We have 5 reasons why you should consider selling your Seattle condo.
Before we get started, lets be clear. The Seattle economy is on fire. There has been a lot of discussion lately on annual price increases and fierce demand. What we know for sure is that prices are being driven higher by a mix of low interest rates, steady job growth, household formation through in-migration and wage expansion.
With that said, just like in any other market sector, housing must have a cycle. We are not suggesting the market has reached it peak. This post is to provide clear-cut, factual reasoning for condo owners who may be thinking about selling.
Inventory is at record lows. Seattle is experiencing an economic boom. Downtown Seattle’s population is up 8.24% and employment is up 13.72% since 2010. However, the number of Seattle condos for sale is down significantly. In 2008 there were as many as 2,500 Seattle condos for sale (both resale and new construction). As of today, there are currently 107 condos actively listed on the MLS. From June through November of this year, there were 501 Downtown Seattle condo sales or nearly 85 sales per month. From an inventory perspective we have about 1.2 months of supply. In a normal (balanced) market, you would see 3 months. So, what does this all mean?
Its a SELLERS market. However, it won’t be that way forever. Real Estate cyclical.
Seattle rents have increased dramatically in recent years. According to Zillow statistics, rents in Downtown Seattle have increased 37% since 2011. What does this have to do with condos? Well, when rents go up, historically buyers find reasons to own versus renting. No one likes to throw their money away on rent when they can own an appreciating asset. This is a contributing factor to the buying demand in Seattle right now.
Eventually if we reach an excess of rental units, we could see this trend of rising rents reverse. We believe that Seattle will experience moderation of rental pricing in the not so distant future. The Downtown Seattle Association suggests we have over 10,000 apartments currently under development.
You don’t have to be an economist to understand the impact of China investing in US assets. Specifically real estate. In September of 2014, the New York Times reported that nearly 1/3 of all $1m plus purchases in certain areas of Seattle were Chinese. The Chinese were the largest group of foreign buyers in the United States in 2014, writes the NY Times. Citing 22 billion dollars purchased in US real estate. The question is, as much as the Chinese have fueled the market in Seattle, what would happen as demand from China recedes? We believe we are seeing that happen now.
Our market is not dependent on China, but in-city condos have certainly been fueled by the Chinese buying.
It is inevitable that rates will be going up. So what happens in that environment? Well, initially there should be a quick wave of buying. Those who have waited, and waited, and waited will finally jump off the fence. With that said, with each up-tick in rate, buyers lose purchasing power. As a seller, you want buyers to have access to low rates. We believe there are plenty of buyers left that will choose to purchase during the upward move in interest rates. However, that won’t last forever. Your time as a seller is right now.
NEW INVENTORY/ECONOMIC UNCERTAINTY
Our last point is simple. As developers add new construction inventory to the market, inventory will rise and buyers will have more options to choose from. In addition to added inventory, it is very difficult to predict where the market will be 12-18 months from today. With the election coming next year, it will be interesting to see which direction the Nation is headed. If you own multiple properties or you want to shift to a risk-off mentality, you can sell in this environment and make plans for your next purchase in the distant future.
We believe Seattle is an AMAZING city. We predict more appreciation and those that keep your assets (hold) will likely enjoy gains from a fruitful economic climate. However, just like in finance, you never lose money ringing the register and taking some profit. We aim to challenge your thinking as an owner and to explore all options during good and bad economic cycles. The state of the condo market can be debated.
Our goal and mission is to be a thoughtful resource and a real estate expert for buyers, sellers, renters and condo enthusiasts. Have questions? Contact us.