Seattle Bubble

Tacoma: Your mission, should you choose to accept it, is to sell 1,500 high-end condos in 14 months:

Hundreds of new, pricey condominiums exclude young singles needed for a thriving city core, according to the author of a study analyzing the downtown housing market.

Builders and developers say land costs and water views push prices beyond the mid-$200,000 range generally considered doable for the first-time buyer. And even though the number of unsold units remains high in some neighborhoods, they say demand is strong for high-end condos. Tacoma’s average new condominium price, according to the study, was $348,893 at the end of last year.

The 149-page report, finished last week, identified three kinds of future condo buyers: female baby boomers, young professionals, and married folks with no children at home. It recommended adding edgy lofts and more small spaces that Generation Y buyers can afford.
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As of December, all six neighborhoods surveyed averaged 14 months of condominium inventory, which measures how long it would take to sell everything built and approved.

A healthy market for new construction tends to be in the six- to 12-month range, said Deanna Sihon, the study’s author.
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Since 2004, nearly 400 condos have been sold downtown with another 525 for sale and about 1,500 proposed, according to the study.
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A year ago, a hot market meant condo shoppers had to make rapid buying decisions, said RE/MAX real estate agent George Pilant.

Not so now.

“Buyers have so many choices they don’t feel a sense of urgency,” he said.
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As in any type of residential real estate, demand is driven by population and job growth, said Paul Turek, an economist with the state Employment Security Department.

But condos are a niche product that at higher inventory levels, he said, raise this question: Will good-paying jobs needed to sell such downtown housing continue to be created?

“I suppose that’s where the gamble is,” he said. “In the Tacoma area, we have some high-paying jobs. Whether there’s enough to support the building of the condos remains to be seen.”

Good luck with that. Seriously.

(Devona Wells, Tacoma News-Tribune, 03.25.2007)

Better be careful the next time you drive through Everett, you’re likely to get burned, the condo market there is so hot!

On paper at least, downtown Everett is poised for explosive growth.

Nearly 800 new downtown condos and apartments are in various stages of planning.

There’s a good chance some of the projects scattered across a dozen development sites will not get off the ground, officials acknowledge.

Still, long-term growth, a property tax subsidy and a strong local economy, buoyed by jet sales at the Boeing Co.’s Everett factory, work in the city’s favor.

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The condo market in the Puget Sound area remains hot, in spite of a wave of foreclosures and slumping housing sales creating jitters and sliding prices elsewhere.

Developers in Everett talk about “pent-up demand” and say they aren’t deeply concerned their projects will create a glut of vacant condos for sale, as is the case in Las Vegas and parts of Florida.

“I think the local market is way stronger than people realize,” said Joe Zlab, who plans to break ground on Rockefeller Square, a 40-unit condo building on Rockefeller Avenue, north of Everett Avenue, this spring.

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It’s only a matter of time before Everett begins to resemble more affluent Seattle suburbs, including Bellevue or Kirkland, said Anthony Aversano, a Mountlake Terrace remodeling contractor.

“Seattle is overpriced, Bellevue has access problems and is also too expensive,” Aversano said. “It’s not a place where people can go unless you’re working for Microsoft and have been there for a long time.”

Gus Boutsinis, a Mill Creek developer working on a 130-unit condo project on 41st Street and Colby Avenue, agrees.

“We think Everett is ready,” he said. “It’s where Seattle was 15 or 20 years ago.

Yow! Smokin!

(David Chircop, Everett Herald, 03.25.2007)

If the owner of the Smith Tower gets what they want, you can add yet another condo to dozens already planned for downtown’s future. Walton Street Capital is hoping to convert the Smith Tower into condos:

Ninety-three years after Pioneer Square’s Smith Tower was built as an elegant business address, its new owner hopes to turn the 38-story landmark into residential condominiums.

Chicago-based Walton Street Capital filed papers with the city Wednesday to begin what could be a months-long process of getting approval to redo the tower as housing.

It seems that living in old buildings is more charming — and practical — than working in them.
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“We bought it, frankly, as an office building, and it wasn’t until we found out we would lose the two largest tenants in the building that we really looked carefully at what our options were,” [Walton Street representative Michael] Allmon said. “We’ve just become excited about the possibility of changing its use.

“It’s important that all possible current and future uses be explored in the preservation of this iconic tower,” he added.
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Allmon believes a condominium-ized Smith Tower would have little trouble competing with the dozen or so swank condo developments under construction in downtown Seattle.

“I think this really is a category unto itself,” he said.

I personally think it would be pretty awesome to live in the Smith Tower (that is of course if I worked anywhere near downtown). It’s always been one of my favorite buildings in Seattle. I made a crude LEGO model of it (crude compared to this one), and it is featured prominently in the only painting my wife and I own.

On the other hand, they’ll most likely be ridiculously expensive luxury condos, far out of reach for most people, and besides that, does downtown Seattle really need yet another tower full of condos, on top of the 49 others in the works? Really?

(Amy Martinez & Elizabeth Rhodes, Seattle Times, 02.22.2007)

Many of you pointed out the latest in a series of paid advertisements masquerading as reporting in yesterday’s Seattle Times. The apparent purpose of the “article” was to convince the reader that 2007 is a great year to buy a condo in downtown Seattle, at any cost.

[Condo developer David] Thyer insists that Seattle isn’t like other cities, where developers are struggling with an oversupply of new condos. There’s a demand for condos in downtown Seattle, he says, drawing a contrast with the speculative buying frenzy that has led to a boom-bust scenario elsewhere in the country.

On Friday, political and business leaders met over breakfast at the Westin Hotel for an annual review of downtown Seattle. Real-estate economist Matthew Gardner shared Thyer’s optimism, telling an audience of about 700 that demand for new places to live downtown will remain “very positive.”
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Developers say the new condos will sell, but will they sell at the prices developers want?
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In Miami and Las Vegas, developers have had to drop their prices after condos outnumbered buyers.

Part of the problem is that many buyers regarded their new condos as investments and had no intention of living in them.
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[Dean] Jones [president of Realogics, a local condo-marketing firm] estimates that speculators accounted for 30 percent or more of all new condo purchases in Miami and Las Vegas, compared with “no more than 15 percent” in Seattle. Now, developers require buyers to disclose if they intend to live in their new condos in an effort to limit speculators, Jones said.

Ada Healey, a vice president at Vulcan Real Estate, said speculators represent a “very modest minority” of its buyers. Thyer, president of R.C. Hedreen, said he tries to limit speculators to no more than 5 percent.
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[Seattle real-estate agent Brett] Frosaker counts at least four projects where a significant portion of the condos sell for $1 million or more. Never before, he says, has downtown seen so many ultra-expensive condos come online at the same time.

“A lot of research shows there’s a market for them,” he said. “But it hasn’t been proven yet.”

So, a bunch of condo developers, condo marketers, and real estate agents all say that “it’s different here.” What a shock. And what evidence, pray tell, do they have to support that assertion? Estimates, intentions, efforts, and (I’m just guessing on this one) a sprinkle of pixie dust.

Matt Goyer, proprietor of the local condo enthusiast blog Urbnlivn also had some critical thoughts about this article that are well worth reading. Considering that he is already a condo believer, it is commendable that he takes these cheerleading articles with such a large grain of salt. Kudos, Matt.

(Amy Martinez, Seattle Times, 02.11.2007)
(Matt Goyer, Urbnlivn, 02.11.2007)