Apologies for the lack of posting yesterday. I spent all day at the Art Institute downtown with my wife, at her “portfolio day,” which marks her completion of the “Residential Design” program. If you know someone that needs an interior designer for cheap (since she’s just getting started) shoot me an email.
Moving on… If you’ve been with this blog for a while, you may recall way back in November when we compared Seattle to our neighbor to the north, Vancouver, BC. Specifically, we discussed condos, and the fact that many people feel that Seattle doesn’t have enough of them. Well, several readers sent me a link to a new story on the topic: Booming Development set to change Seattle’s look.
Despite soaring construction costs and land prices, the downtown Seattle residential pipeline is booming with new condominium projects. Forty-nine new buildings — 13 of which already are under construction — are planned to be completed by 2010.
And all those buildings mean room for thousands more residents, who will need places to get groceries and the other necessities of daily life, and perhaps send children to school.
To some, it’s an expansion that’s long past due.
Seattle is “playing catch-up” to growing cities such as Portland and Vancouver, B.C., said Dean Jones, president of Realogics, a real estate marketing company in Seattle.
…
Buildings like 1521 Second Avenue are luring people downtown. It’s the baby boomer generation, mostly — once children move out, people need less space in which to live, said panelist Kate Joncas, president of the Downtown Seattle Association. Younger professionals make up many prospective downtown buyers as well.Developers are targeting a range of incomes. New condos will cost from $300,000 to more than $2 million.
To meet demand, 10,000 new units are planned for 2010. But panelist Matthew Gardner, principal real estate analyst at Gardner Johnson in Seattle, said he expects 60 percent of that number to actually be built.
Construction costs have reached “astronomical figures,” he said, limiting development. From April 2005 to April 2006, the cost of copper tubing increased 71 percent, Sheetrock 24 percent, plastics 20 percent and concrete 12 percent, he said.
Labor costs are on the rise, and urbanization in China and post-Katrina rebuilding are sucking up the supply of building materials.
Nevertheless, housing demand is strong in downtown Seattle. Emerging neighborhoods such as Belltown, Denny Triangle and the Market District are becoming popular for downtown’s culture and proximity to businesses.
I guess I don’t really have all that much to say about all this. Maybe Seattle really is “under-condo’ed.” Maybe while the condo market in the rest of the country crashes, condos in Seattle will be boom, boom, boom. I mean, everyone I know wants nothing more than to spend between $300,000 and $2,000,000 for the privilege of owning 500 square feet in a fancy new high-rise downtown, separated from their neighbors by nothing more than a few layers of drywall and insulation. Isn’t that the American Dream™?
(Nick Eaton, Seattle P-I, 06.14.2006)
I’m planning to do just the opposite. Once the prices come down, I’m looking to buy somewhere more in the country east of the metro. The trick will be finding a place that will still allow me a modest commute to the ‘burbs for work. I’m sure there would be perks livng downtown, but I’d rather have space and quiet. I lived in apartments for 12 years. I’d rather not buy one.
Having moved from Vancouver to Seattle in the last five years, I can say that Seattle has a lot of great things going for it. The downtown area, however, is a joke compared to Vancouver. I am not going to rant about the lameness of downtown and the reasons for it, but if Seattle is going to have any chance of making things better, it needs a critical mass of downtown residents. And for #@$%’s sake, bury that Viaduct while you have a chance!
This article raises the issue that the cost of building is going up very fast here and everywhere due to rising building materials costs and rising labor costs. I’ve been thinking about this recently because I may want to build a house in a few years instead of buying an existing one.
So the question is: if the housing bubble busts and we get a housing downturn in the PNW (and maybe also a national recession) – what will happen with the cost of building a house vs buying an existing house? Also, what will happen to the price of land (if you can find any)?
I would think that if we get a recession, particularly a global recession led by a downturn in US consumption, that demand for building materials would decrease and prices would have to fall when fewer construction projects are started. I would think the same thing would happen to land although I don’t know whether land would fall less or more than existing house values. I would also think that labor costs might fall some with less work available.
I’m curious if others have any insight?s
Hawaii is already slowing down in a big way. Land inventory has soared and prices fallen a lot. For example, one acre houselot sold for 12k in Aug 2004, 35k in Feb 2005, 72k in Sept 2005, 45k now. I am visiting Seattle, and this is the most overpriced market I am watching. Either people here are in denial beyond belief or it really is different here. We’ll see.
easthawaii,
Where in hula land can someone find 1 acre for $45K? A relative just sold 1/4 acre lot w/3br house for 40% more than she purchased it for just a few years ago in East Oahu and we’re not talkin’ a measly $45k price point (note: value in land, house is teardown). But, had it sold a year ago, she would have realized a 100% gain. I am aware that Hawaii’s prices have been tanking of late, but it always cycles up and down by large margins.
Brings up an interesting point. Is the bubble half empty or half full. From 1 year ago, sure, prices dropped significantly. Call it a crash if you want. On the other hand, she realized a 40% gain on investment. I think the same can be said about Seattle’s market as well.
ex-canuck…I’ll be the first to say Seattle can’t match the West End. One important element the West End has are families and schools. From the article, it doesn’t sound like that’s going to happen here. Also, weren’t most of the land by False Creek owned by the city and sold to developers rather inexpensively to facilitate building those highrises? But, at least our buildings will start looking like Vancouver’s since a number of them will be built by Vancouver developers.
What I’d like to know is how we’re expected to sustain this growth. Sure there are schools planned, but who’s gonna raise more than 1 kid downtown? When the cheaper places are going for 630 a sqft… let me tell ya, getting that third bedroom doesn’t look pretty.
I am just happy I bought into this crazy market when I did.
By the way, most of us Vancouverites have an affinity for Seattle… it’s like our sister!
Realistic Realtor,
Acres for sale at 45k in Leilani Estates and elsewhere on the Big Island, Hilo side. Yes, if you paid 12k, that’s still a nice profit. The house market hasn’t fallen as much, but very little is selling and inventory is piling up. Only one house in my subdivision has sold in 2006, while six houses are for sale. If 3 sell this year, we’ve still got a 2 year supply. Of the six, two are vacant (one is spec and the other resident died).
I am probably totally wrong, but Vancouver doesn’t have cool little neighborhoods like Cap. Hill, Fremont, Wallingford, Ballard (*sigh* yes, even ballard has some coolness…), West Seattle, etc and etc.
I agree that Vancouver has a lot more condos, but did you notice they all look alike?
Man, I can’t WAIT to get back up to Vancouver so I can go to Robson Street! :P
For the record, there is no way those condos will be built. At least not until the next RE up cycle.
Just because you and your friends don’t want to live in a downtown condo doesn’t mean it’s crazy or foolish. Personally I think it is nuts to live in some soul-less, ugly suburban box where you and all the other fat-asses drive everywhere, using up what little oil we have left and spewing poison into the air, helping to kill us all off.
cite,
FYI, I ride an electrically-assisted bicycle to work and many other places, and I’m in great shape. Also, I never said that wanting a condo was crazy or foolish. Chill out, dude.
synthetik said…
For the record, there is no way those condos will be built. At least not until the next RE up cycle.
Unfortunately, I agree. Seattle is too far into the current cycle to support this many new units. If these had broken ground in 2003 this would be a different story. However, it looks like the majority of these units are going to be (or would have been) on the market at about the time when everyone believes that RE is an underperforming asset.
I think it’s really unfortunate since this type of urban density is exactly what is needed to revitalize downtown and provide an attractive alternative to commuting.
It is too bad seattle started with this too late. we do need increased density in this city.
Maybe the Home builders will use seattle as their “last chance stop” and keep building here right through the bitter end?
we can only hope.
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[...] that supply will not be able to keep up with demand in the near future (10 years). Consider the 6,000 to 10,000 new condos that will hit downtown by 2010. Drive just a few minutes out of Seattle proper, and consider the dozens and dozens of [...]
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[...] an interesting comparison. First, this graphic, posted here in June 2006, from a Seattle P-I article titled Booming development set to change Seattle’s [...]