Some folks look at the news regarding Expo62 and the downsized Smith Tower project as reason for panic. For more on the Smith Tower updated plan, here’s the Seattle Times article. In reality, developers’ reduction of future supply is a textbook example of the market adjusting and balancing against demand and great news for owners/sellers (not so great for buyers in the short term). Kudos to the Intracorp and Walton Street for course correcting and thanks to Adam Smith (pictured to the left) for helping us see the forest from the trees.
Looking back at history and recent events elsewhere in the country and world, some cities aren’t able to throttle supply as nimbly and end up flooding already soft markets and in extreme cases, leaving some areas littered with stationery cranes and unfinished projects. So far, it seems like Seattle developers are tapping the breaks and going after the much stronger apartment rental market. This will still impact condo prices since this will reduce rental income capacity but much preferable to adding new condo inventory.
If this is “great news” for condo owners/sellers, one wonders what would qualify as “terrible news”.
I agree that it is good news. The supply of condos was getting out of hand. It will be interesting to see which other projects either convert to apts. or just do not get built. Keep us posted!
Here’s a hot tip,
the oversupply of condos is already here, and has already gotten out of hand. They could stop all the in progress projects *today* and let them rot. It’s still not going to help the unfortunate folks who inflated the bubble.
Also, if anyone thinks that the RE market is anything approaching a free, undistorted market, that is comedy gold.
I don’t understand why any large company needs ‘kudos’ for ‘course correcting’. They see the mess ahead and are simply trying to drop ballast while they can to reduce their pain. They aren’t on your team. They’re not trying to help prop housing values up on their last leg. They’re GTFO.
This condo and townhouse supply story is going to be a disaster.
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.]
I don’t think that Expo62 converting to apartments is any reason to panic. I’m actually glad, as this means not only a reduction in inventory, but also more options for renters who have been pushed out of the immediate downtown areas due to recent condo conversion projects. The demand for rentals is quite high and any savvy developer would rethink and readjust his plans accordingly. Participating in the real estate market is analagous to the stock market; too many people bought high and are panicking now and selling low. In the long run whether it’s brick or paper; time,temperance and paying attention are key to riding out any market adjustments. A few years from now, many chicken littles will look back and regret not buying , especially with interests rates so low. Remember 2002 prices?
I remember MSFT at 120, and I was selling, not buying.
Try again 😉
Selling MSFT at 120 was a good move assuming you’re not a revisionist 😉 But you also need to know when to buy as well? Remember when GOOG was 200 and everyone was screaming “SELL?”
With so many units already on the market for resale, are developers negotiating price on new construction yet?