since the data is still limited, I ignored buildings that didn't have 3 or more 2BR unit resales (i.e., a previously purchased unit subsequently sold by an individual on the resale market and a brand new unit sold by the developer) in 2011.  For what remained, I looked at the average days on market for all the units sold and then plotted them in the bar chart below. The data includes bank owned and short sales as well. 

What's interesting is there appears to be three tiers of buildings.  Tier 1 buildings like Waterfront Landings, Continental, and Cristalla seemed to be able to find buyers for their 2BR units in a little over 3 months.  Tier 2 buildings like Cosmopolitan, One Pacific Tower, and Seattle Heights took almost 5 months to sell.  Lastly, Tier 3 buildings like Belltown Court, Watermark Tower, 2200 Westlake, Meridian, and Vine took a whopping 7 months or more on the market before they were sold.

Of course, if you cut prices, I'm sure you could sell any of those units much more quickly but there's no reason to think that Tier 1 sellers like Cristalla were asking for a lot less for their units than say Tier 3 sellers like those at 2200 Westlake.

   
        (Data is individually extracted from NWMLS and is deemed reliable but not guaranteed.)

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

Will Developers Finally Start Building New Condos?

Last week I asked for readers' questions and got a few great ones so I'll take on one of them here. SCR reader Darrel asks:

A lot of big projects were cancelled or put on hold. AVA, Insignia, Heron and Pagoda, 1 hotel, etc. Inventory is steadily dropping as the last units from Escala, Olive 8 and 1521 are selling out. With an increase in demand for Downtown and Belltown condos in the coming months possibly driving up prices, will this motivate developers to build more? Or do you think they will stick with apartments for now like Vulcan is doing?

Obviously, only time will tell and I'll be the first to admit if I could predict the markets, I'd be on Wall Street (the one in NYC).  I'm sure other readers will have different points of view so feel free to sound off in the comments section below. That said, here are my observations.  

1. There has been some good demand for lower priced condos -- particularly under the half million mark.  
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2. However, we still have a little over a year's supply of inventory for the higher priced condos ($1M>).
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3. Furthermore, prices haven't moved up materially in years and have been fairly flat this year.
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4. Moreover, since many owners are waiting for the market to improve (there are fewer units on the market than normal), there is probably fairly liquid supply lying in wait should things improve.  
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5. In summary, I don't expect to see many new condos breaking ground in the near future.  We'll probably start with investment units currently being rented out, then perhaps some apartment conversions, followed by a few brave developers down the road.

That's my 2 cents.  Curious to see what others think as well!

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

WA Unemployment Rate Drops & Seattle Ranked #3 for Tech Startup Jobs

At least there is good news for January report on the job front.  GeekWire reported that unemployment rates have fallen lower than expected. Read more on GeekWire. 

"A new report out today finds that the seasonally-adjusted unemployment rate fell to 8.3 percent during January as more than 13,000 jobs were added in various sectors.

New research also shows Washington gained more jobs last year than previously estimated. The data shows that Washington gained about 53,500 jobs in 2011, compared to the 26,600 jobs previously reported. Since the low point in the recession, the state has regained about 98,000 jobs, the state said."

In a related story, Payscale reported Seattle is the #3 city in America for tech startup jobs based on the number of jobs available and their average pay.

With all these jobs being offered, we can only hope this will help quicken our recovery for the economy in Seattle and hopefully, housing sales as well.

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

Seattle is Both a Sellers' and Buyers' 2BR Market (Depending on Who You Are....)

Recently, I was doing some comparable analysis for a client who owns a large two bedroom condo in Belltown.  Despite the mushy economic climate, there is a considerably low inventory for sale in this mid price group ($400k-$700k).   Intrigued, I decided to pull more comparables in Belltown and Downtown as well as other price groups to see what their absorption rates are. (Absorption rate is the time it would take the market to consume all the units for sale based on the current number of units on the market and the most recent data on how many units are selling per month.)  

Not surprisingly, the lower price group (under $400K) are selling quite well; there is low inventory and demand is stable (mostly first time home buyers and opportunistic investors), thus pricing has seemed to stabilize.   

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.

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.

Seattle Condo Market Update (September 09)

Eighty percent of professional economists have declared the recession over and most predict the economy will grow 3% for each of the next 2 years :-)  Of course, real estate prices don't necessarily snap with GDP predictions but let's hope they're positively correlated.  

So how did Seattle condos fare in September 2009?  The answer is, like most recent months, mixed.  The good news is that for the first time all year long, pending sales saw a double digit jump versus the same month in 2008.  Specifically, there were 251 pending sales in September 2009 versus 224 in September 2008 (a 12% jump).  For context, year over year pending sales were up 1.5% last month and were negative 40% in March.

Seattle Condo Boards

There was an interesting article on Co-op/Condo boards this weekend in the NY Times.  One quote that caught my eye was:

The people who run for a board seat, he said, tend to fall into three categories: “Some people love the power and they like the respect it gives them; some people do it because they feel it’s time to do something for the community; and some people have a personal agenda.”

It reminded me how little attention some buyers pay to the quality of the condo associations.  Granted, condo boards turnover pretty frequently but in terms of the culture, expectations, and history, some buildings seem to have it down better than others.