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)

We’re used to hearing unsupported claims that “young professionals” and “empty-nesters” are providing the bulk of the demand for condos. Well, finally we have a first-hand account of who’s actually buying condos (in downtown Kirkland, anyway).

Amie Lynn is the community sales manager for Miller Condominium Marketing, which recently opened The Boulevard, a 119-unit condo building at 598 Central Way, and 128onState, a 124-unit building at 128 State St.

She said most of the two-bedroom condominiums — which make up about a third of the stock — sell to empty-nesters who are downsizing into smaller, lower-maintenance places in more urban areas.

“They can afford the higher price points because they had great appreciation in their last house,” Lynn said. “More and more people want to spend their weekends not maintaining a home. They want to enjoy what the city has to offer.”

Retirees, too, have purchased condos downtown as second homes, Lynn said. They winter in California or Arizona and come back to Kirkland in the summer to visit old friends and family.

The remaining studios and one-bedroom condos go to single people ranging in age from their 20s to their 50s, Lynn said, though the majority are in their 30s.

So it sounds like “young professionals” are in the minority in Kirkland. I can’t say I’m surprised that “most” of the condos are selling to people that are actually downgrading their home. When prices spiral upward out of control like they have lately, young people have a hard time buying, and existing homeowners looking to upgrade find that they can’t even afford to trade up.

What’s not springing up downtown are young families — the condominium units that are big enough for couples with children are typically more expensive than they can afford. But Lynn said that’s something that could be changing over the next decade.

Whoops! Looks like the writer let a little bit of truth slip in there. Maybe they figure that they can get away with implying that prices might actually be headed down soon because the King County Journal hasn’t got anything to lose.

(Erica Hall, King County Journal, 01.15.2007)