Do you remember just 2-3 years ago when the Seattle skyline was full of high-rise construction cranes? That’s not the case anymore. When it comes to condos, we might not see another project built for 4-5 years. What does that mean for new construction condo inventory? Statistically it can be proven that inventory is in decline; here is why:
Let’s examine what the downtown Seattle condo market really looks like. Attached is the graphic provided to UCS (courtesy of Realogics Market Research). Realogics maintains detailed information on the sales of each condominium building. As you will see in the illustration below, the inventory of newly constructed condominiums is decreasing dramatically.
Clearly the biggest impact on inventory has been the transition of 4 major condo projects to apartments. These include:
- Expo 62 (114 units in 2008)
- MODA (251 units in 2008)
- Equinox (204 units in 2009)
- Rollin Street (208 units in 2009)
****A total of 777 units
The wild card is Volta (formerly known as Alex). The construction has stopped and at best this could come this year either as condos or as apartments. For now it has be cited as condos because that’s how it was last presented. What’s amazing about this situation is that even if it came to market today, we would still have less than 450 new condos to choose from. From the looks of it, it doesn’t appear that they are doing much with it right now.
In terms of availability by building, from the most to the least, it stacks up like this:
- Olive 8
- Fifteen Twenty-One Second Avenue
- Four Seasons Private Residences
- 5th & Madison
Interestingly, two-thirds of the available new condos are in Escala (now 30% sold) and Olive 8 (now 50% sold). Realogics identifies a unit as being sold as a non-refundable earnest money deposit (pending) or closed.
It is important to note that the title reports are notoriously late with real time information and often show fewer homes sold than actual.
So where does this leave us? The question becomes, is 450 units or less enough inventory for future demand? I think not. As the economy improves, many of those units will be purchased. I’m sure that eventually Rollin Street and others may come back on the market, but for now, as inventory continues to decline, Seattle may be looking at its next wave of new construction starts in 2012/2013.
It is important to understand that as prices continue to fall, many potential buyers have been renting. Eventually the increase in rent will drive more consumption of Seattle condominium sales. In addition, what is most fascinating to me is the enormity of going through the construction process. From start to finish it can take up to 5 years. I will be on the lookout for the first project to break ground. Until then, as consumers we have about 8 projects to choose from.