Just like several projects in town, Insignia condos on 5th Ave and Battery St is on hold and the developer is waiting for the market to recover. They are hoping to launch sales sometime in the Spring of 2009. More information will be added to their website in about four weeks. The developer has no intention to turn it into an apartment complex.
Insignia will offer quite a comprehensive range of amenities including 24 hour concierge service, indoor swimming pool, fitness center, wine tasting room, sky lounge on the 41st level, library, meeting room, and a party room.
636 Homes in these two towers will be primarily 2 bedroom and 2 bedroom plus den floor plans with sizes ranging from 950 square feet to 2,000 square feet. The project will be built in two phases. Phase 1 will take 2 1/2 years to complete. Estimated completion for Phase 1 and Phase 2 will be around later 2011 and 2012, respectively. Judging from the size of these homes, it will probably appeal to empty nesters and urban professional couples.
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The market will be in even worse shape from their perspective in 2009 (prices will be lower, so their odds at turning a profit will be too).
They should accelerate finishing the development, and get whatever prices they can before the market tumbles away from them. Their potential for profit will drop every year.
Ben, you’re absolutely right. Our statistical data and economic analysis shows prices in downtown Seattle will return to presale prices of early 2006 before the year of 2009 is over. People that purchase condos of today’s ASKING prices in downtown Seattle will stand to lose about 17%-23% of their initial investment by Jan, 2010.
The rate environment will continue to increase, which reduces consumer buying power. Market inventory continues to rise substantially, inflation is at a 27-year high (Seattle is the highest in the country), and downtown defaults on condo loans have risen over 20% year over year. Also, add to that the fact the market has not yet been nailed by FUTURE losses that are certain to ensue. These losees will come from individuals that chose negative amatorizing loans, and these loans have not yet been hit very hard. As properties continue to devalue in the region, these people will bail, and ANOTHER round of defaults will hit us, making values drop even more. Its a cycle that economics will and must play out to return the market to normal conditions. In fact, it is estimated we will not see a return to today’s asking prices before 5-7 years from now. Sounds unbelievable I know, but unfortunately it is true.
Also, I ask that consumers take note of the increase in market inventory for condos in excess of $1.5MM. The reason for this is that marketers have found statistical data that homes over this price are still selling, albeit at a glacial pace. However, what they’ve failed to recognize is that consumers that do encompass this buying power are “smarter than the average joe,” and they will not buy it unless it is simply worth it. Marketers have been increasing already old inventory to exceed the $1.5MM threshold in hopes of a sale. The tactic is not working, and will not work in the future.
In my opinion, this building’s site should be SOLD as soon as possible, and they should not try to sell these units at all. Otherwise, the developer will lose big time on this deal.
“The sky is falling, the sky is falling”, said Chicken little. My guess is that the last two posters have never been through a business cycle or a market down-turn — a healthy, natural occurance that happens every so often based on the laws of supply and demand, and especially greed and fear. Having survived four of these, I know that the market will recover in a year or two, the next cycle will be a very good one becaue inflation will boost appreciation of real estate, prices in Seattle will not tank measureably. There is a HUGE national and international trend toward moving back into the city, everyone needs a place to live, growth in our region is strong and legitimate, credentialed economic forecasters are meausureably optomistic about 2010 and more so about 2011. Just like the stock market, people that panic like lemmings will lose in the short and long run…those that buy carefully and hold on patiently will be positioned for the next run up. Most wealth is real estate based, but it takes guts when the market turns soft for awhile.
No Fear = No Brain. LOL If you only knew what I know. Oh, and this IS a business cycle, you friggin’ IDIOT! Its just going to be a more painful one from cycles in the past as the appreciation rate has been the greatest in the past 8 year since the 1920s. So, yeah, it is going to take a long while to correct itself. This isn’t a little “speed bump” in the road of real estate. Get real. BTW, if you’ve been through this 4 times, then that would place you somewhere in your mid 80s. Am I right?
I agree with No Fear. The MD, if you want to actually state sources and research, fine. But simply saying “Our statistical data and economic analysis blah blah blah”, well, that doesn’t mean anything to any of us. Who are you? Even if you an “expert”, that doesn’t mean anything. Show the research and the conclusions drawn and this data that you supposedly have and we can analyze for ourselves. Nobody KNOWS what is going to happen. If you did, I highly doubt you’d be spending your time writing long posts on some condo review blog. In the meantime, you might be better off not calling people “idiots” just because you seem to disagree with them.
I don’t disagree that we are headed for worse times, but I have to say that this economic downtown doesn’t feel nearly as bad as the one we went through in 2001. It would have to get a lot worse to compare in my opinion and I personally don’t see a ton of evidence to support that. Most of the big banks are still making money even with all their defaults and everybody seems to just be pushing through it and relatively cheap credit is still available for people who have good credit scores.
We can all go home now. It appears that TheMD has prognosticated the future based on “statistical data and economic analysis”. Very impressive. I guess the local economists can give up their day jobs now. Truth is that no one knows where this market is headed exactly, but Seattle is not over-built like Miami or Las Vegas or The Inland Empire in SoCal. The local real estate market is soft, so of course inventory is up and its a buyers market. But Seattle is much stronger than most areas in the country and there are reasons for that. We are the last region to join the downturn and if growth models like the one from Matthew Gardner are correct, we could be one of the first out and the earliest to the next up cycle after the pain in the capital markets settles down. Smart buyers will grab some bargains while its a buyers market and before interest rates and inflation both go up – which they will. Smart money is already nibbling on quality real estate from distressed sellers in anticipatoin of the next cycle, which could begin as soon as 2010. Anyone who thinks they know the answers or who thinks they can predicte the future market with any degree of accuracy is a naive fool. Few things are certain: death, taxes, and real estate appreciation over the long haul.
So, Einstien, are you calling Matthew Gardener a fool? Afterall, you did say “Anyone who thinks they know the answers or who thinks they can predict the future market with any degree of accuracy is a naive fool.”
Nobody said the real estate market would appreciate over the long haul. But markets do correct themselves, and this one is going to be unlike ones of the past. Prices will correct themselves to the degree I stated in my original post, which is still in increase in overall appreciation from where it was in the past. Also, Seattle trends the country by 9-12 months. We are a little soft now, yes, but we’re getting ready to head for squishy.
Feel free to respond to me in 5 months and tell me what you think then. 🙂 Perhaps then you’ll want to know more about what I have to say.
A related issue for downtown living in Seattle is the bad press the city is getting for crime/drug abuse/gangs/homelessness. Both the PI and The Times have been running front page articles this month, all of which is bad PR for the downtown condo market. Until Nickels is replaced, it’s unlikely to get better, and will contribute to ongoing soft demand due to the perception of a problem.
I don’t know MD or where he gets his data, and I’m not in banking or real estate, but I’m inclined to believe he’s in the ballpark.
Re now vs 2001 – we’re not even technically in a recession yet, which might explain why it doesn’t feel as bad as 2001. But after the stock market bubble burst back then, it took years to get back to pre-burst stock price levels. Over the years, regional housing bubble collapses have taken years to recover. I have no reason to assume that a national bubble would recover faster. It’s not like MD is forecasting a decade wait.
With all the defaults, there will be more inventory that will slow any price recovery.
Folks in the burbs who might have considered a move or retirement into the city center have often lost a lot of equity because of the current downturn, making it harder to apply that equity towards a pricey downtown condo.
That also would hold for retirees and folks relocating from other parts of the country to our more robust job market.
A consequence of the sub-prime fiasco is that buyers need bigger down payments than before. 20% down on an $800K home is a lot to come up with for most people.
I’ve read that the Fannie Mae folks have a hard time bundling and selling their jumbo loans now, so they’re making fewer such loans – those are often needed by folks wanting to buy the pricey downtown condos.
The Fed can’t keep interest rates as low as they are if inflation gets out of control. Inflation is up. Doesn’t take much of an uptick in mortgage rates to drive many potential buyers out of the market.
Even once the inventory glut is gone, tighter lending requirements will make it harder for many people to affort pricey downtown condos.
I completely agree. The basic math for most people is pretty simple. 20% down is a chunk of change, that most people, don’t have to put down on property. There USED to be a time when that was required, but we all got spoiled. And, the banks simply are not writing loans for larger amounts, so simply put…people are NOT going to be able to buy property that is in the 600K or higher range. Thing are going to slow down, EVEN MORE, the economy will continue to tank, and people are just going to have to either 1.) take their property off the market and rent it or 2.) lower the price.
eternal,
Which “big banks” are still making money. WaMu is luck if they survive the year…and problably wont. Maybe you don’t see this as having profound effects on the local economy?
Any 2011 information on the Insignia? Is it going to be larger than the cancled Heron and Pagota project?
No news yet. It’s supposed to be the biggest project in Seattle with more than 600 units. Stay tuned.