THE SEATTLE PIVOT

Condominium demand and homeownership levels in Seattle are making a comeback, but will developers pivot and keep up with the trends?

The second half of 2017 evidences what may be a paradigm shift in consumer trending from rent to buy. According to research by O’Connor Consulting Group, annual apartment demand in 2017 fell by 4,500 units (unexpectedly) throughout King and Snohomish counties and this decrease was concentrated into the second half of the year. Meanwhile, sales of single-family and condos in the same area swelled by more than 5,000 units—rising from 40,825 homes closed in 2016 to 45,949 in 2017. It would seem that renters are increasingly positioning themselves for capital appreciation, mortgage interest deductions and attainable ownership options for fear of being priced out with rising home prices compounded by interest rate hikes.

As of March 2018, the median home price in the Seattle metro area rose by 13% year-over-year, according to the closely watched S&P/Case-Shiller Home Price Index. In fact, Seattle has consistently led the nation in home price growth for 19 months in a row. Meanwhile, the Fed has bumped mortgage rates 6 times in the trailing 18 months, so rates now average 4.5-4.75% for a 30-year mortgage, according to Caliber Home Loans. They say several more rate increases are anticipated this year and by 2020, the average fixed rate mortgage could top 5.5%.

Throughout metro Seattle, the hunt for affordable homes has literally drained the city of single-family options, especially those priced below $700,000. That’s a popular price point because the conforming high balance loan limit in King, Pierce and Snohomish counties is $667,000, allowing homebuyers to purchase with just 5% down payment (3.5% FHA) and qualify with lower FICO scores and preferred interest rates vs. the jumbo mortgage market.

RSIR analysis of NWMLS data suggests that during Q1-2016 there were 1,454 sales of condominiums and single-family homes sold below $700,000 in the City of Seattle, but two years later during Q1-2018, that number fell to just 951 units—that’s a 35% reduction of opportunity as prices rose and supply dwindled. This is a challenging price point for developers to hit with new construction—certainly no single-family homes will pencil as land costs alone demand $700,000 or more. Townhomes offer some relief but just barely, as only two dozen newly built properties throughout Seattle are active in the NWMLS and they average 1,289 square feet at $529 per square foot, so the median asking price is still $667,000. Many more are already pending with most new listings snapped up in just a few days on the market.

Condominiums more easily hit this price point as efficiently-scaled, single-level homes offer the greatest density of housing, oftentimes with building amenities that expand the lifestyle of living in a studio or one-bedroom home. Currently in downtown Seattle, there are just 46 resale condominiums offered below $700,000 and just three in new construction inventory until 2020. Demand for new, attainably-priced condominiums was on full display on February 24th, 2018 when Da Li Development USA introduced 203 homes at KODA drawing long lines with 95% of the homes garnering reservations with another 80 second and third positions.

The KODA Condominium development generated a line of prospective buyers that eagerly awaited the release of 203 homes for reservation on February 24th, 2018. 

Read the full article on Realogics.com

SEATTLE’S NEW ERA OF CONDOS

As a recent Realogics Sotheby’s International Realty feature entitled “Seattle’s New Era of Condos” proclaims, the Emerald City is definitively in the midst of a condo comeback; the population is growing, residents are fueling additional in-city attractions, and millennials are transitioning from renting to homeownership. Today, thousands are reading the latest Seattle trends, as the special feature, which was originally included in Portrait of Seattle Magazine, was hand delivered to 1,500 broker mailboxes throughout the Seattle area, and was included in select copies of Puget Sound Business Journal, Wall Street Journal, Madison Park Times, Capitol Hill Times, Queen Anne & Magnolia Times, Magnolia News, City Living Seattle, The Monroe Monitor, Valley News, Eatonville Dispatch and Marketplace.

Not only does the insert highlight a number of exciting upcoming projects, including the NEXUS Condominium Tower, KODA Condominium Flats, The Pinnacle at Alki, Sonata, and Florera Condominiums, among others, it also outlines market fundamentals that are helping grow the city. Wealthy tech-industry millennials and downsizing empty nesters are fueling demand for in-city condominiums, yet they face a severe shortage of availability unless they turn to new construction presales. As outlined in the feature, Seattle is home to approximately 80,000 urban residents, yet as of February 2018, there were only three dozen resale units listed for sale with a median asking price of $1.3 million.

A number of RSIR brokers also lend their insight and explore trends in city living, from added conveniences such as the expanding LINK Light Rail that are making life without a car more and more feasible to the notion that condominium buildings are serving as vertical communities that integrate opportunities for residents to have access to technological innovation, health and entertainment, and professional business spaces.

“The expanding demand for both urban condominiums and resort destinations led our firm to open a New Developments Gallery located at 2715 1st Avenue,” announced Dean Jones, CEO & President of RSIR. “The retail pop-up promises to offer consumers a glimpse into the future so they can be in the know before the show.”

For more on Seattle’s condo comeback, find this article and the full digital copy of the publication on RSIR.

AS INTERNATIONAL BUYING SURGES, BEST BROKER PRACTICES ARE MORE IMPORTANT THAN EVER

The rise of the Seattle housing market has been such a consistent refrain for the last several years that there’s little question whether the Puget Sound has “arrived” yet.

Motivated homebuyers from diverse backgrounds are drawn by the region’s spectacular environment, great schools, vibrant culture and world-class companies. The only reason sales could decline in Seattle is insufficient inventory, not waning demand.

International buyers have been an important factor in this surge, with Chinese consumers leading the charge. It’s no surprise Seattle was the most searched U.S. market in 2017 according to Juwai.com, China’s top real estate search portal, and that many Chinese plan to go on shopping tours during the upcoming Lunar New Year celebration.

Increased demand means increased competition, especially in an inventory-scarce market like Seattle. With fewer available properties than interested buyers, consumers sometimes resort to time-saving and corner-cutting tactics to get to the front of the line, like waiving inspections, purchasing homes sight unseen or doing comparison shopping before putting in an offer.

Since our company was founded, Realogics Sotheby’s International Realty and our brokers have had an unwavering commitment to always follow best practices throughout the home buying process. We know how important it is to ensure buyers are protected, that they have the information they need to make educated decisions and receive the best counsel from objective, professional experts both here at RSIR or among our preferred list of advisors including accountants, lawyers, inspectors, school admissions consultants, immigration specialists and the like.

We also understand the unique factors that Chinese consumers face when contemplating a home purchase in the Puget Sound. That’s why we founded the first-of-its-kind Asia Services Group, a network of trusted, experienced brokers who speak Chinese and understand Chinese culture, and are able to serve as responsible, accessible advisors when Chinese consider buying a home.

With Chinese New Year approaching, RSIR recently hosted a Town Hall meeting with the Asia Services Group to review best practices when working with overseas buyers. The meeting was attended by China Daily reporter Linda Deng, who covered the findings in a recent China Daily cover story, and was moderated by Marc Berger from Nyhus Communications.

Find the  top ten results from this meeting on the original source from RSIR.

FORBES CROWNS SEATTLE THE SECOND COOLEST CITY IN THE NATION

Following a recent report by Forbes and Bert Sperling which ranked the “coolness” of the 100 largest metro cities in the country,    that having taken the second spot, “you might even say we’re the municipal equivalent of Beyoncé, expensive denim jackets and cigarettes in the ‘70s.” As the article outlines, after looking at a number of factors including “entertainment and recreation options, the food and drink scene, transit choices, population growth and where young people are living,” Forbes crowned the Emerald City the second coolest city in the nation, behind only San Francisco. 

Among the factors helping Seattle’s cool factor are “recreation and the jointly weighted coffee shops and breweries.” And as Sperling observes, “a city’s desirability (or coolness, if you will) drives the housing demand up.” “It would be an anomaly if you found a place that was really really cool but was really really cheap,” he says. 

To be sure, Seattle’s housing market is on fire, as the latest CoreLogic Case Shiller index reveals that over the past 12 months, home prices in Seattle have increased 13.2 percent, far outpacing those in major U.S. cities across the country. Recent analysis by William Hillis, Research Editor with Realogics Sotheby’s International Realty, reveals that despite the run-up in Seattle home prices, the city is still more affordable relative to local incomes than any of its peer metro markets. Real estate analyst Mark Hanson observed that in Seattle, the difference between household income and income needed to buy a median-priced house is about 18 percent, where a city such as San Francisco is currently at 52 percent. 

Original source on RSIR

REALOGICS SOTHEBY’S INTERNATIONAL REALTY & BURRARD GROUP ANNOUNCE A MAJOR MILESTONE IN THE DEVELOPMENT OF NEXUS CONDOMINIUM TOWER; ENCORE RELEASE OF 16 CITY SUITES ON 11/18

Market Experts Array Pent Up Demand for In-City Homeownership; Downtown Seattle Condo Prices Surge 33% 

Representatives of Realogics Sotheby’s International Realty and Burrard Group announced a major milestone in the development of the 41-story NEXUS Condominium Tower today as it begins a vertical ascent towards completion in fall 2019. With excavation now complete, SKANSKA, the general contractor for NEXUS, has poured the foundation mat, which comprised of 3,900 cubic yards of concrete and measures up to twelve feet thick. 

“The entire development and construction team is excited to shift the focus from digging down to building upward and constructing this iconic tower,” said Chad Mathis, Senior Development Manager with Burrard. 

After analyzing market demand, Burrard also announced a change in the final product offering. The final construction documents include a revision to the floor plates in the “third cube” between levels 28 and 35 where a larger one bedroom and den floor plan will now be built as two independent and efficiently-scaled residences called City Suites – a 484-sq. ft. studio and a 503-sq. ft. urban one bedroom. Conversely, a penthouse home assembled two units to create a 4 bedroom plus den offering nearly 3,200-sq. ft.  These revisions increased NEXUS Condominiums by 8 residences to 389 units. 

“We took this opportunity to optimize the product offering based on market demands,” added Mathis, who acknowledged the flexibility to assemble and disassemble floor plans. 

“This design update presents an encore sales release of new homes priced from the mid-$500,000s to mid-$600,000s, a price range that was previously sold out at NEXUS,” said Dean Jones, President and CEO of Realogics Sotheby’s International Realty. “There’s a lack of attainably priced homes in downtown Seattle. Consumers can afford to live in less space but they can’t always afford the cost of new condominiums. We’re facing a condo crunch as more and more apartment dwellers desire homeownership but there are few options available in the market.” 

Jones points to RSIR research showing that 78-percent of the 496 new condominiums being built in downtown Seattle are currently presold with virtually all remaining homes priced above $700,000. Consumers will find little relief in the resale marketplace as according to the NWMLS, there are only 11 homes listed for sale priced below $700,000. Meanwhile, RSIR reports the median price of resale condominiums sold in October 2017 was $649,500, an increase of 33-percent over the prior year. A preference for newer condominiums was also noted at the recently completed Insignia Condominiums. This presale development was delivered in 2015 and 2016 and experienced four resales last month – all within days of hitting the market, several escalating above asking price and exhibiting an average of 25-percent increases from presale to resale values. Market wide, S&P/Case-Shiller tracked 13.2-percent median home price increases making the Seattle metro area the fastest-rising housing market in the US for the past 12 months. 

Citing pent up demand, market pundits anticipate the latest sales release at NEXUS will sell out quickly upon listing on November 18th. Recently, the Urban Land Institute heralded Seattle as the #1 investment market in the US as part of their “2018 Emerging Trends in Real Estate” report. However, the opportunity for individual home ownership has been challenging given the dearth of for-sale housing being built. Research by RSIR and O’Connor Consulting Group confirms that no new condominiums will be delivered in 2017 and it’s estimated that 94-percent of the 27,000+ new multifamily housing units to be built in downtown Seattle’s urban center for the current decade will be for rent and not for sale. 

Mathis says more new condominiums are on the horizon but suspects most developers will want to retain their inventory as income property because the market is appreciating. 

“Land and construction costs are rising rapidly,” claims Mathis. “The reality is future deliveries will cost more to build and developers will need to charge more to make new developments pencil.” 

Original Source on RSIR