Enclave interior

The Enclave – Eastlake

The upscale townhome development along the Lake Union waterfront in Eastlake, which we profiled last year, is progressing forward. According to Nick Glant of NWG Real Estate, the project has secured enough pre-sales to begin construction this year, with the delivery of its first phase of nine homes in late 2011.

The Enclave (website) features 21 multi-level residences designed by NBBJ and Atelierjones, which are constucted of glass, Prodema, steel, concrete and engineered siding. These lake side homes range in size from 2,500 to more than 3,000 square feet and start from $1.3 million. Prospective buyers may view further information at the sales center, which is by appointment only.

Escala – downtown Seattle

Escala (website) reported that they’ve reached 70 contracted homes sales since the new team took over 5 months ago and are approaching 50 closed transactions. The sales center is open every weekend from 11 am to 5 pm or by appointment.

Brix Condominium – Capitol Hill

Congratulations to Schnitzer West for successfully concluding sales at Brix. Just 3 weeks ago we reported Brix was in the process of closing out the project with just 5 units remaining…all 5 are now under contract.

Lakeview Residences – Capitol Hill

The Lakeview Residences (website) is a small six-unit boutique condominium located on the West-slope of Capitol Hill. The high-end homes range in size from approximately 1,400 to 1,670 square feet and are now priced from the low $600,000s. When these home first came on the market, they were priced well above $1 million. Currently, only 3 homes remain, 1 of each distinct floor plan.

Around the SLU:

Christine Keff, the James Beard award winning chef and restaurateur of the Flying Fish has opened a new artisan cafe in South Lake Union called On the Fly. The shop, located at 950 Thomas Street, will feature baked goods, espresso, lunches, a selection of wines and fully prepared take-home dinners.

On the Fly will be open Monday through Friday from 10 am to 7 pm, after Labor Day.

Recently, TSCB noted two new mortgage fees implemented by Fannie Mae affecting condo buyers — a .75% condo add on fee and a 1.75% additional fee for investors — both applicable to loans with a loan-to-value rate greater than 75%.

Well, there’s more. Effective March 1, 2009, Fannie Mae is implementing condo guideline changes “in light of the current condo market and the need to mitigate risk on condo loans”. Some of these changes may affect a buyer’s ability to obtain conventional condo loans for new and established condos.

A condo project is “established” if 90% of the units have been sold, is complete and the HOA has been turned over to the owners. A condo project is “new” if less than 90% have been sold, is not completed, is subject to phasing or if the HOA has not been turned over to unit owners.

Overview of Fannie Mae condo guideline changes:

• For new construction and newly converted condo developments, 70% of the units must be pre-sold (closed or under contract). This is being increased from 51%.
• No more than 15% of a condo project units can be more than 30 days delinquent on HOA dues. This is an existing guideline that is now being applied to new condo projects. The calculation was also changed from being 15% of HOA fee payments to 15% of total units.
• Fidelity insurance will be required for condos with 20 or more units, ensuring that homeowner association funds are protected. Presently, this requirement applies to new projects and is now being extended to include established condos.
• A requirement that borrowers must now obtain a condo-owners insurance policy unless the master policy provides interior unit coverage; coverage may not be less than 20% of the assessed value. A condo-owners policy, known as an HO-6 policy, covers personal property, personal liability, and the physical unit from the studs and in. Many policies also include special assessment coverage or the option to include a special assessment coverage rider.
• No more than 10% of a project can be owned by a single entity.
• No more than 20% of a project can consist of non-residential space.
• The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible.

According to a Fannie Mae, the guidelines can be modified for condo projects on a case-by-case basis. Therefore, these guidelines may not apply to all condo projects.

What effect will the changes have?

The revised guidelines may affect a buyer’s ability to obtain a conventional loan for either a new or established condo if the project does not conform. Most notably, it’ll affect new developments and it’s already having an impact on at least two new projects. Vulcan recently sent a letter to buyers at its Rollin Street Flats project in South Lake Union notifying buyers of the new 70% pre-sold guideline and extending closing until April 15th at the earliest.

As it stands, Vulcan may be unable to close any of the units at Rollin Street unless (1) they continue to extend closing until 70% of the units are under contract, (2) seek modification under a Fannie Mae expedited review process, (3) find a lender willing to hold the loans in their portfolio, or (4) convert the use of the building.

Ruby Condominiums in Eastlake is holding off closings until there are enough sales to qualify under the guidelines…that could be awhile. Ruby is FHA approved so that offers qualified buyers an alternative, though Ruby must have 25 sales under contract before it can begin closing FHA buyers. Its developer, Barrientos, is a major apartment developer as well, so reuse may be an option. In both cases, buyers are left in limbo.

The new guidelines may also apply to other recently completed and/or soon to be completed projects including Enso, Veer Lofts, Equinox, Alex, Duncan Place, Leona, Lakeview Residences, Brix, Eleven Eleven, The Danielle, The Dakota and Marselle — that is unless they’ve been approved for a lower rate under a case-by-case expedited review process. Quite frankly, though, I expect a few of these won’t end up as condos.

If there is a silver lining, it’s for sellers at established condo developments who’ll have reduced competition from new construction developments.

Statement from Vulcan:
Vulcan has informed our buyers of the new Fannie Mae and Freddie Mac regulations because Rollin Street is at a level of pre-sales that is under what is mandated by the new guidelines. As these guidelines affect the ability of our buyers to obtain financing and close on their purchases, we felt it was important to communicate these challenges as soon as possible. We are working to understand the new guidelines and how they will ultimately affect the property and our buyers. We will be communicating what we know about these changes and their impact in the next 2 to 3 weeks.

Veer and Enso are at a higher level of sales and pre-sales respectively and our goal is to continue to close units in those buildings as buyers come to the closing table.

Response from Williams Marketing (per comment below)
As of today [2/20/09], Ruby has partnered with a local lender (Seattle Mortgage) looking to actually lend money! They have committed to close homes now, ie, we are move-in ready with no pre-sale requirement. We are also working with other regional lenders for additional commitments to close homes with no presale requirements. Ruby on Eastlake is both FHA and VA approved, so buyers can take advantage of every financial opportunity to get into new home ownership.

Posting has been revised.

Inspired by Frank Lloyd Wright’s Prairie Style, the Lakeview seeks to blend a contemporary design with Capitol Hill’s historic architecture. The project’s architect, Studio Meng Strazzara, designed several other high-end residences in the area including the Harvard and Highland and The Harvard Residences.

Each home includes two-bedrooms and two-plus baths that range in size from 1,380 to 1,711 square feet. Other features and refinements include:

• Private entry foyers
• 9′ ceiling height with oversized windows
• Custom wood cabinets and antiqued nickel plumbing fixtures
• Slab granite or marble kitchen countertops and white Carrara marble in the master bath
• Private cedar decks
• Two parking spaces
• Common rooftop deck

Homes are offered from $1 million.

Lakeview Residences will celebrate its grand opening this coming weekend, July 12th and 13th, at 1114 Lakeview Boulevard East.