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)

In a Lynnwood Journal puff piece that reads more like a sales ad than a news article I found these interesting anecdotes:

Local lenders, such as Golf Savings Bank, are offering incentives, such as $1,000 off closing costs for certain new home communities, like Edmonds Cascade Cottages.

And local developers, such as Puget Sound Homes of Everett, are extending generous buyer’s incentives for purchases of homes into January, to spur sales activity during a typical slower time of the year. However, as the market heats up again after the 15th of January, these buyer’s incentives may go away.

Realtor Rick Horst, from the Everett office of Windermere Real Estate, represents Puget Sound Homes and Bellrose, a community of 28 single family homes located at the north end of Mill Creek. According to Horst, buyers at Bellrose can choose between a 2007 Ford Mustang, with a $23,000 MSRP, a $17,000 buyer bonus for use in closing costs and/or down payment, or having their first six months worth of mortgage payments paid by the developer.
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One example of this [builder incentives] is the Acadia community of homes in Silver Lake, currently being offered for presale through John L. Scott Real Estate. Listing Agent Paula Hovander believes builder D R Horton will extend some portion of the buyer bonus offered in December, when the presale campaign was launched for their community of 36 single family homes. A total of seven homes were sold in December, with a $10,000 buyer bonus offered through DHI mortgage as an incentive to quick start presale activity.

Aren’t these the kind of things that builders do when they are having a hard time selling at current prices? If the local housing market is as “healthy” as some would have us believe, why would homebuilders be resorting to bribes to get people to purchase new homes? Not having been shopping for a hew home lately I couldn’t say how common this is becoming, but the fact that it’s happening at all is still more evidence that things are slowing around here.

I kind of wish that we had a local blog that followed new single-family homes the way that Matt over at Urbnlivn follows condos. It would certainly help give us a better idea of how much the market is softening.

(Jolene Anderson, Lynnwood Journal, 01.08.2007)