Prospective Buyers Lined Up for Limited “For Sale” Opportunity Priced from Below $350,000 to More Than $1.5 Million
Da Li Development USA, a Taiwan–based real estate development company and Realogics Sotheby’s International Realty (RSIR) report first position unit reservations and deposits were received on 95-percent of the 203 homes at KODA Condominiums – a new 17-story condominium that will be built at 450 South Main Street. The project debuted on Saturday, February 24th at 11am at RSIR’s New Developments Preview Center located at 2715 1st Avenue in downtown Seattle. Prospective buyers and brokers began lining up the night before the event, at 8pm on February 23rd. Approximately 300 registrants attended the debut of the development, resulting in an additional 80 second and third position reservations. The homes were offered for individual unit reservations, which identifies a specific condominium referencing its preliminary floor plan, specifications and price range in advance of official presales, which are anticipated to commence in the summer 2018 commensurate with the opening of the KODA Sales Center and the groundbreaking of the development. The efficiently-scaled homes range in size from below 400-sq. ft. to more than 1,100-sq. ft. with introductory pricing from below $350,000 to more than $1.5 million.
“We extend our congratulations to the many prospective homeowners that secured their future home for priority presale this weekend” said Dean Jones, President & CEO of RSIR. “We are thrilled to represent this extraordinary opportunity for attainably-priced homeownership in one of the fastest-growing neighborhoods in the region.”
Jones says KODA Condominiums are the “first of few” new development opportunities for presales in downtown Seattle. According to research by RSIR and O’Connor Consulting Group, 94-percent of the estimated 27,000 housing expected to deliver in downtown Seattle during the current decade will be for rent and not for sale. Market pundits say that condominiums are notedly undersupplied, citing developer’s overwhelming preference to build apartments instead of condominiums. Resale opportunities for downtown Seattle condominiums have averaged fewer than 50 units and the median asking price is more than $1.4 million, according to the NWMLS.
The Reservation Agreement is a first right of opportunity offered to consumers in exchange for a fully-refundable $5,000 deposit that will be held in escrow. Reservation holders will be provided notice when the final product offering is released by the seller including the final floor plan, confirmed specifications and fixed price within the quoted price range – just as soon as that information is a validated by the architect, contractor and members of the development team. Reservations holders must be prequalified by the preferred lender, Caliber Home Loans, in order to maintain a reservation. The seller will accept multiple positions for reservations in the event a prospective buyer’s first choice is already reserved.
“We are certainly encouraged that Seattle consumers have responded so favorably to our vision for KODA Condominiums,” said Kevin Hsieh, Vice President of Development for Da Li Development USA. “I only wish we had more inventory to offer.”
Hsieh says they are looking for other opportunities but it can take 12-24 months to entitle new developments through the City of Seattle and then another 20-30 months to build the condominium, depending on the size of the project. He recognizes the challenges in identifying land and digesting rising construction costs, which have been escalating by nearly 1-percent per month.
“We only build condominiums in Taiwan and are very comfortable with that product type,” adds Hsieh. “That said, we can also understand the strategy to build and hold these appreciating assets as apartments, especially as Seattle’s growth trajectory is so exciting. So, it’s of little surprise that our units are also attractive to individual investors.”
Jones intentionally limits the number of reservations offered to individual investors. The Reservation Agreement requires buyers to identify themselves as either a primary resident, second home buyer or investor and must be qualified as such by the preferred lender. He confirms that investor sales represent a minority of the reservations and that the overwhelming majority of demand is still from local homebuyers.
Mainland Chinese are noted as being a top international buyer profile for US real estate, according to Juwai.com – a leading international home search website in China with more than 2 million monthly users. Juwai’s survey of Chinese consumers ranked Seattle No. 3 of the top US cities in demand for 2017, behind New York (No. 2) and Los Angeles (No. 1) – the top reason is portfolio diversification within international markets.
“Seattle punches above its weight in terms of Chinese buyer demand,” says Carrie Law, CEO of Juwai.com. “The city attracts more Chinese buyers than you would expect for its size. A typical seller in Seattle is twice as likely to have Chinese buyer interest than one in greater LA or New York. Seattle attracts similar Chinese demand levels as those larger cities but is less than half their size. Seattle was built on immigration and technology. Links to China and the rest of Asia will perpetuate its growth story.”
The government of British Columbia recently imposed additional taxes for foreign buyers in Vancouver, BC, increasing from 15-percent to 20-percent as a method of curbing international home sales. Such a tax has been explored in Seattle but isn’t constitutional, according to experts on the matter.
“The rising cost of real estate in peer markets like Vancouver will only divert more international demand to Seattle,” said Eddie Chang, a real estate broker and member of RSIR’s Asia Services Group as well as a founder of the firm’s Government Affairs Council. “The fact is we need to work more on the supply of new condominiums rather than trying to curb the demand. The Washington State Condominium Act has been a major headwind in new development and until it’s amended, I fear we’ll continue to suffer from anemic inventory and rising prices.”
Chang notes that the act, which very consumer protection-oriented, has the unintended consequence of squashing developer enthusiasm to build condominiums because of the limited earnest money deposit structure and exposure to construction defect liabilities. A bi-partisan proposal to reform the act failed to make it to the House floor earlier this year, and will be pushed off for consideration in 2019.
KODA Condominium is designed by KMD Architects with pre-construction services offered by PCL Construction. Caliber Home Loans is the preferred mortgage lender. Marketing and sales are being provided by Realogics, Inc. and Realogics Sotheby’s International Realty, respectively. Title and escrow services are provided by First American Title and Escrow. For more information, visit www.ownKODA.com.