Seattle area housing shortage predicted by local consultant

Seattle Times PI, Saturday October 18, 2008. Housing Gets Hammered.

Building comes in cycles. It's all about supply and demand. One challenge with building is there is always a long lag time from when demand picks up and supply can actually be on the market. This leads to the market usually being behind the 8-ball when the demand rises. Currently there is too much product on the market and builders are giving discounts to get this product purchased. It's happening in Seattle as well, just not as much as in other areas.

Nationally housing starts are down to the lowest level since 1945. Applications for new homes has dropped 8.2%, the weakest level in more than 25 years.

Locally a housing consultant, Todd Britsch, predicts that there will be a housing shortage in Seattle in 2011-2012. The request for new building permits in King, Pierce and Snohomish county is down 35 percent year-to-date. He believes that an over-supply of new lots over the last few years is causing developers to stop requesting permits. Once the current inventory comes off the market (purchased) it will take a while for builders to ramp up and get new product built.

That's when the housing shortage hits and appreciation starts to kick in. Go to RECENT MEDIA for the entire article.

Auction Results

Just a quick update on the auction I mentioned a couple of weeks ago.

The auction was yesterday and about 30 bidders were there and about 120 people in the room. There were 17 condos for sale so the odds were pretty good on getting a condo if you really wanted one. There was a minimum bid for each type of unit. After the first 13 sold the Seller stopped the auction. I believe it was because they were not getting as good of prices as they had anticipated. They sold the first 13 from about 25%-46% under the current asking price. The current asking prices were about average for similar condos currently for sale in the area so getting a condo that much under the asking price is incredible. All the condos had new kitchens, bathrooms, flooring, new roof, siding and windows.

Deals of the day;
Studio condo w/out parking sold for $102k. The average price for Studios on Cap Hill w/out parking is $200k. The cheapest co-op on Cap Hill is a dump for $115k.
2 Bedroom/1 Bath top floor w/parking and a view of the Space Needle sold for $278k. The average price for 2 Bed/1 Bath condos on Cap Hill is $356K.
1 Bedroom w/parking sold for $205k. The average price for a 1 Bed condo w/parking on Cap Hill is $332k.
With such low pricing the Seller has put himself in a sticky situation. Future purchases will be based on these prices so anyone else buying in this building should be able to purchase well below current rates.

There are still about 11 condos for sale in this building. Please let me know if you are interested in getting more information as I feel confident that a good deal can still be had, just not through the auction process.

Auction of Condos

Here is something new for Seattle condo projects - an auction to get some of the condos sold.

1707 Condominiums on Capitol Hill will be auctioning off 17 condos on Sunday, October 19th. There is a minimum bid of $95k for Studios, $195k for 1 Bedroom units and $215k for 2 Bedroom units. These minimum bids are up to 47% off the current list price, which can be a great buy if you can get any of them at the minimum price.

According to the on-site team the developer is fine financially but wants to get some units moved before the quite months of November/December. They are asking for a $2,500 deposit and you must close in 30 days. Monthly dues are about $180-$205 depending on the unit (25-45 cents psf), which is pretty good.

It's a basic building w/out a lot of amenities in a great location, just one block west of SCCC. It could be a great first-time Buyer condo or a great rental, depending on the final sales price.

Developers are hoping for 70-80 bidders. I'll be there with a client and will let you know if any great deals were found.

September 13, 2008 - Seattle market

The Seattle Real Estate market has been on a roller-coaster ride since last August 2007, when the lending crisis first hit the news. Prior to that there was already a trend of homes sitting longer on the market that started in June of 2006 so the "crisis of 2008" only added to a trend that started a while ago.

2005 and 2006 were record years for Seattle, so anything comparing back to that time will most likely show negative figures. Even with that said if you had purchased a home in January 2004 it would have grown in value by 53% as of June 2008.

Even in this slower market (the average time on the market for a piece of property is about 7.4 months) there are still many good qualities that the Seattle area has that other areas don't have;

• A large employment base in many different areas (Microsoft, Boeing, Weyerhaeuser, Amazon, Starbucks, Import/Export to Asia, Bio tech, Alaska Airlines, etc.) most of which have a national or international reach.
• Projected job growth. Though there have been some hiccups this summer (Weyerhaeuser and Alaska both announced that they will layoff up to 1,000 employees each) there are other companies that have projected growth for the next several years (Boeing will hire @4,000 employees/year for the next 2 years and Microsoft will hire @5,000 employees/year for the next 10 years.
• Limited construction growth. Due to local topography there is only so much buildable land. The mountains, lakes, streams and hills prevent the overbuilding that has occurred in other markets, many of which are REALLY suffering at this time.
• Prices are still much less than other major metropolitan areas on the west coast. Even with the strong appreciation over the last couple of years Seattle is still one of the least expensive big cities to buy property.

It is still a great time to buy. See the Recent Media section to see articles on the Condo Shortage in Seattle and other great articles specifically about our local Real Estate Market.