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August 2008
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October 2008

September 2008

Harvard and Highland Update

It's easy to get bored reading about Seattle Condos.  Seems like they are all fairly similar these days - great views, lots of glass, novel amenities, and perhaps an attached hotel.  It was kind of a breath of fresh air to check out the Harvard and Highland project in Capitol Hill's Historic Landmark district.   The lowest price unit starts at $1.45M and go as high as ~$5M.  It's def not your typical mid-career $500K purchase but that's not who they're going after. 

According to George Kropinski, the manger for H&H, home buyers purchasing this type of homes are moving for life changing reasons. They are mainly empty-nester buyers (I'd add well heeled ones) who are downsizing from their 4,000-5,000 square foot homes to a 2,000-3,000 square foot condo that requires minimal maintenance work so they can spend time traveling around the country (probably to visit the new grand kids). Some may own a 2nd home in Miami or LA. Half of the time, they may not be in their primary home. Due to the baby boomer demographics, this market gets bigger every year and there is demand to build this type of home to cater to their needs. People who buy H&H are like the regal baby boomers I suppose.

He also pointed out that home buyers looking at H&H are generally looking for a transitional design, a cross between traditional and modern finishes. A single family home with multi-story or a high-rise condo with too contemporary of a design will not appeal to them.

Continue reading "Harvard and Highland Update" »

Capitol Hill Condos -Homes for Auction!

Seventeen07_auctionIn this slow market when sellers are not getting too much response from buyers. What can they do to speed up the selling process?

One project is using the auction method. Seventeen07 condos is holding an auction on Oct 19 at 2.00pm at Hotel Monaco in downtown Seattle. Instead of dragging out on the sales on the remaining units, they are hoping to have quick sales for all the remaining 17 homes.

Seventeen07 is a recent conversion on Capitol Hill which started their sales back in the spring this year. The building comprises of 36 homes which include studios (395-397 sq.ft.), one bedrooms (471-665 sq.ft) and two bedrooms (817-849 sq.ft.).

Interested bidders will need to visit the sales center and register themselves. Tour the condo and pick the unit(s) they desire to bid. Talk to their preferred lender, either with Wells Fargo or Countrywide and pick up a bidding package.

On bidding day, home buyers should arrive with a $1,000 cashier check written out to themselves (presumably this will help show you're not just a window shopper). The bidding will start at $10,000 increments. If you are successful in the bidding, you would need to provide another $1,500 check to make the deposit for the home. The home would also need to close in 30 days.

Bidding for their 17 homes start at $95,000 for studio, $195,000 for one bedroom and $215,000 for two bedroom. For context, the 2BR's were listed for low 300's back in August. Only one bedroom and two bedroom homes come with parking. Based on their sold units, the two bedroom units will give home buyers the biggest room for bidding. If the seller actually honors those minimal bid prices and there aren't a lot of people in a position to pull the trigger, a 2BR for potentially only $215,00 could be a risk tolerant investor's opportunity.


Condo news- Conversion construction defects

Condo_conversion_cover_upKing5 ran a story on construction defects at conversion projects. When the condo market was booming in Seattle, apartment conversions were a much preferred development over new construction projects which usually go through longer planning, design review, city approval, numerous permit applications, lengthy construction, and larger loans from the bank.

In the midst of this conversion trend, there were developers that did a pretty good job with their projects carrying out extensive remodeling work on the exterior and interior of the building and other developers that went with minimal work, low-cost finishes, and often overlooked aspects of the conversion process.

Here are a few tips to minimize surprises:

Continue reading "Condo news- Conversion construction defects" »

Seattle Condo Market Update

Aug_08_blog_7The last two weeks have been a crazy time for the financial sector. We had Lehman Brothers file for bankruptcy, Merrill Lynch rescued by Bank of America, the federal government taking control of Fannie Mae and Freddie Mac, and bailing out American International Group with a $85 billion loan. Closer to home, WaMu's shares sunk to $2.01 this week. There's no doubt this presents a challenging and discouraging time for America and obviously impacts those who have been considering buying a new home.

In Seattle, numbers from the NWMLS for August indicate that inventory has started leveling off with a total of 1,491 condos on the market, 9% higher than same time last year. On the bright side, back in January this year, we had ~65% higher inventory than January of 2007 so inventory trends are coming down.

Median prices for August ($310,000) have fared better than the previous month ($299,975) but are still lower than a year ago which was $327,500. This is a 5.34% drop versus the same time last year. Compared to other cities, we are still experiencing a minor drop in median prices but it's unclear if Seattle will continue to be an oasis of fairly stable prices in light of what's going in in the rest of the country.

Continue reading "Seattle Condo Market Update" »

Comparing the Seattle & Singapore Condo Markets

I thought we'd mix things up with this post.  Instead of focusing on the Seattle condo market, I thought it would be fun to talk a bit about the Singapore condo market and compare it to what's going on in our Rain City.

Since I hadn't been back to Singapore in over a year, I quickly realized how much has changed. There was a huge real estate boom so there are many more office and condo buildings, rental rates have gone up substantially, and the population is growing like gangbusters. (The Singapore government recently decided to heavily promote immigration to increase the population due to the nation's declining birth rate.)

In some ways, though they are thousands of miles apart, Seattle and Singapore are going through very similar real estate cycles. Both cities had relatively few condos 10 years ago and went through the condo craze over the last few years. Rental rates for both cities are up, but more significantly in Singapore, with rent almost doubling in the last 4 years. The highest point of the condo market for Singapore was last year, similar to Seattle. Prices for condos for both cities have also started dropping since the end of last year. Developers for both cities are holding off their projects as well. Even the sub-prime market in US has affected the real estate market in Singapore since local developers are seeking financing from foriegn banks.

Continue reading "Comparing the Seattle & Singapore Condo Markets" »

Condo Update

I have only been away for a week and yet there were quite a number of updates in Seattle Condos. Here is a quick summary:

Exterior 2.) Following the foot steps of Expo 62 (Axis Apartment) and Domaine in Queen Anne, Moda is officially converted to an apartment. Moda homes were initially sold out two weeks after the sales center opened back in 2006. Two years later, several home buyers decided to back out from the purchase because the homes turned out to be smaller than they expected. That resulted with a handful of units becoming available on the market. However, with completion just around the corner, the developer has decided to turn it into an apartment citing that many home buyers are unable to secure financing as their 2nd home or investment property and others getting cold feet leaving them with no other alternative but to convert to an apartment. The slow market conditions did not help them as well. Read more.

Previous posts:

Moda Update
Moda: Small, smaller, smallest!

Continue reading " Condo Update" »

Mortgage News

Fannie_mae_freddie_mac_2I'm sure you saw this but just in case, last Sunday, the federal government stepped in to take over Fannie Mae and Freddie Mac. With sharp declines in home prices and high foreclosure rates in many parts of the country, this is much needed help.  Hopefully, this can help shore up the mortgage infrastructure so that buyers can continue to access the capital they need to purchases.

The stated aim of the takeover is to make mortgages readily available, easier to obtain, and more affordable.  Nevertheless, home buyers shouldn't expect the lending standards to loosen up; fees to home buyers with weak credit will still remain.

Overall, I think this is encouraging news.  Mortgage rates have come down this week as a result.  It's not the answer to all our ailments but a move that seems to be supported by most experts.  Read more here.

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.

Market Update

The PI had a nice market update and since I'm currently traveling, I figured I'd just point you to their numbers.  Some interesting tidbits from my point of view:

Listings for all homes (houses and condos) were up 26.4 percent in the county and 27.4 percent in Seattle from a year earlier. The increases were the smallest since January 2007 in the county and December 2006 in Seattle, suggesting inventory might be starting to level off.

"The entry-level part of the market is much closer to being balanced than people expect," Crellin said. "That part of the market is probably not going to see much in the way of price declines."

If I had to make a prediction, based on the numbers I'm seeing and what I'm hearing from buying and selling clients, I'd say we're likely to see prices bounce around +/- 5% from where they are today. 

For sure, buyers who'd been sitting on the sidelines are definitely coming back into the market attracted to the great selection and attractive prices.  On the other hand, there's so much inventory that it's gonna take a while to see prices appreciate more than low single digit %'s -- probably for at least a year.

The biggest wild card is the national economy.  If people here keep reading about soaring energy costs, slowing national growth, and real estate contortions all over the country, many Seattle buyers will decide to continue to put off their purchase.  On the other hand, if energy costs stabilize, the national economy stops slowing, and the hardest hit markets across the country bottom out, Seattle is definitely positioned to stage a gradual comeback in 2009.