The Seattle Condo Blog | Seattle Condos and Lofts

Vulcan Real Estate and Williams Marketing hosting a preview event last night for Vulcan’s upscale South Lake Union development, Enso Condominium (website: www.ensoliving.com).

I’ve been anticipating the completion of this project, which is one of my favorites, and it did not disappoint. The craftsmanship and quality of finishes met expectations. With its aggression pricing, Enso fits into the the mid-level luxury niche nicely.

I noticed that one structure apparently disappeared. Early in the design phase the little triangular lot at the corner of Denny and Westlake was supposed to be a wine bar lounge. It’s now a small park.

View available Enso Condos for Sale.

Matt has a lot more photos and videos on his blog.

The condo marketers version of musical chairs continues to go around as Williams Marketing takes over sales of Enso, and as of today, Veer Lofts.   It had been rumored that Vulcan was considering handling sales in-house after the contract with John L. Scott expires this month.   The Williams Marketing website also indicates they’ve taken over sales at The Pittsburgh.

Williams Marketing recently relinquished marketing and sales operations at Brix, Olive 8 and The Danielle.

Veer Lofts just announced special pricing on five homes for a limited time. Three of the units are top floor full-loft units while the other two are a flat and a flexi-loft unit.

The current pricing is available for homes that are purchased by July 1, 2009. In addition, Veer Lofts is providing a $500 California Closets credit and are waiving HOA dues till November 2010.

#317 – $270,000 flat, approximately 615 sq ft, previously offered at $275,000
#403 – $280,000 flexi-loft, approximately 635 sq ft, previously offered at $295,000
#606 – $465,000 full-loft, approximately 1,130 sq ft, previously offered at $485,000
#607 – $440,000 full-loft, approximately 957 sq ft, previously offered at $475,000
#617 – $395,000 full-loft, approximately 906 sq ft, previously offered at $399,000

View available Veer Loft homes for sale.

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.

Enso just announced special “pre-opening” pricing on several units to entice potential buyers. All of the units are either one-bedroom or one-bedroom plus den that are now being offered between $350,000 to $499,000. With the homes ranging in size from 687 to 979 square feet, that’s around $500 per square foot. The pricing is available to purchases under contract by May 22, 2009.

#504 – $350,000
#1004 – $375,000
#1304 – $385,000
#710 – $435,000
#910 – $445,000
#1310 – $474,000
#1009 – $485,000
#1309 – $499,000

Additionally, Vulcan is offering a few other incentives – up to $8,500 in closing costs, no homeowner dues until December 2010 and will donate $500 to a SLU non-profit organization in the buyer’s name.

Vulcan sent an update letter to Enso buyers a few days ago notifying them about the special incentive they’re implementing in order to facilitate more sales. My guess is that Enso will need to conform to FNMA’s 70% presold requirement and this is a push to get them there. Vulcan did reiterate its commitment to its top-tier condo development and is aiming for the temporary certificate of occupancy by May 25th.

View available Enso condos for sale.

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.

[youtube:http://www.youtube.com/watch?v=-1Q7B6_JXOA]

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