Seattle Condo Market Update Feed

The Shift from Building Apartments to Building Condos

The Seattle Shift from Building Apartments to Building CondosThere have been several recent announcements about new condominium buildings being constructed in Seattle. For the last few years, the only residential developments being built in Seattle were apartments, minus a few outliers like Insignia and Gridiron, but we are starting to see a flood of new condominium projects hitting the scene again.
 
Why the switch from apartments to condos? Well, we think it is due to apartment buildings not being as profitable as they once were. Major investment groups who were once willing to buy apartment buildings at high price/unit price tags are not as bullish right due to the softening of the rental market. That softening is likely due to an oversupply of apartments entering the market, around 6600 rental units are coming just to the South Lake Union neighborhood by 2019. It is now more profitable to build and sell condos. Developers are very market driven so they will make these decisions based on what is happening right now in the apartment and condo markets, but it seems to us that they don’t put onus on the future market conditions that their developments might cause. For instance, if we had built a mix of condos and apartments over the last few years perhaps we wouldn’t have an apartment building glut right now and be starved for condos, we might just have balance. Instead it appears that their decisions are reactionary, if apartments are profitable then they build a ton of apartments, flood the market, the apartment market softens, then they switch to building condos and so forth and so on. Perhaps someday we will see a balance of what is being built, helping both the rental and real estate markets stay more stable over time.

Here are some recent articles on new and upcoming condo projects around Seattle:
2nd Avenue Condos in Downtown  
South Lake Union Condos
403 13th Condos in Capitol Hill
The Neighborhood Collection Condos in Capitol Hill & Wallingford
Spire Condos in Belltown
Solis Condos on Capitol Hill
Emerald Condos in Downtown
Condos in Bellevue

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


What’s Happening in the Market? Shift, Change, Adjustment or What?

Seattle condo market update and recommendations for sellers.We have all seen the news media articles over the past few weeks reporting that there has been an over 70% increase in our current market inventory, that the market is slowing down or that there is another recession coming, and so on. If you are a seller, let’s not panic or get into modes of desperation just yet.

We have to keep in mind, we see a seasonal slow down every year in our market during mid-summer (due to factors such as buyers and their agents being on vacation and sellers putting their homes up for sale at a higher rate in order to move before the school year starts, etc. - see photo for seasonal trends), so I wanted to chime in and speak to what I am actually seeing out here.

We are seeing, what I would call, a shift in the mindset of condo buyers. There are less multiple offer scenarios on both condos and single family homes as well as a lot of buyers doing more of a wait see approach to the offer review dates. This is quite opposite of what we were seeing earlier in the spring, which was a very aggressive approach of doing pre-inspections, waiving all contingencies, and being willing escalate well above list price. Also, there is a significant increase in the inventory. Homes and condos are still selling, but they are going into contract slower than they were in the spring.  We are also seeing the percentage over list price not being as aggressive. This will apply to most neighborhoods of Seattle, and appears to happening in most price segments as well. 

Now, does this change how I, as a condo broker, might approach the market? Yes, of course, our strategies must change with adjustments in market conditions. But does this mean we are in a changing market or a just a slightly more aggressive seasonal slowdown? I’m not sure yet. But my sense is we have some slowing due to general buyer fatigue and frustration and increased summer market inventory from sellers who are trying to ride the coattails of the spring sales pricing. Sadly, we are also seeing a lot of homes that just aren’t presented well, such as not being in the best of condition, poor quality flips, or disadvantaged locations, etc. These condos and houses might be too aggressively priced by sellers and agents that are just too optimistic that the hot market will have buyers buying anything they can. The buyer fatigue is stalling sales on homes that simply aren’t properly prepped and priced for the summer market conditions. I do think that these factors are causing some lethargic market conditions right now that are affecting even those homes and condos that are spruced up and ready to sell as the mere fear of a slowing market will cause more slowing in the market.

I’m predicting that the market will absorb, although slowly, the summer inventory and we’ll see a bit more of the frenzy return in the fall when buyers and their brokers are returning from vacations and ready to be realistic and get back to the market.  

Timing is everything, and we might have missed a bit of a window for some sellers, so holding off until fall might be a new thing to consider. If you are thinking about selling your condo, make sure you are realistic about how long it will take to sell your home and what price you are likely to get.


Tower Near Space Needle Will be Condos & Named Spire

Tower Near Space Needle Will be Seattle Condos and Named SpireLaconia Development, who is developing the triangle shaped lot located at 600 Wall St, has announced that they will be building condominiums and not apartments.

The 41 story building will be called Spire and they will break ground today. There will be 352 residences from studios to 3 bedroom plus den homes. They are indicating that pricing will range from $450,000 to over $5 million. This Developer will also allow units to be combined. Amenities will include 2 rooftop decks. They anticipate the construction to take 28 months due to the challenges associated with the small sized lot.

This switch from apartments to condos reflects the softening rental market due to the influx of new buildings being constructed and the condo price increases that we are seeing in our current real estate market.

Being located on the intersection of Denny Way, Wall St (the current off-ramp from Aurora) and 6th Avenue is a definitely a busy intersection to be located on. We will see if that location in Belltown can fetch prices near $5M.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


The Secrets to Buying Right Now! Really, This is Good Info.

Ppw 11It’s a long and detailed article, but I highly recommend you read the article put out by the Seattle Times earlier this month, How to Buy a Home in the Seattle Area: The Survival Guide.  It includes data collected from lots of interviews with buyers, agents, and industry players and I really think it’s a great read.

Although this isn't condo specific, we feel it is important for our readers who are buyers, and even those who are sellers, to understand what is happening in the market out there and what things buyers should be doing to better their chances of success.

Some of the key points in the article that I loved and can absolutely agree with and endorse:

  • Discount brokerages, such as Redfin, are a 'you get what you pay for' situation. There is a reason they can offer a discount and that discount may not save you any money in the end by the time you factor in how long it took for you to finally get a house.
  • Lenders- pick the right one, and make sure they are local. This is key right now.  As listing agents, we give much higher credibility and weight to pre-approval letters from local lenders who have a good local reputation and who we know can close quick and close on time, without surprise delays.
  • Look for stinkers. Buyers that have flexibility in terms of doing repairs and are open to condos or houses in not perfect condition, can benefit in this market by buying a proeprty with less competition.
  • Make the offer about the seller and what they need.  Not all offers are just about price.  A good agent will research, connect with and find out what’s important to the seller.  Certain offerings such as rent backs, guarantees you are not an investor that will rent the home out, etc. can go a long way to winning in bidding war.  Not all sellers are created equal, and not all offers are either.  Be creative and make sure your agent knows how to communicate with the other agent effectively.
  • Be aggressive and do it early. Don’t take 7 or 8 offer attempts to realize you need to be aggressive. As Mike wrote in the article, “ Home prices in Seattle have increased an average of $226 per day through the past year” so by the time you finish reading this editorial post, and the article itself, that 6-7 minutes is costing you another dollar or two in home price.  My point being, the longer your learning curve is as a buyer, and the more offers you need to write before you get that figured out, the more money it’s costing you. So let’s get you educated, armed for success, and ready to buy.

Great read and great article.  Check it out.


NEXUS Pre-sale Opportunities End 6/30

The NEXUS model home and presentation center will be closing on June 30th and all pre-sale opportunities will stop at the time of the presentation center closure.

If you are considering purchasing at NEXUS now might be the time to do it so you can benefit from the pre-sale price offerings, still select your interior color palette and receive a $25,000 buyer decorator allowance, which they are throwing in from now through June 30th.

At this time, NEXUS is 90% sold and the available options are 2 and 3 bedroom floor plans, ranging in size from 1,022 to 2,142, and priced from $1.2 million to $3.5 million.

Here is the current availability:
NEXUS Availability 5.22.18
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Update on Sonata Condominiums in Columbia City

Sonata 2Sonata, the new construction condominium project in Columbia City, is coming soon and they have released more information and floorplans for the project.

THE DETAILS:

  • 96 units
  • Live/work lofts, studio, urban one bedroom, one bedroom, one bedroom + den, and two bedrooms
  • Sized from below 400 square feet to more than 1,000 square feet
  • Priced from $300,000 to $800,000+
  • Clean, contemporary design
  • Emphasis on space efficiency and high functionality
  • Oversized windows and soaring ceilings
  • Hardwood floors, modern kitchens with stainless steel appliances and quartz counters, and spacious, spa-like baths
  • Host of color palette and customization options
  • Amenities: numerous outdoor gardens, a roof deck with outdoor fireplaces and BBQs, a large co-working space that will share the ground floor with an eclectic mix of retail and dining options, bicycle room and underground parking
  • Blocks from amenities, restaurants, cafes and services of Columbia City and across the street from the Link Light Rail station (15 minutes to Downtown!)
  • Occupancy in 2019

SALES DETAILS:

  • Prospective buyers will be able to reserve a home in advance of presales by putting down a fully-refundable $5,000 deposit held in escrow confirming a particular home with a set price range, and will be granted a first right of opportunity to enter into a presale just as soon as the developer is able to confirm the product offering
  • The reservation event is now scheduled to take place in June—exact date TBD

Looking forward to the reservation event!

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


The Pinnacle at Alki - New Construction in West Seattle

If large spaces and water views are what you are looking for, the new construction condominium on Alki, The Pinnacle at Alki, might be the perfect fit for you. This condominium building is located at 1118 Alki Ave SW.

The Pinnacle at AlkiDetails:

  • 11 condominium homes
  • Views of the city skyline, Elliott Bay and the Olympic Mountains
  • Ten 3 bedroom 2.5 bathroom units, one 1 bedroom 1 bath unit
  • 3 bedrooms ranging from 1,806 to 2,128 square feet; 1 bedroom unit is 885 square feet
  • All with outdoor spaces
  • Floor-to-ceiling windows
  • Northwest Contemporary design
  • Finishes- Bosch stainless appliances, Bosch or Wolf gas ranges, wine refrigerator, fireplaces, option for two tone cabinets, Quartz countertops, hardwoods flooring in living space
  • Options/upgrades- a variety of personalization options including color schemes, updates for flooring and technology will be offered
  • Each unit will have one parking space, and certain units will have the opportunity to purchase an additional space (cost estimate of $100,000)
  • HOA Dues are estimated to be between $.35 and $.40 per square foot per month and it is estimated that they will cover water, sewer, garbage and hot water
  • Close to the West Seattle Water Tax
  • Currently under construction with completion set for fall 2018

The Reservation and Sales Process:

  • You can sign a reservation agreement on a unit prior to public sales debut with $5,000 refundable deposit
  • You can cancel the reservation at any time
  • You will be required to be pre-approved with the seller's preferred lender, Caliber Home Loans
  • A price range will be listed in the reservation as final pricing has yet to be determined
  • Once reservations are converted to Purchase and Sale Agreements, 5% earnest money will be required


By Marco Kronen with Seattle Condo Review: A guide to 
Seattle downtown condos.


2018 Housing Forecast by Matthew Gardner

Windermere's Chief Economist is the renowned Matthew Gardner. He put together his annual forecast of the real estate market for 2018 and we are summarizing what he sees in his crystal ball for the future of our market this year.

The Main Takeaways from Matthew Gardner's 2018 Housing Forecast:

  • The number of millennial home buyers will expand and they will be big influencers in the market
  • Interest rates will rise modestly to an average of 4.4%
  • New home sales will rise by 8%
  • Existing home sales will increase by 3.7% and this modest increase will take some heat off of the market meaning home prices will rise by 4.4%
  • We are not in a housing bubble but he is concerned about affordability as it relates to the long-term health of the housing market but he thinks that price growth will begin to taper and provide some relief

Much of Mr. Gardner’s numbers in his annual forecast are based on regional and national numbers, so I do predict that Seattle will see slightly higher price growth and less new home sales than these national numbers.

Matthew Gardner 2018 Forecast

 

 


Group Looking for Partners to Build Condos in the Seattle Area

Crane 5An article came out in the PSBJ yesterday that we found very interesting.

According to the article, "an executive at a large real estate company says it’s time to build more condos in the Puget Sound region, and he’s willing to put the firm’s money where his mouth is."

The gist of the article is that this company, Grosvenor Americas, sees the low inventory in the Seattle area condo market as an opportunity to fill the void in the market by financing developers who might be willing to build condos instead of apartments, which 94% of residential units being built right now will be.

Apparently, this group is in talks with developers of 2 projects in Downtown and one in South Lake Union along with several on the Eastside. The goal is to finance a condo project in our region in the next 12 months.

Hopefully as a result of their efforts, we will see at least one and maybe more current projects shift from apartments to condos here in the next year.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Snapshot of Western Washington Real Estate Market

Windermere Real Estate's Chief Economist, Matthew Gardner, releases the Gardner Report every quarter analyzing Western Washington's real estate market by looking at both the residential and commercial/industrial markets, doing financial analysis, and looking into land use and regional economics.

WWA Gardner Report Q3 2017_Single Page_Page_4Here is a snapshot of The Gardner Report's Third Quarter 2017  analysis:

  • Economic Overview
    • Washington State economy added 79,600 new jobs over the last 12 months - a growth rate of 2.4% 
    • State unemployment rate continues to fall - it is currently at 4.6%, which is essentially full employment
    • Matthew Gardner anticipates that the Washington State economy will continue to outperform the US  due to this expansion and solid income growth

Continue reading "Snapshot of Western Washington Real Estate Market" »