Five things we now know that we didn’t know before the end of 2007.
1.) The housing crash did not happen in Seattle despite constant media reports, bearish pundets, and market crises in most other regions of the US throughout 2006.
2.) It is possible for one of the nation’s top mortgage companies, American Home Mortgage, to stop funding approved loans leaving some homebuyers unpleasantly surprised at their closing appointments.
3.) In Seattle, the biggest portion of new construction inventory, approximately 3500 units is proposed for 2010. However, these inventories may not all come through.
4.) Homebuyers care deeply and intensely about how developers communicate with them on the delays for their condo and aren’t afraid to blog, post, and comment about it. Some of those developers and marketers will probably get more skepticism on their future projects.
5.) Most buyers went into wait and see mode in late 2007 and, for the most part, sellers didn’t budge, took their properties off the market, or made symbolic price reductions.
Five things we suspected were true in 2007 but now we know for sure.
1.) Seattle strong job growth is keeping the demand up.
2.) Retiree (65 and above) and baby boomers formed the largest group of home buyers for new condo projects in downtown Seattle.
3.) There is material demand for previously untested hotel/condo combo projects in the Seattle market.
4.) Apartment-to-condo conversions decreased the supply of rentals and local job growth pushed up previously stable rental prices.
5.) The days of easy double digit appreciation and speculative flipping are over (at least for the next few years).
Five things we need to know as soon as possible if we want to know what is going to happen for Seattle condo market in the long term.
1.) Will buyers re-enter the market in the first quarter of 2008 or will they continue to wait and see?
2.) Will sellers continue their relative discipline and patience or will they start a price race to the bottom?
3.) Will Seattle’s employers maintain their growth or will they be affected by slower economic growth as seen in other regions in the country?
4.) Will rental properties raise rents enough to make waiting less attractive than buying?
5.) Will the sub-prime mortgage mess spread to the rest of the mortgage industry?
The bias of this blog has really been showing lately.
I’m actually in the market for a condo but I’d be questioning the honesty (or intelligence) of my broker if they were trying to sugar coat our current environment. Be honest. We can take it.
I am not in the market but I actually think this blog is overly cautious and pessimistic. There is constant talk about the mortgage crisis and questioning the Northwest job market every other post. Also, why spread about all the horror stories with previous Seattle projects?
Da nile: I think I’ve been pretty clear that I have a positive long-term outlook for the Seattle condo market and I thought December was a great opportunity for buyers. That said, I don’t think I’ve painted an entirely bullish picture as you can see from my questions at the end of this post. Thanks for stopping by and best of luck with your search!
Jeffrey: Sorry you feel that way. I think I’ve tried to show all sides of the picture and while I take a positive outlook on the market, it would not be fair to ignore the mortgage challenges and mixed experiences some people have had with some projects. Thanks for sharing your opinion!
Great article Wendy! All very true. It is difficult to speculate. I would imagine that prices in condos will stay realively stable and low interest rates will drive sales in the coming months. Michael
Well Wendy you certianly get my respect for not deleting and even addressing my comment. My take on the condo market is that inventory is increasing due to over building and slow sales and buyers are decreasing because of a lack of financing, and a lack of speculators. Prices will have to drop.
I dont think job growth (how many Wamu people will lose their jobs?) or the relatively small rent increases I’ve seen will slow these continuing big trends.
I love downtown and like all the new buildings that are going up, but I think we are going to have a situation like in early 1990 when they overbuilt with Class A office buildings. As prices drop there will be a good time to buy but I dont think we’ve gotten there yet.
Wendy, no crash in 2007, but that doesn’t mean we’re in the clear for 2008. I worry, as a condo owner, that Seattle is just lagging behind other parts of the country. Hopefully there isn’t any wrenching correction in our future or I may be living in this condo longer than I’d originally planned to get any appreciation.
As much as some are wishing for a fairy tale in Seattle,, 2007 was a real turning point. I hope people have their financial seat belts on for 2008+. By all indications, it is going to be a rough ride if you overpaid in 2004-2007 and need to sell.
I hope we are fortunate in this region to escape any major job shedding, if this recession does turn out to be significant.
LOL. To paraphrase Hot Lip: The sky is falling. The entire world is about to go into depression. Immediately sell you property at any cost and buy gold coins. And if the market doesn’t crash this year, it’s 2009 which will be the real turning point. And if not that year then 2010 will be the reckoning. [C’mon, let’s just everyone take a chill pill and acknowledge the market ain’t gonna crash in Seattle but it ain’t gonna be flippin great either. If anyone is only in it for the short term, that’s what you get. If you’re in in for a few years, ignore the drama…we don’t need no drama.]