Seattle's "Condo Conundrum"
It's no secret that the Seattle-Metro area housing market has been at, or near, the top of the nation's list for some time now (13 months to be exact). However, as typical with the winter months, that trend seems to be slipping just a bit. "...the Seattle index slipp[ed] by 0.28 percent monthly in September. That is not a steep slide, but to put it into context, the Seattle index has been positive for 31 consecutive months." Additionally, Seattle home prices continue to lead the nation. According to CoreLogic Case Schiller Home Price Indices, "all other Pacific Coast getaways have endured at least one month on the down side since the end of 2014... So this could certainly be just a breather on the way to yet-higher prices throughout the Puget Sound region."
So, as a solution, frustrated buyers are now turning to new construction reservations. Projects like the NEXUS Condominium Tower had prospective buyers camping outside the sales center in order to reserve a 2019 condo located in the Denny Triangle area of Seattle. The project had recently announced new, smaller, options after development group Burrard and the Realogics Sotheby's International Realty (RSIR) team disassembled a larger floor plan, making more studio units available. Referring to the recent encore sales event, Dean Jones, President and CEO of RSIR stated, "It felt like Black Friday, except it was a Saturday and we were selling condos."
This frenzy is because, "Of the 75 major projects currently under development in downtown Seattle, just 3 will offer condominiums." This isn't just a Seattle issue, though. The Seattle Times reported that, "prices reached $851,000 on the Eastside with a "12 percent year-over-year increase" which "includes a 33-percent jump in the area south of Interstate 90, and a 27 percent rise on Mercer Island." Other [local] markets also saw sizable gains, as Snohomish County median prices increased 11.3 percent compared to last year, and Pierce and Kitsap counties saw increases of 7.5 percent and 9.6 percent, respectively." The Seattle Times went on to state that Seattle's "condo drought" is "depriving both first-time buyers and downsizers of a cheaper homeownership option that's common in other pricey cities." In November there were just five available condominiums priced under $500,000 on the market in Seattle.
On December 1st, the Puget Sound Business Journal reported that there would be a projected 1,383 condominiums completed between 2018 and 2020; however, currently only 60 of the 496 units currently under construction (slated for occupancy in 2019) are actually still available for purchase. Lack of supply and eager demand have potentially created a light at the end of the tunnel, however. "Beginning January 1, 2018 the conforming loan limit for King, Snohomish, and Pierce Counties will be $435,100 and the high balance loan limits will be $667,000... This means that a borrower can put just 3% down on a conforming loan of up to $453,100... while a borrower could put a 5% down payment on a high balance loan of $667,000, which affords a $702,000 purchase price."
One thing is for sure, the housing market in the Puget Sound is formidable and now, more than ever, it is important to have someone knowledgeable by your side when trying to sell or buy a home. The WinninghamKing team has over 4 decades of combined real estate knowledge in both Seattle and on the eastside of Lake Washington. Contact our team to discuss your options and what we can do for you and your home search.