Time for another Friday Flashback! Today’s flashback comes at you from February 2007, as the Seattle Times declared 2007 to be “The year of the condo in downtown Seattle” (emphasis mine).
[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.”
In Miami and Las Vegas, developers have had to drop their prices after condos outnumbered buyers.
That’s not happening in Seattle, said Dean Jones, president of Realogics, a local condo-marketing firm. Jones said developers in Seattle have learned from the mistakes made in Miami and Las Vegas.
The article goes on to mention a few examples of how Seattle’s condo market is so super-special and different. Let’s see how each of them have turned out…
Olive 8: David Thyer’s development completed in mid-2009, about nine months later than this article said it was scheduled to be finished. After pre-selling nearly every unit, many buyers walked away from their deposits. The developer recently had to resort to an auction to sell the remaining 32 units on the lower floors.
‘1’ Hotel and Residences: Dug a giant hole at 2nd and Pine, which sat empty for over a year. Hole was eventually filled in and paved over, and the fabulous ‘1’ Hotel and Residences is currently a $6/hr parking lot.
Escala: Famously raised prices in early 2008, as the marketers insisted that potential buyers waiting for price drops were “reading the local market wrong.” Held the line through 2009, but were finally smacked with a clue-by-four in 2010 and decided to join the rest of us in reality, announcing price cuts of 20 to 50 percent across the board.
It sure is lucky that Seattle developers avoided the problem of a big oversupply of condos!
What did I have to say about this nonsense back in February 2007 when it was printed? Let’s find out:
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.
Of course, I wasn’t alone in calling “BS” on this one. Even my condo-loving buddy Matt Goyer wasn’t buying it:
I think we need an article that looks at the demand side of the equation instead of focusing on supply. Just who are these people who can afford $600+/square foot? Are there really that many suburbanities moving downtown? Is there a big influx of hires coming into Google/Amazon/Microsoft? At what point do they get priced out of the market?
I too am skeptical there is a sustainable market for one bedrooms at $500k+.
As it turns out, the pixie dust ran out, and Matt’s skepticism was well-founded.