Sponsored by the Seattle Times and The Seattle Post Intelligencer, the “Mega Open House”, Seattle Condo Expo and Realtor Symposium took place yesterday with approximately 2,500 visitors. The expo included exhibitors from many of the high profile new construction projects in the core of Seattle as well as Bellevue.
The main highlight was the presentation given by Senior Principal and land use economist, Matthew Gardner, and Blaine Weber, principal from Weber + Thompson Architects. Matthew touched on the inventory coming on the market as well as the outlook for the next few years. Here is some interesting data he presented (Here is my own analysis from May 12th):
• The average project size for new construction is around 150 units for 2007-2009 inventory and 300 units for 2010 inventory.
• Condos completing in 2007 are mostly sold out. 50% of 2008 inventory is reserved and 9% of 2009 inventory is reserved.
• In Seattle, the biggest portion of inventory, approximately 3500 units is proposed for 2010. However, these inventories may not all come through.
Matthew also pointed out that Seattle is not following the path other markets are suffering now due to over supply. One of the differences about the Seattle market is that he didn’t see an over exuberance of new developments occurring in the last building cycle for condominiums. He suggested Seattle was able to learn from other cities and plan accordingly. Many projects also limited their investor caps to reduce excessive speculation.
2005/2006 30% cap
2007 20% cap
2008 10% cap
Matt also noted Seattle is experiencing exceptional new job growth and will probably continue for the balance of the decade. The question on everybody’s mind, "what about appreciation in the downtown area?" Matthew is optimistic about the Seattle market, however, he pointed out that we are not going to continue to see double digit annual appreciation that we have been seeing over the last few years. If interest rates remain benign, he believes that appreciation will probably be in the high single digits.
So what kind of people are buying all these condos?
• Retirees (65 and above)- This is the largest market. Their family wants them to be in a safe environment rather than living out in the country.
• Baby boomers – 50% of them are buying condo as their 2nd or 3rd home.
• Urban professionals (25-50) – Career focused group and want to reduce commute time.
• Investors- they are more limited in numbers because of the way the developer is limiting the investor cap.
• Move up buyers- They might have already been living in the condo and looking for pre-sale to live for couple of years and moving up to a better condo. (Matthew didn’t mention this group but Dean from Realogics brought this up.)
All and all it was an informative event. For homeowners and home buyers, they can probably breathe a little easier if they have some concerns on how the market may perform. As for condo flippers, if you are looking for high appreciation, you may be in for disappointment.
If you are curious about what other industry experts are saying about the market, visit www.seattlcondoexpo.com.