Seattle Bubble

Apparently Puyallup is not alone outside of Seattle in its ability to attract ridiculously lavish condominiums. "Luxury condos" are popping up in all kinds of outlying Seattle neighborhoods:

Luxury condominiums, some priced up to $2 million, are springing up in such unlikely locations as Edmonds and Ruston as developers look to attract empty nesters in search of low-maintenance living.

These are no Belltown boxes, either. The spate of new luxury condo developments boasts spacious units averaging about 2,600 square feet and amenities such as pools, theaters, guest suites, conference centers and multiple parking spaces.
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Developers of such projects have their sights set on aging baby boomers who are more active than their parents’ generation, who appreciate the amenities and ease of condo living but aren’t willing to downsize to a traditionally sized unit.

Most important, many have amassed large amounts of equity in homes bought decades earlier.
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"The more sophisticated the urban environment, the more likely you’re going to see that kind of price point [$1 million]," he said. "We’re getting there in Seattle, no doubt about it.

"Would I expect to see more units priced around a million dollars? Yes. In the last 20 years, with the equity we’ve built up in our single-family houses, a million dollars is really not a lot anymore."

Plus, thanks to the power of appreciation, the $1,000,000 condo is guaranteed to make these smart investors even wealthier as the years go on. But seriously, I guess if you’ve got the money and that’s the way you want to spend it—hey, more power to you. I do wonder what is going to come of these developments if the air comes out of Seattle’s bubble before they’re completed…

(Deborah Bach, Seattle P-I, 03.22.2006)

My coworker that is selling his Northgate-area house still hasn’t had any luck. In fact, the home that he originally listed at ~$475,000, then dropped to ~$450,000, has had the price reduced again to ~$425,000. Furthermore, it now shows up as a "new listing," listed in the past seven days. Hmm, interesting.

Also, I just had the pleasure to listen in on a conversation between a few coworkers regarding housing appreciation around Seattle. For reference, these are generally intelligent people (engineers) that do not have any particular "in" regarding real estate. Here are some of the quotes that I was quick enough to type:

"I think in some areas (around the country), the bubble is popping, but I don’t think you’re going to see a lot of it around here (Seattle area)."

"Microsoft is here forever."

"There’s nowhere else to build."

To coworker: "I could see your neighborhood leveling off…maybe. But probably not."

"I think we’re not going to see the kind of gains we’ve seen over the last two years… but I don’t think we’re going to go down in price. … I think mine (neighborhood) is going to continue to go up."

It is interesting to hear what average people think about whether there’s a bubble or not. Perhaps in the future I can "seed" some conversations to get a regular pulse on general real estate sentiment.

Some parts of the market in the greater Seattle area may be slowing down, but nobody told the condo developers in Puyallup:

After several years of public investment in downtown Puyallup, private money is now pouring into multilevel condominiums around Pioneer Park.

It appears to be money well spent. Some units are expected to sell for around $500,000.

"When we started, we were not predicting prices that high," condo developer Bill Schuur said. "It’s clear that there’s a strong housing market in downtown Puyallup."

In recent years, Puyallup has brought pedestrians and shoppers back downtown with its new library, farmers market and businesses that have replaced empty storefronts. But some say a sure sign of downtown revitalization is when people choose to live there.

"Seattle, Bellevue, Tacoma – everybody is moving downtown," said Tony Benson, 52, who was having early dinner with his wife, Julie, at a picnic table at Pioneer Park on a recent afternoon. "That’s the way to the future."
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Developers say the demand shows no sign of abating.

"Our experience in marketing Pioneer Park Condominiums tells us, anecdotally, that demand will continue to increase, and prices will rise steadily," Cochrane said.

Demand never decreases, and prices never decline. Nope. Not ever.

(Eijiro Kawada, Tacoma News Tribune, 03.23.2006)

Apartment to Condo conversions made the front page of today’s Seattle P-I in a story titled City’s renters lose out as condo switch soars.

Thousands of Seattle renters have been displaced as developers turn to apartment buildings to meet strong appetite for in-city homes. Apartment-to-condominium conversions in Seattle have skyrocketed, from 345 in 2004 to 1,551 last year.

Yet, compared with some other areas with hot housing markets, Washington state law gives tenants far less time to vacate their apartments. Relocation assistance for low-income residents displaced by condo conversions is set at $500.
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For the first time last year, the region also lost more apartments than were built, according to Dupre + Scott Apartment Advisors. Though that trend should change as the market adjusts, it’s stoking concerns about Seattle’s supply of moderately priced housing.
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Condo conversions can offer relatively affordable options for those looking to buy, with most units in her building expected to sell for between $240,000 and $370,000. That’s cheaper than many of the neighborhood’s single-family homes or new downtown condos.

"There’s a true, true problem with affordable housing in this city," said Robert Hardy, a developer who’s undertaken six condo conversions, including the Arboretum View Apartments where Orso lives. "I’m one of the only guys around that’s creating any supply of affordable new condos, and that’s pretty scary."

But the wave is also displacing thousands of renters who can’t afford those prices, with some longtime tenants facing distressingly abrupt evictions.

What’s scary to me is that $240,000 is considered an "affordable" condo. Attention: Common Sense has left the building.

(Jennifer Langston, Seattle P-I, 03.20.2006)

It’s getting more and more expensive—twice as fast as the national average—to live around the Puget Sound:

Consumer prices in the Puget Sound area increased 1.3 percent over January and February – almost double the rate of inflation nationally.

Housing prices, up 2.4 percent, led the increases in the Tacoma-Bremerton-Seattle area, the Labor Department reported Thursday. Grocery prices were up 1 percent in the two-month period, while alcoholic beverages poured a 3 percent increase.

If only our wages were going up twice as fast as the national average, too. Heck, I think we’d be in okay shape if our wages were going up at all.

(News Tribune Staff, Tacoma News Tribune, 03.17.2006)

Most of the stories I post on here are about trends and big-picture type things, but it’s good once in a while to look at individual examples of how the housing craze is affecting people and places around the Puget Sound. In that vein, here’s a story about “downtown Everett’s biggest apartment building,” its impending sale and likely conversion into condos.

In Mastro Properties’ sales flier about the Nautica, it boasts that the complex is “ready for conversion to condos.” All around the Puget Sound area, apartment complexes are being bought and transformed into condo blocks to meet demand for such housing.

“Developing condos from the ground up on raw land is becoming a very risky proposition for most developers. So the alternative is looking at apartments that are already constructed … and convert what is here,” Hoban said.

Living at the whim of the property owner is certainly one of the downsides of renting, but for my money it’s still better than being a slave to a ridiculously high mortgage.

(Eric Fetters, Everett Herald, 03.16.2006)