The Seattle Condo Blog

Veer Lofts, located in Seattle’s South Lake Union district, has reduced prices and is offering a limited time $8,000 seller credit on any purchases before December 1, 2009. It is timed with the November 30th expiration of the First Time Home Buyers Tax Credit. For purchases that close by November 30th, buyers will effectively receive $16,000 in savings ($8,000 seller credit and $8,000 tax credit).

Veer Lofts offer three styles of home layouts: flats, full 16′ two-level lofts and a hybrid flexi-loft layout. Flats start from $259,500, Flexi’s from $282,500 and the full-lofts from $379,500.

Website: www.veerlofts.com

It had been anticipated given the low pre-sales rate that Rollin Street Flats would convert to apartments, especially in light of the new Fannie Mae condo guidelines. Here’s an excerpt of the letter that was sent to pre-sale buyers:

Unfortunately, pre-sales at Rollin Street are at approximately 25%, which is below the 50 – 70% threshold Fannie Mae and most mortgage lenders require for buyers to obtain financing.

Market conditions tell us we will not achieve the required minimum 50% pre?sales in a short timeframe.

As a result, we have decided to convert Rollin Street into a rental apartment building. We will refund your earnest money deposit (currently safely held in an escrowaccount) and any deposits you made for upgrade finish options.

We had expected to be able to communicate this decision earlier, but the process of getting permission from our construction lender took much longer than we had hoped.

Additionally, they are offering a credit to Rollin Street pre-sale buyers at Vulcan’s two other SLU properties – Veer Lofts and Enso.

We appreciate the commitment that you have made to the South Lake Union neighborhood.

Recognizing this, we will offer you a credit to apply toward a purchase at either Enso or Veer Lofts–our other two condominium projects in South Lake Union. You are also eligible for a lease credit to apply toward renting a home at Rollin Street.

I actually see this as good news for the condo market. The immediate effect is the reduction of 200+ condo units from the downtown market, which is significant, and should benefit existing properties (e.g. 2200, Cosmopolitan) as well as soon to be delivered properties (e.g. Enso, Escala, Alex, Olive 8). After 2009, there will be no new condo units delivered in the downtown area until 2012 at the earliest, providing much needed time to for the market to absorb the inventory and stabilize.

So what about the prospects of the other developments that’ll be delivered this year. I believe two are on thin ice – Marselle and Danielle -and both could do well as apartments. Currently, Schnizter is adamant that Equinox will remain condos, but given the poor sales activity at all three of their Seattle projects (Brix and Gallery being the other two), it’s hard to fathom they can keep all three as near empty condo buildings. On the other hand, we’re seeing a glut of new apartments complexes in the downtown area (Olivian, Aspira, Rollin Street, Taylor 28, Axis, Hyatt Place, Moda) so there will be stiff competition for any new entrants into the rental market.

DISCLAIMER: This information is presented to provide an overview of Fannie Mae’s condo guideline changes. For specific information and questions, please consult with your mortgage loan officer.

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.

Veer Lofts has adjusted prices of its full-loft homes located on the 1st and top floors. The full-loft homes have 16′ ceiling heights with either private patios or decks.

The first floor lofts that include interior as well as street-side entrances now start in the very low $400,000s while the top floor homes, depending on floor plan, now begin in the high-$400,000s to low-$500,000s.

The flexi-loft prices were not adjusted though I’m sure they’ll be flexible with those units as well.

www.VeerLofts.com

Vulcan hosted a hard hat tour of Rollin Street Flats today, which provided a first glimpse of the project. Overall, the build quality and finishes met expectations, definitely an upgrade over Veer Lofts.

Based on the model unit at the Discovery Center and marketing materials I was anticipating the homes would be a bit more refined with large open layouts. With the exception of the two-bedrooms, the layouts were not too dissimilar from other recently completed condo developments. To me, the layout as well as the sterility of the exposed concrete walls and ceilings were quite reminiscent of Mosler Lofts. The decks seemed a bit too narrow, probably wide enough for potted plants and a bistro set, but not much else. The “shotgun” units on the alley side don’t seem receive a lot of ambient daylight, mostly due to the depth of the units, something to keep in mind if you like bright and airy living spaces.

Rollin Street’s common areas are impressive. On the lower level there’s fitness center and a full-sized basketball court that also serves as a volleyball and badminton court (Update: BB court is not regulation, it’s 24 x 80 ft with hoops on both ends). The second floor houses a huge community room and a large landscaped terrace that incorporates a fireplace feature and BBQ area. A second outside terrace is located on the penthouse level. One unique design feature that Vulcan included are the elevator lobbies on each level with floor-to-ceiling windows providing Westerly views. Upon arriving home and exiting the elevator the first thing you’ll see is the Space Needle.

One feature I wasn’t aware of is that every home at Rollin is air-conditioned, pretty sweet. Dues run about 52 cents per square foot, which on first glance seems high. But, it covers nearly everything except electricity, so it’s quite reasonable.

Currently, Rollin Street is approximately 35% sold. They aren’t offering any incentives at this time (Vulcan is probably the one developer who can weather the downturn). Interestingly, they are using the low sales rate as an inducement. The development won’t be turned over to the association until it’s 75% sold, therefore, owners will not have to pay HOA dues in the interim (Vulcan covers in the meantime). So, they say, if you buy today you likely won’t have to pay any HOA dues for another 9 months. A nice way of saying they aren’t expecting to reach the 75% sold rate until well into 2009. And, no, they are not considering converting to apartments.

No word yet on the commercial/retail tenants slated for the building, other than for a high-end home furnishing store.

Unfortunately, Vulcan is the only developer to prohibit photography so no photos to share.

The Seattle DPD is hosting a South Lake Union Urban Form Scoping meeting to provide information about the South Lake Union Urban Form Study and EIS process and to take public comment on the rezone alternatives that the City will study in the EIS and to identify areas of potential impact that should be studied. More info.

Wednesday, November 19, 2008
5:30 – 7:30 p.m.
South Lake Union Armory
Naval Reserve Building at Lake Union Park
860 Terry Ave. N
*This venue is accessible, please contact us for special accommodations

Veer Lofts (www.veerlofts.com), Vulcan’s first South Lake Union condominium/loft project to complete (technically the 2200 is not in SLU) received its temporary certificate of occupancy recently, and first move-in is expected shortly.

With Veer, Vulcan seeks to emulate a trendy industrial loft feel with open spaces accented with heavy timber beams, concrete and metal. The six-story building contains 99 homes with three distinct home plans – flats, lofts with a flexible space and two-level full lofts.

Prior to the TCO, our only glimpse of Veer was through the rather limited kitchen vignette at the SLU Discovery Center. And, honestly that single vignette provided an underwhelming impression of Veer, especially when compared to Vulcan’s other under-construction projects – Enso & Rollin Street.

I had the opportunity to tour Veer this week and I must say that it exceeded my expectations; partly because the finish materials are higher quality than originally sampled. And, also because the interior layouts exhibit an efficient use of space. Though, there were a couple of odd quirks. The in-unit exposed sprinkler pipes were not symmetrically installed. There may be a building code reason for this, but visually it was distracting. And, in the common stairwells, the sprinkler pipes hang below the ceiling decreasing overhead clearance, which is only an issue if you’re hauling large items up and down the stairs. At least in two flexi-lofts units I toured, the access point to the loft area was hindered by the ceiling beams that effectively decreased the height of the opening. I’d be hard press to visualize the flexi-loft space as anything other than storage. But, that’s fine. There’s more than ample living space on the main level.

Inside, the light colored concrete floors on the main level and over-sized windows provided more than ample ambient light. In the flats, a 3/4 height kitchen wall allows light to pass through to the sleeping alcove. The top-level full-loft homes are impressive with its soaring 16′ ceiling height, multiple decks and territorial city views. Curiously though, to access the private outdoor space (top-floor units) you’ll need to step out through a window opening, which is smaller than shown in renderings.

Veer Lofts has a number of units available offering an excellent array of home options, primarily flexi and full-lofts. There is only one flat still available, unit #207 that’s being offered at $404,950. This is a 751 square foot unit with windows on three sides offering views of downtown and Lake Union.

The flexi-lofts, located on the 4th and 5th floors, range in size from approximately 600 to 740 square feet and are being offered between the upper-$300,000s and upper-$400,000s. One note about the flexi’s, the stated square footage does not include the loft space, which would add an additional 250 to 350 square feet. The full-lofts, located on the 1st and 6th (top) floor, range in size from approximately 807 to 1,073 square feet. The 1st floor homes start from the upper-$400,000s while the top floor homes begin in the mid-$500,000s.

An on-site sales office and staged model homes will open to the public beginning Thursday, October 9th. The sales office hours are 11:00 AM to 6:00 PM.

Veer Lofts Versus …

Three other recently completed new construction developments provide homes with similar layouts to Veer. These include Madison Lofts, Gallery and Mosler Lofts. Here’s my impression on how they compare to Veer.

Madison Lofts
Madison Lofts is a much smaller building with only 20 loft homes compared to the much larger 99-unit Veer. All of Madison Lofts’ homes are multi-level full-lofts with 16′ ceiling height, on-par with Veer’s full-lofts. Homes at Madison Lofts essentially start from the upper-$400,000s, though two larger units with expansive outdoor space begin at just under $1 million.

With a few exceptions, the interior layout and square footage between the two projects are quite similar. But, Madison Lofts scores more points for better construction (concrete/steel vs. wood frame), a more polished interior with better quality finishes and more usable, larger exterior spaces. Veer gains points for its central location, in the middle of the yet to be fully realized SLU district and close to downtown. Madison Lofts, on the other hand, is tucked way next to the arboretum, a good 15-20 minutes from downtown.

Gallery Townhomes
The Gallery condominium in Belltown is in the final stages of completion with residents already moving-in. At one point Gallery offered “SkyLofts”, two-level loft units on the upper floors, but eventually replaced those with single-level flats. Fortunately, for those interested in loft living, Gallery did retain its ground floor loft-styled townhomes. Though, these are aimed towards a different demographic and are larger, ranging in size from 1,000 to 1,195 square feet. They’re also priced quite a bit higher, between $622,000 and $740,300.

Gallery is a concrete and steel building located within the established Belltown neighborhood, so it has an edge over Veer in that respect. With its refined interiors, it lacks the urban industrial character of Veer and Mosler. Gallery offers a greater variety of home options which will appeal to a more diverse homeowner base as well.

Mosler Lofts Townhomes
The concrete and steel constructed Mosler Lofts, also located in Belltown, offers similar ground floor loft-style townhome units. Mosler has a more industrial aesthetic compared to Veer, with exposed concrete walls and ceilings and exposed HVAC ducts, but does have higher quality finishes and more common amenities.

Presently, only one of the five loft-townhomes is available. It’s a 962 square foot home offered at $579,000, which competes directly with Veer’s top-floor lofts. Although, Mosler has a superior build quality, more amenities and located in an established area, on price, a top-level Veer unit is a compelling option. Veer’s top-floor lofts offer city or lake views, private decks and a greater sense of security.

Veer Lofts is located in Seattle’s most aggressive urban renewal and reinvention projects, South Lake Union. Led by Paul Allen’s vision, SLU is actually an amalgamation of numerous entities that represent diverse interests – educational and research institutions, market-rate and low-income residential development as well as commercial/office developments. Local companies setting-up shop in SLU include Group Health, UW Medicine, Rosetta, Tommy Bahama, Amazon, Microsoft, Weber Thompson and NBBJ. Additionally, Microsoft is expected to be the principal tenant of the 2201 Westlake office building (Enso).

Rollin Street Flats is an upscale condominium in South Lake Union. Links: Our review and Rollin Street website

Enso is a luxury condominium in the South Lake Union district. Links: Our review and Enso website

South Lake Union and the Seattle Humane Society will be celebrating the 10th annual Take Your Dog To Work Day on Friday, June 20th at the SLU Discovery Center (corner of Westlake & Denny).

The Seattle Humane Society’s mobile adoption center, the MaxMobile (pictured), will be at the Discovery Center from 11:30 am to 2:30 pm. If you’ve been contemplating adopting a dog, cat or rabbit, then drop on by.

Additionally, a week-long pet food drive benefiting the Humane Society’s Pet Food Bank is currently underway at locations throughout SLU. You can also make pet food donations at the Discovery Center. Dry cat food is the most requested item at the food bank.