Our local condo enthusiast Matt made a post this morning pointing out an interesting sign of slowing:
For a limited-time, Queen Anne High School is offering a $5,000 BUYER BONUS on all homes under $400,000*!
With its close-to-downtown location, Seattle’s perma-hot real estate market, and all the free fawning press that this project got when it opened last month, you would think it would have sold out in record time.
Of course, I’m sure the local real estate cheerleaders would be more than happy to provide me with a plethora of perfectly rational-sounding explanations about the slow time of year, undesirable floorplans, and a “return to normal” for the market. Still though, does anyone doubt that this would have sold out in a week had it opened in September 2004 or 2005?
I’m just sayin’…
(Matt Goyer, Urbnlivn, 10.31.2006)
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31 responses so far ↓
1
Lake Hills Renter
// Oct 31, 2006 at 9:55 am
Do you get your own locker?
2
Matt
// Oct 31, 2006 at 10:51 am
No, but some units have their own blackboards :).
3
plymster
// Oct 31, 2006 at 10:53 am
Don’t forget, Realtors have been on vacation (and judging by rising inventory still are). The buyers are all out there; they’re just waiting for their Realtors to get back.
Also, Queen Anne Hill is not very desireable when compared to the 6-7 blocks of Seattle that are selling at above asking price. Plus they’re near the Queen Anne radio towers (prime terror targets), near an electrical station (cancer), and Olympia Pizza House (heart disease).
Then there’s the problem of the negative housing press that’s been dragging down the market. Why does the media hate real estate so much?
Another problem is the floorplans. Not only are they crappy, they are also way too big for the childless professionals and empty-nesters. 526-1432 sf? MODA sold like hotcakes with <200 sf studios for a reason. Why, oh why do condo developers keep building these Condo McBoxes way too large?
Clearly, this project has so many problems with it. It’s no wonder they’re having to practically give away the subteranean studios at just over a 6 times the county-wide median salary.
4
Matthew
// Oct 31, 2006 at 11:23 am
looking at the most recent FATREPORT, (which is very interesting BTW I suggest anyone interested in condos sold in Seattle google it) it appears the the Queen Anne Highschool condos have only sold 53 out of 137 condos so far.
Hmmm…… Intersting!
5
Matthew
// Oct 31, 2006 at 11:48 am
BTW, housingtracker.net stats are out for 10/30/06 and it looks like we will see a 3.6 percent increase in inventory from September - October of this year.
6
Grivetti
// Oct 31, 2006 at 12:28 pm
There’s high school classy: Old-school chalkboards and original classroom floors in some units. And then there’s classy-classy: Granite, stainless steel and tile, all standard condo accoutrements,
chalkboards? classrooms? Geezus, who thought this was a good idea?
Er… no thanks, I’ll pass on that one. I don’t want detention hall to cost me 3K/month in mortgage and condo fees thank you..
7
meshugy
// Oct 31, 2006 at 12:30 pm
BTW, housingtracker.net stats are out for 10/30/06 and it looks like we will see a 3.6 percent increase in inventory from September - October of this year.
Although it’s now trending downward…my own tracking of various Seattle areas shows that inventory dropped in many areas this month. Especially the last week…it’s really dropping pretty fast now.
No surprise really, that’s pretty normal this time of year.
8
LoneLibertarian
// Oct 31, 2006 at 12:45 pm
Inventory trends down during the winter, this is true. Winter is not homebuying season.
The truth will be told starting next year when the seattle area ARM’s start readjusting.
I’m willing to bet that there will be a glut of homes dumped on the market at the that time.
Next spring will be another HOT real estate market as homeowners get burned.
9
Matthew
// Oct 31, 2006 at 1:12 pm
Although it’s now trending downward…my own tracking of various Seattle areas shows that inventory dropped in many areas this month. Especially the last week…it’s really dropping pretty fast now.
SHUG- what is “YOUR OWN TRACKING”? Does that consist of a daily “drive-by” of a few houses for sale in Ballard??? I’ll take the data on housingtracker vs. the Meshugy Inventory report, thanks.
10
Matthew
// Oct 31, 2006 at 1:14 pm
I realize that inventory traditionally is down for this time of year, that is why the data on housingtracker.net is even more powerful…
11
Richard
// Oct 31, 2006 at 1:17 pm
What I find surprising is the amount of new construction still underway. I was on Holman road this weekend and spotted yet another foundation being laid for a multi-unit.
This is lot was separate from another 4 developments in a 2 mile stretch.
12
synthetik
// Oct 31, 2006 at 1:28 pm
plymster, you are the best.
13
redmondjp
// Oct 31, 2006 at 1:34 pm
The REAL question that I haven’t seen anybody ask yet–what did they do to this 1909 building (if anything) in order to make it withstand the next Big One, coming some day soon (in geologic time) to the Puget Sound?
This building has survived a few less-severe earthquakes, with some damage, as noted here
Anybody know if you can get earthquake insurance on one of these condos?
14
Ardell DellaLoggia
// Oct 31, 2006 at 1:45 pm
Next one will be First Church of Christ Scientist, a landmark building in Capitol Hill.
I visited the Queen Anne High School when it opened, and actually, most of the better units were sold to pre-registered buyers and alumni before the public was even allowed to view it.
Just because a builder offers incentives to get rid of the tail end/worst of the pack, does not mean the whole project was sluggish. Lots of presales in there.
Same as Waterview here in Kirkland. All the best ones, more than half, sold out in 7-14 days. If the last five have builder incentives because they are the underground condos…no reflection on the market.
You have to evaluate the trees before you condemn the forest. When the best doesn’t sell, that spells trouble. When the worst doesn’t sell…?
As to Realtors being on vacation…need a few days for 10/31 sales to register. But I am getting the impression that a whole lot more homes are coming on market in October, than I recall in year’s past. So far that’s where I’m seeing the increased inventory coming from.
My call is there were more closings from September sales than August sales, and October, November and December buying decisions (going into escrow) will be down by the same rate they are every 4th quarter. I’ll post the on RCG by this weekend.
But if y’all want to celebrate the 4th quarter being lower than the 2nd and 3rd quarters…as it is EVERY year…have at it. I’ll try not to rain on your parade with the facts.
15
Comrade Chairman Greenspan
// Oct 31, 2006 at 1:48 pm
My ins. co. (State Farm) gives me earthquake insurance provided my apt. building doesn’t have underground parking.
16
The Tim
// Oct 31, 2006 at 2:09 pm
Ardell, I honestly have no idea what you are talking about. No one here is comparing the fourth quarter to the first three quarters. Any time that numbers are quoted around here, it’s all YOY.
17
wreckingbull
// Oct 31, 2006 at 2:19 pm
You know, this QA Condo story brings up an interesting point in my mind.
It seems in a rising market, this ‘Buy now, move in way later’ model seems to work well. The buyer sits with a nice cozy feeling in their gut that their condo will be worth more than the contract price.
Now that the Bulls are out to pasture, is this going to be a monkey wrench in the business model of Condo pre-sales?
Is someone really going to put down a good-sized deposit for something which is not move-in ready for 18 months? Where will the market be in 18 months? What if only 60% of the units have sold in 18 months?
Ardell, perhaps you can answer this question: What would happen if only 60% of a condo sold by move-in time? Who eats up the shortfall in operational revenue? Does everyone have to pay a surcharge on homeownder’s dues until they are fully sold?
18
Matthew
// Oct 31, 2006 at 2:34 pm
Ardell,
Tail/end worst of the pack does not apply here. The Queen Anne HS has only sold 38.6 percent. You are talking about the “worst of the pack” being 61.4 percent of the condos… That is a big “trail-end”.
19
Matthew
// Oct 31, 2006 at 2:40 pm
I suppose that most of the “good units” could have been sold pre-sale, but then that means that 62 percent of the building is crap.
20
CRichard
// Oct 31, 2006 at 2:43 pm
Data Geek Alert!!
The correlation between the original HousingTracker inventory numbers and the NWMLS numbers for King County is 0.9517 (although it is looser in the slower months). Predicting next months NWMLS numbers from the October combined monthly HousingTracker data gives a value of 10,081 with a 95% confidence interval of 9,847 to 10,316.
Last months high inventory number was 9,890. We actually have a decent chance of hitting the highest inventory numbers since Nov 2003 (9,862).
21
MisterBubble
// Oct 31, 2006 at 2:49 pm
Ardell, are you capable of making an argument that isn’t a red herring?
Every post, you make at least one. Here, you’ve made two:
1) “When the best doesn’t sell, it spells trouble. When the worst doesn’t sell….”
Doesn’t matter. A year ago, all of the units would have sold. “Buyer incentives” were unheard-of a year ago.
2) “if y’all want to celebrate the 4th quarter being lower than the 2nd and 3rd quarters…as it is EVERY year…have at it”
Actually, this is more of a straw man than a red herring (only Meshugy regularly compares MOM stats around here), but you couple it with some bizarre, nonsensical justification for October inventory increases (inventory’s up because sales are down? really?? ‘ya think???) that gives the whole argument the smell of lutefisk.
22
The Tim
// Oct 31, 2006 at 2:59 pm
Did someone say lutefisk?
Oh, lutefisk, Oh, lutefisk
How fragrant your aroma
Oh, lutefisk. Oh, lutefisk
You put me in a coma.
Good ole’ Stan…
23
plymster
// Oct 31, 2006 at 3:08 pm
Nice post, Matthew. Hmmmm… what has a tail that accounts for 61.4% of its length? Maybe an Alligator?
24
Peter Taylor
// Oct 31, 2006 at 3:44 pm
Next one will be First Church of Christ Scientist, a landmark building in Capitol Hill.
Interesting story in the Stranger in the summer about that.
In conversations Agnew describes as “harmonious,” the church’s trustees agreed to sell the land to Atlin Investments, owned by Wes Giesbrecht. Atlin intends to build condominiums on the site—but as anxious neighbors who attended a meeting of the design review board were relieved to hear, the church sold the building on the condition that the exterior be preserved.
…
Giesbrecht describes his investment as “an eccentric labor of love.” He is not optimistic about turning a profit—the retrofitting of the church’s interior for condos, says Giesbrecht, is going to cost 50 percent more than simply tearing down the church and starting from scratch.
It is too early, says Giesbrecht, to discuss in detail the ways that the interior will be changed for its new use. He can only say that he will not be adding a structure to the existing one, that there will be two floors, and that his architect will try to save as many of the interior details as possible.
In particular, Giesbrecht admires the church’s plasterwork. One difficulty will be bringing natural light into the building—the stained-glass windows are too few and too small. So Giesbrecht hopes to add a few windows to the west side of the church, which faces an alley. That plan requires approval of the Seattle Landmarks Preservation Board.
So, let’s take stock here. No windows, tiny units, strange layouts to accomodate existing architecture, and sky-high prices. It’s a recipe for success!
25
Richard
// Oct 31, 2006 at 5:31 pm
retrofitting of the church’s interior for condos
The developer ought to run ads for it during Opie and Anthony’s show on XM. Had it been a Catholic church he was retrofitting, they’d all go in presale, no doubt.
26
Matthew
// Oct 31, 2006 at 9:53 pm
I can see it now Samuel L Jackson in his latest movie…..
“A TIME TO SELL”
27
Ardell DellaLoggia
// Oct 31, 2006 at 10:21 pm
“Ardell, are you capable of making an argument that isn’t a red herring?”
No.
28
Ardell DellaLoggia
// Oct 31, 2006 at 10:50 pm
Wreckingbull,
The CC&Rs hold the builder responsible for all costs until the HOA is turned over to the owners via a Board of Directors. The owners are only responsible for their proportional share. The builder is in essence the owner of the rest until sold.
In some much older complexes with older CC&Rs, like Sixty-01, the builder (called the Declarant) had lenient provisions and added perks. Those familiar with that complex know the damage caused by those provisions,and the lawsuits that followed when the Declarant retained the priveleges for 40 years. Low appreciation and high monthly dues.
Sixty-01 is probably the best example of “Declarant” abuse of privelege.
29
wreckingbull
// Nov 1, 2006 at 10:34 am
Thanks Ardell.
Good info. If I were buying a condo these days, I would extend my due diligence to not only make sure the builder can handle its capital costs, but also operational costs of unsold units.
30
MisterBubble
// Nov 2, 2006 at 6:45 pm
Q: “Ardell, are you capable of making an argument that isn’t a red herring?”
A: “No.”
Well, then. At least you’re honest.
31
Walter
// Jan 11, 2008 at 2:39 am
Taking issue with Ardell DellaLoggia
Sixty-01 converted to condos in 78 (30 years ago, not 40) and there’s been but 2 special assessments since 1990; the last in 98. Dues appear high but they are competitive with Kirkland condos, include capital improvements, haven’t been raised since 2003, and their owner equity has not been below 1.6 million going on 3 years…
I don’t know what provisions you refer to when you say they suffer low appreciation. Last year, several 2 BR townhouses (and three 3-BRs) closed over $300K, and three 450-sqft studios just went for $135K.
They’ve only had one lawsuit since 1990 that involved the declarant and that was settled to the HOA’s approval in early 2006. A second suite (that ended successfully for the HOA last year) involved 65 months of non-payment of dues (because at the time of purchase, someone told them “there would be no dues increases…”) The third (and only remaining) is over the 1999 board rescinding an amendment that re-calculated the dues. Although (on a second appeal to a circuit court decision) a jury found for the HOA in 2006, it’s now in its third appeal.
Due diligence is required before we give sage opinion on things we aren’t involved in. Otherwise, our ill-formed opinions make us out to be people we don’t want to be, it misleads potential buyers, and is bad for the industry. Condo ownership isn’t for everyone, but as for Sixty-01, they are obviously leaps and bounds ahead of where people such as you say they are. (And owner occupancy is a solid 60+%.)
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