According to NWMLS data for September, downtown Seattle values are skyrocketing as the median home price for in-city resale condominiums increased a staggering 35-percent year-over-year. The sharp increase in value is indicative of Seattle’s continued struggle with population growth, rising real estate prices for both renters and buyers, and a supply and demand imbalance with little relief in sight.
The median sales price of downtown Seattle condominiums in September increased 35-percent compared to last year’s numbers
“After looking at NWMLS data for September, I wasn’t surprised to see the median single-family home price surge across the board by 12-percent, but I wasn’t expecting to see condominium values increase so quickly,” said Dean Jones, owner and principal, Realogics Sotheby’s International Realty (RSIR). “There is an affordability crisis brewing as downtown demand is rising much faster than supply, which isn’t likely to change anytime soon.”
To be sure, 94-percent of the 25,000+ new housing units in downtown Seattle in the current decade are offered for rent, with no new condominium deliveries in 2018, and two-thirds of what is currently under construction into the next decade already pre-sold.
As illustrated above, no new condominiums will be delivered in 2018 and two-thirds of what will deliver in 2019 and 2020 is already pre-sold.
Why does there seem to be an overwhelming preference for developers to build apartment buildings in Seattle? A recent RSIR report reveals that it comes down to a couple of key factors. First, the record number of new residents in the city coming for jobs in the tech industry has generated high demand in the rental market, as many newcomers are likely to hold off for a few years before making a home purchase. Second, there are more risks involved in building condominiums for developers given Washington state’s stringent quality assurance standards and consumer protection with the Condominium Act, which limits the amount of non-refundable deposits a buyer can have at risk.
Jones says a large contributor to the rise in downtown Seattle condominium values is due to the lack of supply.
Though more condominiums will be delivered in 2020, construction costs and current market dynamics will mean higher price tags, so “there’s little relief when looking for affordability,” Jones added.
Despite a decline in inventory, sales volume for downtown Seattle condos increased 15.4-percent year-over-year.
Nowhere is the growth more evident than in the northeastern corner of downtown Seattle, referred to as the “East Village.” This burgeoning neighborhood will see significant expansion in new developments to be delivered between 2018 and 2020, as illustrated in the graphic below:
The forthcoming NEXUS condominium tower, pictured at front, is already 85-percent pre-sold.
Many of these trends and prevailing market fundamentals are being tracked by The FutureCast Forum – a thinktank of industry leaders that are exploring the trajectory of the Seattle and Bellevue metro area into the 2020 and beyond. For more information, visit www.Seattlein2020.com.