Seattle is exhibiting seller market characteristics as the supply of available condo properties for sale constrict. Compared to last March, there are 40% fewer properties on the market today and since the peak in 2008, inventory is down 60%.

Demand has risen as homebuyers and investors take advantage of lower condo prices and mortgage interest rates. As a result, buyers are encountering more multiple offer situations and, yes, we’re even beginning to see bidding wars again.

How can buyers best position themselves to have their offer accepted at the best possible price?

Here are “new rules” for buying a Seattle condo in a seller’s market:

• Get your finances in order before venturing out. Work with a condo mortgage lender to get pre-approved, or if you’re a cash buyer, have your proof of funds on hand. You will benefit by knowing how much you can afford and you’ll be in a stronger position when making an offer. Buyer financing is the number one reason why transactions fall apart so sellers give greater weight to cash and pre-approved buyers.

• Know your limit. If you happen to encounter a multiple offer situation, know how high you’re willing to go. This will allow you to present your highest and best offer while keeping you from straying beyond your budget. The last thing you want is being caught up in a bidding situation and paying more than you should.

• Research in advance. Determine the neighborhoods and buildings that best suit your needs and lifestyle – amenities, transportation and commute options, crime rate, market sales activity, price trends and so on. By defining the areas you’d like to live in, you’ll be able to move more readily giving you an edge over the competition when properties become available in your favorite neighborhoods. You will know a good value and the perfect property when you see it.

• Be prepared to act quickly. When a condo that ticks off all the boxes comes on the market, be prepared to act quickly. Condos that are well priced for the market, in good condition and located in desirable neighborhoods are selling faster. Recently, in the hour it took me between setting up a showing with a buyer and arriving at the property the unit went pending. It was on the market less than 24 hours.

• Strengthen your offer position. In a multiple offer situation, consider minimizing contingencies and strengthening the other elements of your offer. This may include a larger down payment or earnest money deposit amount, pre-inspecting the property or being flexible with the contract terms such as the closing date or escrow preference.

Heading into spring, we are moving towards the high season for home purchases. The low cost to finance, better values and warmer weather offer a compelling opportunity for buyers to enter the market, and as they do they are experiencing dwindling inventory supply and greater competition from other buyers. To get the edge buyers need to be aware of the news rules in Seattle’s evolving condo market.

Are you ready to get your condo feet wet?   Contact the SeattleCondosAndLofts.com team at Keller Williams Greater Seattle to get started.

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The lower selling prices, however, encouraged steady sales activity with unit sales dipping just 2.4% compared to 2010. That’s a pretty good result considering there were no external incentives (e.g. tax credit or condo auctions) to bolster sales last year.

Condominium sale prices declined throughout Seattle in 2011. However, there were a few exceptions – South Lake Union (+53.1%), Crown Hill/Broadview (+4.8) and Maple Leaf (+33.5%) experienced increased prices. Downtown remained flat.

A word on how we calculated the downtown Seattle neighborhood districts. In our monthly market reports we provide stats based on the MLS defined area for downtown, known as Area 701, which includes downtown, Belltown, Denny Triangle, Pioneer Square, the International District and parts of South Lake Union. For our annual report, we separated the districts into their distinctive neighborhoods and manually scrubbed the sold listing data for greater accuracy. For instance, an MLS classification limitation and agent preference placed sales at Marselle, Veer, Enso and several First Hill and Queen Anne condos in “downtown”. Because of scrubbing and re-classification, we have adjusted the 2010 median prices for downtown and South Lake Union.

A greater number of lower priced property sales also influenced the median sales price. Compared to 2010, there was a 25.6% increase in the number of condos sold under $250,000 last year. Nearly half (49.1%) of all Seattle condos sold in 2011 were priced under $250,000, which weighted the mid-point downward.

Interestingly, there was a significant increase in million-plus dollar condominiums as well, up 24.6% over the prior year. That’s reflected in SLU’s strong showing and kept downtown on par with 2010.

Finally, the figures reflect median sold prices and not property values. In some neighborhoods, there were too few condo sales to be meaningful, such as the two sales in Fauntleroy or zero sales in Leschi. When looking at the chart, it’s important to note that property values did not fall, or increase, by the numbers shown. For instance, condo values in Fauntleroy did not drop 64.4% or Lake City by 51.4%; and conversely, condos in SLU did not rise 53.1% in value.

While foreclosures remain an important factor affecting local condo values and sale prices, it may not be as prevalent in the near future has they’ve been in the past. King County foreclosure filings have reduced significantly compared to 2010 and shrinking inventory is accelerating multiple offers (in the lower price points), which may eventually lead to a pricing recovery.

Sales information provided by the NWMLS; all figures were independently calculated by SeattleCondosAndLofts.com. Private sales (by owner) and some new construction unit sales were not reflected in the NWMLS database.

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© Seattle Condos And Lofts
Cover photo by Christian Terboven available under a Creative Commons Attribution 2.0 commercial license.

On the new construction front, 2011 brought good tidings to developers, marketers and banks. Several developments sold out including the Gallery in Belltown, Enso in South Lake Union, Trace North and Trace Lofts on Capitol Hill. Other buildings are close to selling out, surpassing the 75% sold mark – 1521 Second, Hjarta, Marselle, 1111 E Pike and the Daneille – with Olive 8 not far behind. Escala reached the 50% milestone gaining Fannie Mae approval status, while on the Eastside, Bellevue Towers closed 144 units last year.

On the resale side, fewer owners took to selling last year, many perhaps, taking advantage of the hot rental market or waiting it out for a recovery before attempting to sell. The available listed inventory supply dropped approximately 30% from 2010 levels, which resulted in quite a few multiple offer situations…something we haven’t seen in a while.

Buyers, who may have been encouraged by the job outlook in the Seattle area (e.g. tech and manufacturing sectors), historic low mortgage interest rates and declining prices, kept Seattle’s condo market rolling along.

2011 By The Numbers

Condo unit sales remained relatively even with 2010 with just 43 fewer units, 1,783 to 1,740, or a decrease of 2.4%. The largest dip was in South Seattle with -14.0%. West Seattle unit sales decreased 11.4%, Capitol Hill was down 9.3% and Northeast Seattle had 5.4% fewer sales.

One the other hand, several areas saw increased unit sales over 2010 – Queen Anne & Magnolia (+7.8%), downtown/Belltown (+4.1%) and Northwest Seattle (+0.7%) – neighborhoods with a high density of condominiums.

Buyers bought bigger and cheaper in 2011. The citywide median condo sales price declined 11.5% to $252,000. Bucking that trend were downtown/Belltown and West Seattle, which saw median sale prices increase 4.7% and 0.8%, respectively for the year. The total aggregate dollar value of condos sold in Seattle dropped 8.2% to $596,022,458.

The average condo unit that sold in 2010 was a one-bedroom at 946 square feet. In 2011, the average unit sold was a 991 square foot two-bedroom. Buyers got more for less.

For sellers, besides seeing sale prices fall, it also took much longer to sell a condo in Seattle last year. The average cumulative days on market rose 12.4% to 136 days. Pricing, property condition, location and whether or not it was a distressed property greatly influenced the time it took to sell a property.

Distressed properties currently account for 29.0% of the available condos for sale. Of that, short sales (pre-foreclosure) make up 9.9% and bank-owned (foreclosed) make up 19.1% of Seattle’s condominium inventory.

The sold condo figures last year reflected a similar overall split between distressed and equity properties but with bank-owned and short sales switching places. Equity sales accounted for 70.9% of the condos sold in 2011, while 18.9% were bank-owned and 10.2% were successful short sales. The numbers bear out the fact that short sales, which make up 1 in 5 properties on the market only account for 1 in 10 closed sales, do not have the same appeal as equity or bank-owned properties and have a high purchase failure rate.

Moving ahead through 2012…personally, I think we’ll see more of the same this year. I expect sales to remain brisk with continued pressure on values and further reduction of inventory. Even though supply will shrink I’m not betting that prices will stabilize or recover citywide, not with the significant number of distressed owners and the shadow inventory. However, it is not inconceivable that prices could improve in certain neighborhoods or price tiers.

Source: NWMLS database. Some figures were compiled independently and were not published by the Northwest Multiple Listing Service.
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© Seattle Condos And Lofts

The Pontedera Condominium, situated just south of Downtown Seattle at 827 Hiawatha Place just reduced prices significantly on a number of units. The price drops range from $10,000 up to nearly $60,000 per unit! Good thing, too, since there’s only been 18 closed sales out of 102 unts, with only 2 sales in the past year, per NWMLS & county records.

It’s a shame really since Pontedera was nicely designed and accented, plus it’s conveniently located to downtown, Capitol Hill and the International District. Home prices start from $174,900 and there are several incentives and programs geared to first-time and lower income home buyers, including down payment assistance, property tax exemptions for qualified buyers and no HOA dues for a year. Its worth checking out.

View available Pontedera Condo homes for sale

1111 E Pike Street – Capitol Hill

The Tom Kundig designed 1111 E Pike Street Condominium is down to the final three homes for sale. The uniquely designed boutique condo building is located in the heart of Capitol Hill’s trendy and vibrant Pike Pine Triangle. Homes start from $314,950. Own for less than comparable Cap Hill apartments rent for!

View the last remaining 1111 E Pike condos for sale

Hjarta Condominium – Ballard

Ballard’s green constructed concrete and steel Hjarta Condominium reports they are now over 75% sold. Per NWMLS records, Hjarta closed 25 units, just over 30% of its homes in 2011.

Hjarta is located at 1530 NW Market and is one of only two new constructed condominiums in Ballard. Hjarta’s new home prices start from $264,950.

View Hjarta condos for sale

Marselle Condominium – Lower Queen Anne / South Lake Union

The Marselle Condomium report they have sold 100 homes, or 75%, since opening, with 21 home sales in 2011. Marselle features a variety of floor plans ranging from open one-bedrooms to 2-story three-bedroom penthouses with soaring ceilings.

Marselle is located at 699 John Street in the shadow of the Space Needle…a great place to call home for those who work in downtown or South Lake Union. Home prices begin from $199,990.

View Marselle condos for sale

Danielle Condominium – Ballard

Ballard’s other new construction condominium, the Danielle, is down to its final three homes for sale — 2 one-bedroom units and a two-bedroom. Located at 5803 24th Ave NW, it’s close to Ballard’s many shops, restaurants and attractions. The remaining homes range from $219,950 to $479,950.

View Danielle condos for sale

The total dollar sales volume increased 1.9% from $103,761,956 to $105,709,480, while the average price per square foot reduced 11.9% from $774 to $682. The average home size just barely shrunk from 2,286 to 2,281 square feet.

Here’s a look at the Top Ten most expensive Seattle closed condo sales in 2011:

• Price range: $1,765,000 to $3,167,440
• Average price per square foot: $903
• Number of bedrooms: seven 2-bedrooms and three 3-bedrooms
• Average size: 2,859 square feet
• Location: Downtown Seattle & Queen Anne

Compared to 2010′s top ten Seattle condo sales, the homes were smaller and less expensive.

#1 – Fifteen Twenty-One: $3,167,440

1521 2nd Ave #3103 | Downtown Seattle – 2,658 square feet, 2 bedroom, 2.25 baths

View available Fifteen Twenty-One condos for sale

#2 – Fifteen Twenty-One: $3,134,889

1521 2nd Ave #3500 | Downtown Seattle – 2,602 square feet, 2 bedroom, 2.25 baths

View available Fifteen Twenty-One condos for sale

#3 – Fifteen Twenty-One: $3,050,000

1521 2nd Ave #3000 | Downtown Seattle – 2,602 square feet, 2 bedroom, 2.25 baths

View available Fifteen Twenty-One condos for sale

#4 – Fifteen Twenty-One: $2,990,000

1521 2nd Ave #3200 | Downtown Seattle – 2,602 square feet, 2 bedroom, 2.25 baths

View available Fifteen Twenty-One condos for sale

#5 – Millennium Tower: $2,690,000

715 2nd Ave #1501 | Downtown Seattle – 4,589 square feet, 3 bedroom, 2.25 baths

View available Millennium Tower condos for sale

#6 – Escala Condominium: $2,200,000

1920 4th Ave #2401 | Downtown Seattle – 3,562 square feet, 3 bedroom, 3.25 baths

View available Escala condos for sale

#7 – 200 West Highland: $2,100,000

200 West Highland #202 | Queen Anne – 2,406 square feet, 2 bedroom, 2 baths

View available 200 West Highland condos for sale

#8 – Millennium Tower: $1,950,000

715 2nd Ave #1902 | Downtown Seattle – 2,720 square feet, 2 bedroom, 2.25 baths

View available Millennium Tower condos for sale

#9 – Escala Condominium: $1,925,000

1920 4th Ave #2903 | Downtown Seattle – 2,442 square feet, 3 bedroom, 2.5 baths

View available Escala condos for sale

#10 – 200 West Highland: $1,765,000

200 West Highland #402 | Queen Anne – 2,406 square feet, 2 bedroom, 2 baths

View available 200 West Highland condos for sale

Expanding the list to include the top ten most expensive condos in the region last year, the list would include three Eastside condo sales:

5505 Lake Washington Blvd #2-C, Kirkland sold for $3,249,000
500 106th Ave NE #4005, Bellevue sold for $2,220,000
10700 NE 4th St #4104, Bellevue sold for $2,062,000

Source: NWMLS and King County, all sales data are in the public domain

Related story: 2010 Top Ten Most Expensive Seattle Condo Sales

Escala is one of a few high-end new construction condominium towers in the downtown Seattle area with available units for sale.

Located just north of the retail district, Escala offers a variety of spacious floor plans, upscale finishes and impeccable residential amenities including a concierge services, semi-private elevators, a restaurant quality kitchen and dining room, a wine cave with a private dining, a world-class fitness center and spa, a theatre and a wonderful outdoor terrace.

Inquire for additional information or to schedule a private tour of Escala with our condominium specialists.

–> View available Escala homes for sale

Unit #3202 at the Cosmopolitan Condominium just came on the market. It’s a spacious 1,261 square foot two-bedroom home facing Northeast with gorgeous views of Lake Union, Capitol Hill and the Cascade Mountains.

This home features penthouse level finishes in the chef’s kitchen with all you would expect, including high-end appliances and an undercounter wine cooler. Interior details include a gas fireplace, beautiful hardwoods and an open floor plan that’s great for entertaining. The home also comes with two parking spaces and two storage units, a rarity.

The Cosmopolitan is luxury condominium building in downtown Seattle with wonderful amenities including 24-hour concierge, community lounge/events room, business center, fitness center with spa, a guest suite and an expansive roof top terrace. Enjoy the convenience that living downtown can offer – shopping, fine dining, theaters, movies and more!

View more photos and details of home #3202 or inquire about private tour or for additional information.

View other Cosmopolitan condos for sale.

Listing information and photos courtesy of Matt Warmack, Keller Williams Greater Seattle.

Compared to last November, the median sales price dipped 8.92%. On the surface, that’s not good (unless you’re a buyer), however, it was the smallest YOY decline in six months and the $240,000 median sales price reflected a one-month increase of 6.9%.

The number of properties going under contract dipped from the prior month, which is normal given the seasonal slow down in November and December. Compared to last November, though, the number of pending transactions increased 21.9%. Presently, distressed properties account for nearly 57% of the pendings (41.6% short sales and 15.2% bank-owned).

The one figure that stood out was the number of closed sales, which increased an amazing 43.9% over November of last year. That’s a significant improvement and shows buyers confidence in Seattle’s condo market…or at least they’re seeing value in the current price levels. Of the closings last month, 12% were short sales, 24% were bank-owned and 64% were equity sales.

King County condo sales were even more impressive with a 69.9% increase of closed condo sales over November 2010.

Seattle’s condo inventory continued to constrict with just 824 condo units listed in the NWMLS for sale in November, a 68-month low. That reflected a one-year decline of 31.2% and a one-month reduction of 9.5%. Granted, we expect inventory to drop during the holiday season. However, the current inventory level is reminiscent of late 2006, just as the construction boom took off. While that may still seem high to some, to provide perspective, at the height of the glut there were around 1,900 units available.

The improved sales volume, combined with shrinking inventory, kept the citywide inventory supply rate (absorption rate) in a neutral, or balanced, market environment. That is, neither a seller’s market nor a buyer’s market. The supply rate varies by neighborhood and price point. Presently, inventory for in-city condos under $200,000 is fairly tight, while higher-price points and outlying neighborhoods tend to have excess inventory.

If inventory continues to drop, which it likely will through 2012 and 2013 even with the shadow inventory, we may return to pre-2006 levels by 2013…back to a seller’s market based on the current rate of sales and lack of any new projects in the pipeline.

Source: NWMLS. Some figures were not compiled or published by the Northwest Multiple Listing Service.

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Last week, FHA got a reprieve from Congress, which reinstated the higher loan limits in 42 states through 2013. For the Seattle/King County area the loan limit is back to $567,500.

Unfortunately, Congress chose not to reinstate the higher limits for conventional loans (e.g. Fannie Mae and Freddie Mac). The conventional loan limit in Seattle/King Country will remain at $506,000.

Most single family and townhomes will qualify for FHA. The higher limit means an additional 92 properties are eligible. Of the 1,709 single family and townhome properties currently for sale in Seattle today, 70.6% are available under $567,500.

Condos are a different story as the building complex will need to be approved by FHA in order for purchases in those buildings to be eligible for FHA loans. Recent changes to FHA guidelines now require condos to undergo recertification every two years, so some buildings that were once FHA approve may no longer be.

As of today, per the HUD website, 408 condominiums buildings in Seattle are FHA approved, which has increased over the past year. Overall, less than half of the condo buildings in Seattle are FHA eligible.

Of the 873 condos currently available for sale in Seattle, 35% or 307 units, are FHA approved. Throughout King County, 42% of the condos units for sale are FHA approved.

>> View FHA approved Seattle condos listed for sale. *

* Subject to buyer verification

Executives at RC Hedreen Company announced they’ve closed their 148th sale (with six sales pending in November) marking a new milestone with two-thirds sold and closed at the 229-unit, Olive 8 condominium tower.

“Olive 8 was successfully repositioned in 2011 and our sales momentum continues as buyers realize that the cost of homeownership has been greatly reduced,” says David Thyer, president of RC Hedreen Company, the developer of Olive 8. “Our construction loan is nearly paid off, home values at Olive 8 are stabilized and we saved our best inventory for last.”

Having earned 45 new sales since resetting prices up to 35% below previous list values, Olive 8 represented a significant share of Seattle condo sales in 2011. To maintain momentum, Thyer recently realigned the asking prices of all remaining homes with the selling prices of similar homes that recently closed in the building. Select home plans were further adjusted up to 8% below the most recent list prices.

“We had a strong start to 2011 and we’d like to close out the year in a similar fashion,” says Thyer.

In addition to validated market prices, Thyer confirmed HOA dues will drop 15% (from $0.54 per foot per month to just $0.47 per foot per month) given the building’s operational efficiencies shared by the hotel and from lower utility consumption within the LEED (Leadership in Energy and Environmental Design) “Silver” certified building. Additionally, Thyer confirms that 5% down-payment options are now available at Olive 8. Recent sales, appraisals and financings confirm the stabilized values and continued market performance of the development.

“Consumer confidence is returning,” he added. “It also helps that the in-city housing recovery is now more obvious when compared with the broader King County region.”’

According to a report by the Northwest Multiple Listing Service, the median home price of condominiums in downtown Seattle (Area #701) year-to-date was $392,620 as of October 31, 2011, up nearly 5% from $375,000 over the same period year-to-date in 2010. Similarly, rental rates have trended 3-5% higher in downtown Seattle neighborhoods year-to-date, according to a recent report by Dupre + Scott Apartment Advisors.

Click to view the entire press release (pdf)

>>   View Olive 8 Condos for sale

Disclosure: Olive 8 and Realogics Sotheby’s are advertisers of Seattle Condos And Lofts.