I just received this press release from Urban Condominiums charting the performance of condos in Seattle over the course of 2008.
The introductory comments are on the bullish side but the charts are definitely worth a good look.
I tend to agree that interest rates are favourable and it is encouraging that Seattle developers had investor caps to avoid over speculation. This should help Seattle moderate its correction compared to other major cities which were more supportive of condo speculation.
Update 01/09/09: Urban Condominiums just informed me that MLS had a few additional closings very late in 2008 that didn't get posted in time for them to inlcude in their previous numbers. They have an updated report. The numbers changed only slightly but their general findings are still the same.
Here are the changes:
- Fewer active listings remained on the NWMLS at year-end 2008 versus 2007 (10% less inventory active today)
- Pending sale activity slowed by 27% in 2008 with fewer presales of new construction as buyers “wait-and-see”
- Overall inventory absorption in 2008 retreated 12% versus 2007 (partially due to presales from prior years)
- While median condo prices below $600,000 decreased by 4%, median prices above $600,000 increased by 20%
- Median prices year-end in aggregate (all price points) dropped by 2.13% – less than a quarter of regional decline
- Factoring all new construction not listed on NWMLS, median prices were actually higher in 2008
Thanks for the information.
Wendy, from the charts alone, it looks like the current cycle is pretty smooth, right? A pick-up in early 07, levelling off in mid to late 07 and part of early 08, then a steady slide down to mostly sustainable recession period levels.
Is that by virtue of downtown’s limited stock, or is it somewhat true that Seattle dodged most of the buckshot?
The press release seems to imply that the decrease in the number of active listings is a good thing, but I wonder how much of that decrease is due to people giving up trying to sell their homes vs. closed sales… A quick look at the graphs seem to indicate that for every 4 new listings each month, 2 to 3 listings are taken out of market unsold…
@AJ: I’d say Seattle has faired better than most of the rest of the country. However, it might be premature to say we’ve dodged most of the buckshot.
As an example, Seattle *might* be lagging the rest of the country — we’ll know for sure when we start seeing prices appreciate year over year. Something else to remember is the charts are for the downtown Seattle Center area only so it might be more about downtown Seattle neighborhood than the Seattle metro area. Lastly, there are probably other metrics like days on market which may be more illustrative of some of the challenges we saw in 2008.
Ultimately, I’m still glad we’re in Seattle and not say, Miami, Las Vegas, San Diego, New York, or Chicago; nevertheless, the biggest factor for Seattle will be the national economy. *If* the country bottoms out this year, I tend to think Seattle will be on the leading edge of that recovery. If not, I don’t think anyone will be immune to a deeper recession.
Re Lucas comment – I was wondering something similar, as I think it was Moda that went from condos for sale to apartments, and I seem to recall hearing of a few others, but I don’t know if they’re in the geographic boundaries of the survey. Something like that doesn’t really fit in well with how they report the stats.
As I was reading it, I was also wondering about what major developments opened in 2008 or 2007, where the prices agreed on were settled a year or two before the current downturn, and how such things are factored in.
E.g., there’s been some blog activity elsewhere re Olive 8 and current values vs. originally agreed upon prices. That it is both a particularly upscale development, and agreed upon prices were set before the current bust, when they go online this year, there are enough units sold there that they’ll make next year’s version of this report look pretty good.
Are there comparable reports that focus primarily on the downtown resale market?
Aah…Another blog from Wendy where she believes things are bullish. Didnt you write an article last year around the same time saying things look bullish 🙂
I will start thinking about buying a condo again, the day Wendy gets bearish on the Seattle real estate market :).
Its the stock market effect. The bottom is not reached till the most bullish turn bearish.
Seattle market has to fall more.
Who knows how things will be in the near future? As a non-supporter of Obama, I have hopes (No other alternatives) that he will be able to fix the country’s financial problems?
As for the downtown seattle condo market. My gauge is to keep my eye on the one-bedroom Critalla’s prices. For example, all the units currently on the market in the 600K range were initially bought between 360k – 450K range. I see the prices slowly dropping, but when they reach 500K or less, the market has hit bottom? The owners are still making a killing if they can sell it between the current asking prices and the initial prices paid.
Luckily, I sold mine a while ago 🙂
If I really wanted to buy a certain condo I would offer slightly above the price the current owner originally paid for the unit or at least add in the realtor fees of 6% so the owners break even.
What about the new (Lower-High End ) buildings (Olive 8, Escala) that already have these 600K+ range prices. Will those prices hold in the future?
There are many initial Olive 8 one-bedroom buyers that paid 150K – 200K less than the current asking prices. Those people don’t have much to risk, but if you are new buyer, that’s a different story. As for the Escala, those prices have raised at least 100K for the new buyers verses the initial buyers.
What’s a potential buyer to do in this market?
@seattlite: From Wendy’s comments, it sounds like she’s saying if there’s a deeper recession, we’re hosed. I wouldn’t call that bullish.
That’s the million dollar question isn’t it?
If you don’t like the idea of renting or you’ve recently sold your previous home, you’re looking for a new place to own for a few years or more, and you’ve found a place you really love, buying now could make good sense.
However, if it’s important to you to buy and then sell in the short term, you’re looking at this as purely a financial investment, and you’ve got no urgency, than I’d say there’s little chance you’d be missing out by waiting and seeing how things develop before pulling the trigger.
Thanks for your comment and this website.
I did buy and sell for awhile but am ready to settle down and stay in one place. I like the Escala and Olive 8 and I have read ALL the blogs about the negatives and positives’ of each building. I believe if I just buy and stay in either building for 8 – 10+ years that it would be a good investment?
I am more interested in the Escala because of the outside spaces, finishes, private elevator foyer, and the club.
I am not a real high-end dinner person, although I do enjoy that once in a while. I will enjoy having occasional lunches and dinners at the club or “dinners to-go” back to my condo.
This does seem like a good time to buy with lower prices and interest rates, but the great deals seem to be the re-sales not the new construction.
Now we can all go back to being home buyers instead of speculators. If you love Seattle, stake your claim. There are certain types of apartments you just can not rent. Anything in Olive8 or 1521 2nd are not going to get cheaper. The fed is printing money 24/7 and if you ever read about 70s stagflation we are making the same mistakes. If you take the long term view and actually use you condo you can not go wrong in Seattle. Downtown Seattle has just started its renaissance. How many of you love sitting in Traffic or when fuel prices go through the roof. Urban centralization is the future and 10 years from now it will not make any difference what you paid because the benefits of being in the center of it all will more than make up for the time waisted waiting around for things to get better. By the time they do you will have missed out. If you buy a condo as a place to live, you will not go wrong.
I’ll put money down that Escala will go apartments, very expensive apartments. I can’t see too many people wanting to pay top dollar for a new condo in this economy. Yeah, rates are lower, prices may get lower but if people are afraid of losing jobs – can’t see them pulling the trigger.
Putting 20% down and buying a condo to live in it for a few years?! What is this world coming to?
Would you know what (if any) implications there are for those buyers that have put a deposit on a new-constructions condo in-progress that changes into apartments prior to closing? (ie. do u get your deposit $ back?)
You should be able to get your deposit back since the condo is not longer for sale.