The August numbers are in, and condo numbers are up. The average price of a Seattle single-family-home was $575,000 last month (15 percent higher than last year), while the average price of a Seattle condo was $395,000 (32 percent higher than last year). In an already crazy-high real estate year, this is the biggest 12-month jump we’ve seen so far this year.
Why condos? Why has the price for these spiked so high?
For starters, competition. So many buyers are competing for so few homes (see last month’s report on Seattle’s tiny real estate inventory), that some would-be homebuyers have given up and are opting for more affordable condos instead.
Second, new condos aren’t being built. Apartments are more profitable for developers and builders, because (1) condos are liable to the state’s condominium act, and (2) there’s still an overwhelming demand for apartments.
“Everybody has so much work building apartments,” said developer Dave deBruyn, “they didn’t want the potential long-term liability of building condos.”
Here’s an important clarification: in most areas, condo prices are still below their astronomical peak during the last housing boom (In many areas, prices are still 25 percent or more below that peak). However, condo prices have broken the last housing boom’s high-water mark in downtown Seattle, Capitol Hill, and West Bellevue. If you’re looking for a condo, steer clear of those three areas.
What does this mean for Seattle?
It means more renting. Consultant Brian O’Connor estimates that 57 percent of new Seattle households will rent, rather than face either the steep price of a downtown condo or the prospect of buying a house in the suburbs. That 57 percent is particularly significant in context: just a decade ago, only 13 percent of new households chose to rent.
We also know, as these prices continue to rise and people continue to move to Seattle, this is not another bubble. These high real estate prices are here to stay, and real estate agents are more important than ever in a market like this.
Are you considering a condo? Talk to us. We’ll look at your situation and make a recommendation. We’ll look at all the angles and let you know if a condo is a sound investment.