The Seattle Condo Blog

Third quarter results showed no Earth shattering revelations about the market - prices and sales are down.

Seattle’s condo median price for Q3 2008 was $305,000, down 5.3% from the same period last year. The number of closed sales fell 51.1% while total dollar sales volume dropped 53.3% to $193,339,000.

Year-to-date, the citywide median price remains unchanged at $315,000, though the number of closed sales are off 40.1% compared to the same period last year. So far, prices during the first part of the year were high enough to offset the price declines we’re now seeing. Though, by the end of year I anticipate a decrease in the annual median price figure.

The condo market performed fairly well last month; aside from a median price decline it did show signs of stabilizing. Compared to August, the median condo price remained unchanged at $310,000, which also reflected a year-over-year decrease of 6.03%, the largest drop so far this year. It was also the third consecutive monthly drop in year-over-year median price value.

The number of active listings reversed its recent declines, increasing by 12 properties, or 0.08%, over August. Though, for the first time in years the number of active listings fell below the prior year’s figure. There were 1,503 actives in September ‘08 compared to 1,531 in September ‘07, a year-over-year decrease of 1.83%. Now, that’s just 28 properties, but it’s significant when you consider that in January there were 512 more active listings compared to the prior year. Given current market trends, though, it’s not unexpected. For many sellers, it makes more sense to ride out the downturn by taking advantage of the stronger rental market.

The number of pending transactions (under contract in escrow) showed improvement last month, reflected by a 14.3% increase over August. The year-over-year result improved as well. In August ‘08, the number of properties going under contract was just 55% of those that were under contract in August ‘07. In September, the number of pending transactions improved to 85.5% of the previous year’s level.

The improved pendings rate and falling inventory helped to reduce the inventory supply rate (absorption rate) to 6.7 months. It’s still a buyers market, but we’re seeing a little more parity in areas - Capitol Hill, Queen Anne and Downtown. Downtown’s supply rate actually dropped last month (compared to September ‘07) but that can be attributed to pendings at Gallery, particularly previously unrecorded pre-sales that just popped-up as pendings last month. To Gallery’s credit they are recording pendings and solds, something many developments haven’t done (more on this later).

September will likely go down as an anomaly. It had begun to show signs of improvement, which may have been the result of the Fannie Mae / Freddie Mac takeover. That news helped to spur just a little more confidence and briefly lowered mortgage interest rates. Going forward, the recent economic crisis, both nationally and locally, will wipe out the gains made last month. In all likelihood, we’ll see a downward movement in the number of active listings, median price and pending transactions through the remainder of the year.

Thanks to Jim and Matt who reported that Live Historic’s Marlborough conversion project is reverting back to apartments. Matt also noted that Maris condos on Shilshole made available their unsold units as rentals. Marlborough and Maris joins other developments which reverted back or switched to apartments or are now leasing unsold units - Max, WestWater, Carbon 56, Domaine, Expo 62, Landes, Strata. I’m sure we’ll be seeing more of these.

Seventeen07, a recent conversion at 1707 Boylston Ave is auctioning off 17 units with bids starting from $95,000 for studios, $195,000 for one-bedrooms and $215,000 for the two-bedroom units.

The auction, which is being conducted by Accelerated Marketing Partners, is scheduled for 2:00 PM on Sunday, October 19th at Hotel Monaco, located at 1101 4th Avenue. Bidders are encouraged to arrive between 1:00 and 1:30 pm to pick-up bid packets, and will need to be pre-qualified by either Wells Fargo or Countrywide (see auction site for more info).

Seventeen07 was converted earlier this year and has 36 units (studio, one- and two-bedrooms). The auction notice states that 17 homes will be available, though only six closed sales and two pending sales have been recorded in the NWMLS. It is possible the remaining 11 units were sold but never entered into the NWMLS system, or being held for a future sale. At least one unit, which closed this month, is available for rent.

For more information, visit www.auction1707.com.

If you’ve been by Northgage Mall in North Seattle lately you’ll notice a lot of construction activity at the mall’s former south lot. No, it’s not an extension of the mall (that’s on the north side), but a massive residential, retail and entertainment development on a controversial piece of land whose tumultuous history dates back more than eight years.

Back then, there were contentious debates among local residents, conservationists and mall owners about developing the south lot and Thornton Creek which ran beneath it. In 2002 the Appeals Court overturned a lower court decision and ruled that the water running below the lot was not Thornton Creek, thus opening the door for development. But, more debate and lawsuits followed. It wasn’t until 2004 when numerous stakeholders reached an agreement that plans for development moved ahead.

Fast forward.
Today, Thornton Place, is rising like the phoenix out of the south lot asphalt ashes. When fully completed by the end of Summer 2009, Thornton Place will feature a 14 screen & IMAX theater, retail and restaurants, 266 apartments, 121 condos including 12 live/work lofts, a 143-unit senior living development by ERA Living and an uncovered Thornton Creek channel.

The Thornton Place urban village is one of only five projects in the state participating in the LEED ND (neighborhood development) pilot program which strives to create a compact, walkable and vibrant mixed-used neighborhood. Additionally, the developer, Lorig Associates, is expecting to achieve a LEED Silver certification for green building practices.

Key dates ahead:
   Apartment rentals begin - April 2009
   Cinema and retail open - May 2009
   ERA Living’s Aljoya opens - Summer 2009

Condo sales begin.
The first structures to finish will be the condos, which began sales this past weekend. Thornton Place offers a variety of floor plans to fit most everyone’s needs, including studios, one- and two-bedroom flats, two-bedroom townhomes and live/work lofts.

One thing that struck me as I toured the units was the sheer size of the homes compared to their downtown counterparts. Even the smallest homes are huge. The studios start from 600 square feet, some with 9′ 10″ ceiling heights, and include a large sleeping alcove, walk-in closets and a defined dining area. The other floor plans range up to 1,364 square feet in size.

Home features and amenities include:

• Two color palettes to choose from
• Various ceiling heights, up to 14′ in select top floor units
• Natural Maple or Kempas microstrip hardwood floors in living area, plus porcelain tiled flooring in kitchen and bath
• Striking polished slab granite countertops in kitchen and bath, with porcelain tiled surround
• Wenge or cherry veneer cabinets
• GE appliances including stacked washer and dryer
• Large, oversized windows
• Patio or deck space for most homes
• Heat and glo gas fireplace in most homes
• Gated entry after hours, plus parking and extra storage
• Community room and lounge area, 24-hour accessed fitness facility and a business/conference center, shared with the apartments

Currently, 62 condo units are available for purchase ranging from $299,000 to $589,000. On a per square foot value, the condos are among the priciest in North Seattle. So, what’s the benefit of spending a more for a piece of Thornton Place - location. An urban village in its own right, Thornton Place is part of the larger Northgate urban village that includes various transportation options including two park-and-rides, ample retail, restaurant & entertainment choices, and numerous business and community services. Plus, Thornton Place will be home to a diverse 600 residents.

While the condos are market rate, the apartments will include both market rate and workforce housing units. The workforce housing units will be available to residents earning 80% of King County’s median income.

The condo sales center is open daily from 11 am to 6 pm, enter parking garage from NE 100th Street. For more information about Thornton Place, visit:
- Thornton Place
- Thornton Place Apartments
- Aljoya (ERA Living)

images courtesy of Lorig / Thornton Place

As has been the case throughout much of the year, each passing month exhibits the fluidity of Seattle’s condo market.  A number of factors have contributed to the buoyancy such as new construction closings, seasonal changes, mortgage availability and rates as well as consumer confidence levels.

The citywide condo median price rose 3.3% in August to $310,000 compared to July.  Historically, though, August outperforms July along with an uptick in the median price so it’s to be expected.  In comparison to the prior year, the citywide condo median price in August fell 5.3%.  And, that’s significant when you consider it was the largest one-month YOY decrease spanning back several years.  Yet, keep in mind that only compares the results of two 31-day periods in time.  Looking at YTD median price figures, the citywide median price is unchanged relative to 2007, though a downward movement is expected.

Perhaps the best piece of news in August was the third consecutive decrease in the number of active condo listings, down to 1,491 or 48 fewer than July.  In comparison to August 2007, there were only 127 more listings, or 9.3%, the slimmest margin in YOY listings since the condo market softened. A fair number of sellers are mitigating the effects of the downturn by taking advantage of the rental market.  Interestingly, should the number of listings plateau in September, we’ll realize a YOY decrease in listings next month.

On the other hand, the inventory supply rate (a measure of months of inventory based on active listings and pending transactions) remains at a moderate 7.6 months, even though we’re seeing parity in the number of active listings compared to 2007 levels.  The main reason being that buyers are remaining on the sidelines, tepid about the market and concerned about the economy.  Compared to last year, the number of condo purchases is down 45.3%.

We may yet see a bounce in the market given two key factors - inventory options and recent government actions.  Buyers have the advantage of a buyers market resulting in more inventory choices (fewer active buyers in the market to compete against).  Slower sales volume may also translate into better deals in terms of price, contract terms and concessions.  The government’s recent takeover of Fannie Mae and Freddie Mac helps to instill confidence in the mortgage market and has resulted in lower rates, dropping below 6% this week.  Plus, low down payment loan options are still available.  Finally, the $7,500 first time home buyer tax credit (an interest-free loan) means a more immediate benefit to buyers.

As for sellers, September may result in a rebound as well.  Not in regards to price, which is likely to remain below 2007, but rather in the number of properties that are selling (pending transactions). Through the first week-and-a-half of September we’re seeing a rise in sales volume.  But, this is cyclical as well since we normally see a bump in September/October, though lower interest rates may be spurring buyers off the fence.

The Leona Condominium on Queen Anne will host an open house event on Saturday 9/13 and Sunday 9/14 from 11 am to 6 pm.

Leona is a mix of the old with new. The development preserves the original 1909 structure along with the addition of a new penthouse level on top as well as townhomes along Ward St.

Leona offers a mix of floor plans including one- and two-bedroom flats, 3-story townhomes and 2-story penthouses. Prices range between $429,000 and $1,975,000. Additionally, homes may be eligible for a 10-year tax abatement significantly reducing property taxes. www.leonaliving.com

Leona is located at the corner of Queen Anne Ave N and Ward Street. www.leonaliving.com

Recently, a number of condo developments, both new and conversions, adjusted prices downward.

Luxe - reduced prices on a number of units between $25,000 to $30,000.

Queen Anne High School - recent adjustments on select units ranged from $10,000 to $99,000. For these units, the aggregate reductions ranged from $40,000 to $300,000 since they were originally listed in the NWMLS.

The Pittsburgh - reduced prices on select units in the $35,000 to $40,000 range.

22 West Lee - a few units were dropped $40,000 to $50,000. One unit reflected a $140,000 price reduction since it was originally listed.

NoMa - select units were reduced $20,000 up to $80,000 in the past few weeks.

Beacon Flats - the adjustments were only $4,000 but the units are under $200,000.

One Main Street - hmm…$1,000 price reductions.

Who knew.

Listings for two 30th floor shells at the Ten Twelve First Avenue (1012 1st Avenue) project came on the market yesterday. According to the listings, 1012 1st Avenue is a 36-story tower featuring 219 hotel rooms and 25 luxury condominiums located on levels 23 through 35. The two 4,000 square feet shells are being offered for $1,750,000 a piece.

The 1012 1st Avenue development is located adjacent to Hotel 1000 / Madison Tower and the listings indicate the shells will be delivered in late 2011. Though, in searching the DPD website there’s no information for this project (land use notices, bulletins or applications) so it seems rather ambitious to have the development approved, funded and ready for a 2011 shell delivery timeframe.

All that aside, should the tower come to fruition, the building will be an striking addition to the downtown landscape. Designed by famed New York architect Ismael Leyva, 1012 1st provides a departure from a number of lackluster designs being produced by the stable of local architects. Leyva also designed Heron and Pagoda Towers.

Though, I’ve been reminded that zoning codes will probably not allow the design in its current form from being realized due to the proximity to Hotel 1000 / Madison Tower. So, expect to see something else when, and if, the project is approved and developed.

Interestingly, Pb Elemental’s website suggests the project is in permitting stage (they’ve since recategorized it as a “concept”) and they even have their own vision for the parcel.

Update:  Information from the Daily Journal of Commerce

• Investors are unnamed but are from Seattle and the East Coast, financing is from Multi-Capital.  Multi-Capital is also associated with the Heron / Pagoda project, but didn’t have complete financing in place for that development.
• Two-bedrooms are expected to be priced from $2,200 to $3,000 per square foot, even above the Four Seasons stratosphere.
• Construction expected to start in 2010 with a late 2011 completion date.  Though that information is coming from the developer and listing agent, it is unlikely that time frame will be met.

Update:  Information from Seattle Times (9/14)

• Listing agent Breffni McGeough is a principal in a four-person partnership seeking to acquire the property.
• Very early stage, still looking for developer and hotel operator.

Which brings up a point, how in the world is the current listing even acceptable?  They’re accepting a reservation deposit for a development on a property they don’t own, for a project that hasn’t been filed with the DPD, which would need a zoning variance based on the current rendering, on a site which could be classified a historic landmark, yet anticipating a 2011 completion date.

July exemplified the fluidity of the housing market…it was tough month for Seattle’s condominium market. After median price gains over the past couple of months, the median price took a tumble to $299,975 last month, which reflected a 4.5% decrease compared to the same period last year and the fourth year-over-year decrease this year.

Though, not all was negative. The number of active listings decreased for the second consecutive month to 1,539. That number reflects just 14% more listings compared to July 2007, the smallest year-over-year percentage we’ve seen in over two years, and a significant reduction since January’s 65% difference in actives.

Relative to last year, which was a seller’s market, there aren’t that many more properties on the market, yet we are considered to be in a buyer’s market. That distinction, though, is largely based on the fact that so few buyers are actively purchasing condos. The number of properties going under contract fell to just 202 units, or 19.5% fewer than June and 46.8% fewer compared to July 2007.

The condo inventory supply rate (absorption rate) rose to 7.6 months based on pending sales, the highest level spanning back several years. Downtown, MLS area 701, and West Seattle, MLS area 140, led the city with 9.8 and 9.9 months, respectively. Yet, Downtown’s high rate wasn’t due to rising inventory (same number of actives in both 2007 and 2008) but due to the number of properties purchased, 83 in July 2007 compared to just 33 last month. Based on my observations so far this month I expect more of the same.

Whether this is good or bad news depends on if you’re a seller or a potential condo buyer. If you’re a seller you’re faced with a shrinking pool of interested buyers and volatile prices. Though, if you need to sell, are willing to accept the current market environment and price your property accordingly, you shouldn’t have difficulty selling.

If you’re a buyer, you have the benefit of downward pricing trends and less competition from other buyers, yet there isn’t a fire sale on condos in the city. Additionally, buyers can now take advantage of a first time buyers tax credit. The credit is based on the purchase price and maxes out at $7,500, subject to eligibility requirements.

There is a potential that the number of active listings may continue to drop as seller’s pull their properties off the market, many renting them out instead, while waiting for the housing environment to improve. And, that may help to normalize the market.