The Manhattanization of Seattle
Panel of Experts Talk Renting vs. Buying in Seattle
"I believe we're going to have one of the most fundamentally dense markets, like New York City, Vancouver and San Francisco."
- Dean Jones
CEO of Realogics Sotheby's International Realty
Condo Comeback: Following a dearth of new supply after the 2008 economic recession and credit crunch, a new cycle of in-city condominiums will begin becoming available in 2015 as both homebuyer interest and median home prices rise. As illustrated, the resale market is also expected to expand significantly as new product allows move-up buyers to introduce more resale inventory to the marketplace and more renters are expected to purchase that supply.
*SOURCE: the Puget Sound Business Journal
Historically, the average annual price appreciation of a King County condominium since 1990 has been 2.9% (this includes the correction and recover following the 2007 peak values and the result of the Great Recession). Interestingly, apartment rents have risen 35% since 2010 and overall, condominiums have risen just 6% during that same time period but are expected accelerate as supply and demand imbalance plays out.
Overall the trends are for fewer listings and increased asking prices and selling prices with single family homes. Sellers are becoming more confident and as the median prices rise, they are increasingly exploring a move. Some percentage of these sellers will desire downsizing into a condominium, which increases the demand and increases the price trending.
Similar to the single family trending, inventory for King County condos has been trending downward and prices have been rising. A new crop of presold condominiums in downtown Seattle will spike both the total unit absorption and the average sales prices.
Clearly the percentage of new construction sales into all condominium sales has been trending downward, mostly because there has been effectively no new construction built (some supply from buildings that delivered in 2010 were later absorbed in the following years). It is anticipated that a similar cycle of increasing demand like 2003 through 2007 is occurring however there are far fewer new units being added to the market that are for sale at this time.
This chart illustrates robust condominium and single family markets in past cycles. Clearly the greater Seattle area began its recovery in 2012 and average price appreciation appears to be accelerating. At the same time, the market fundamentals that were largely responsible for the 2008 economic downturn are not present at this time suggesting the current trending could be sustained into the foreseeable future, especially knowing that much of the housing stock being constructed is for rent.