September ’08 condo market update
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.
It seems like the Seattle condo market is still doing better then most other cities. In Tucson we have still seen 20+% price declines year over year. Seattle also has a much more diverse economy then most cities across the US and that should help ease things if the economy keeps with the trends of the past month.
I agree that the condo market here is stronger than Tucson. But I also think that each of these amazing buildings will remain at 50-75% occupancy for some time. How many people want to lay down 400K for 700sq ft when they can get a town home that is close to 2000 sq ft in Fremont or Wallingford. Again I agree that there are some amazing projects all over the place but I see a steep decline in the ability for consumers to lay down that kind of money for a small condo. I am certian that there will be some severe discounts after the beginning of the year as builders and banks NEED to get these assets moved from their books. Also because of our strong Seattle economy, the Northwest is always one of the last economies to recieve the brunt of an economic downturn, believe me, we are seeing it in banking, we will see it in the condo market and I plan on getting a very good deal on a moderatly priced loft in one of those buildings and riding out the storm. My recommendation, get a good real estate agent, a strong lender, and play hard ball. If you pay full price for anything you will be digging yourself out of a hole for at least five years. And dont pay anything more than 475/sq ft!!!
question for “bob the banker”
I am curious what building you are considering purchasing in.
how did you come up with 475/sqft as a floor for pricing?
and what do think of olive8 ( I have a reservation there at roughly 500/sqft )?
Condoboy, you have a reservation at Olive8? Or, do you mean a Purchase and Sale Agreement?
Also, Bob the Banker is “spot on.” You’re going to see these buildings with significantly lower occupation levels than what the developers may want consumers to believe.
Yeah, I would definitely call that a bad month. Unfortunately, though, it is going to get even worse. A lot of people are speculating the election (contingent Obama wins) will bring with it a new economy and everything will fix itself in a relatively short time. The problem, however, is a global economic meltdown. So, this is well out of the reach of any one man or administration fixing. Believe it or not, the TRUE economy is much worse than what even we see today. The current administration is doing its best to “keep it together” until after the elections are finished, meaning we are currently experiencing an artificially BETTER economy than what it actually is. So, my prediction is that after the new year begins, we are going to witness even more layoffs across the board with a significant reduction in home values following a few months later. This isn’t a “hick up” as most real estate agents would want prospective buyers to think. Its going to take a few years to recover.
technically I have p&s, with a deposit, I just meant I have not closed yet, and could still walk away ( loosing the 5%… ouch ) and I am trying to gauge the point at which it would make sense to do so. I bought/reserved on the first day they were available, and got a great price( just shy of $470 sqft ), but the the price is becoming less great day by day. I am not buying as an investment, but I dont want to pay twice what a rental costs on a depreciating asset. any thoughts anybody?
at a price like that you’ll be able to rent it out and come close to your mortgage
olivian across the street will rent at about $3 PSF
Condoboy, at $470/square foot, I would say that is a FAIR price. It isn’t terrific, but it certainly isn’t terrible. If you bought into Olive8 on the first day, and you aren’t looking to flip the condo, then I would say stick with it. You’re not going to make a gain much, but you also get to take advantage of the mortgage interest expense as a tax write off each year. Also, your HODs can be written off as well, depending on circumstances. That’s a HUGE bonus to owning. Can I ask which unit, which floor? That can also dictate whether or not I would back out as views are going away in that building on the East and South.
condoboy, i think $470/per ft is a great deal. those prices are alot better than what some units are trying to sell for (ie. $700+/psf) in the building. i say you got a nice cushion if condo prices continue to fall. there are a number of condos in seattle like olive 8, such as 1521, cristalla, etc that average $700-900.
MD- when you say the south view will be blocked, are you reffering to the building proposed at 8th and pine (where the old building was demolished ) or ava or both. because even with those two buildings a large southern view “corridor” will still exist. Unless they tear down and build a new highrise where the paramount hotel sits, I will be fairly happy with my view ( it wont be a million dollar view, but still ok )
Quite honestly, looking closer, even if your view were blocked, I would still stay in at $470/square foot. That’s a pretty good deal in downtown Seattle at a nice building with hotel underneath. Even with the prices tanking, I doubt you would lose anything at that price. I say WAY TO GO!
I am scratching my head wondering how you were able to swing $470/square foot in that building, even if you were one of the first to buy. Most starting prices in that building on the South side the day of opening were starting about $570/square foot on the LOW side.
remember that every floor you go up, the price goes up anywhere from 10k to 20k
if you end up having second thoughts, i’d take it from you at that price.
Wow, Seattle’s numbers are great in comparison with ours here in the Phoenix area. I wish our year over year decrease was around 6%. Although the steeper decline has definitely brought investors back into the mix.