King County condo shoppers who tentatively reentered the market when it began to slacken in the spring have more reason to celebrate: A trend of falling prices and rising inventory solidified as spring turned into summer, according to monthly real-estate data released Monday.
Median condo prices across the county are down 3.4% year over year, to $400,000 in July. Condos are staying on the market for almost a month. And active listings are up by 39% over last year. That means buyers can afford to cool their heels before making an offer, said Windermere condo broker Jeff Reynolds, who runs the urbancondospaces.com blog.
The July glut in the resale market is sparked, in part, by sellers who are finding “it’s harder to be a landlord in Seattle than it used to be” because of regulatory changes and pressure from falling rents, said Seattle Redfin agent Jessie Culbert, who specializes in condos.
A June 2018 report from the University of Washington found that nearly 40% of Seattle owners who rent out their condos have sold or planned to sell their units in response to city regulations, including limits on move-in fees and criminal background checks. Another city ordinance unpopular with landlords, mandating that leases go to the first qualified tenant, was struck down by a judge last year.
In Seattle’s downtown core, it’s a slightly different story. Here, the condo market has been picking up. Downtown condo resales are up 18% over last year, and presales for new developments are also gaining speed.
Three years ago, the market was so overheated that buyers waited in line to buy units. We’re not back in those days, by a long shot. But the new sales figures indicate that at least downtown, some buyers are striking before the iron is hot.
“This is probably one of the better windows for a buyer than we’ve seen in eight years,” Reynolds said. Buyers have been able to negotiate for more price reductions than last year, Reynolds said, even in neighborhoods where sales are increasing.
Luxury condos hustle to attract buyers
Meanwhile, new luxury condo developments in Seattle are working hard to entice buyers with a slew of bonuses and financing options.
The Gridiron in Pioneer Square reduced prices and is offering a $25,000 buyer bonus. Downtown, Spire is offering buyers a decorator allowance in the tens of thousands of dollars, and down payment assistance. Other developments are willing to consider employees’ restricted stock options as equivalent to income for the purposes of qualifying for presales — an inducement primarily aimed at new Amazon employees whose stock options haven’t vested.
Units in the new developments aren’t a whole lot less expensive than a single-family home, even in pricey King County. One-bedrooms at The Emerald, another downtown condo development, are pitched at $559,000; two-bedrooms are selling for close to $1.5 million.
There’s some evidence the goodies are working, said Dean Jones, the president of Realogics Sotheby’s International Realty, which markets 15 developments in Seattle. First Light in Belltown, priced at around $1,500 per square foot, has sold two-thirds of its units before breaking ground. In February, First Light offered BMW leases and trips to London as inducements to buyers as part of a Chinese New Year special, a sales agent confirmed.
Developers and listing agents are betting that growth in high-paying tech jobs — including the addition of 2,000 Apple jobs in the Seattle area in the next two years — and more foreign buyers will drive sales at new luxury developments.
“Folks have put so much weight on Amazon being the driving force behind our economy,” Jones said, noting that Amazon has been locating more of its operations on the Eastside. “But consider Expedia’s move to the Interbay area. Google and Facebook and Apple haven’t even begun their job growth here.”
Outlying counties see strong home sales
No one’s waiting in line to buy condos, but they are waiting in line to buy homes in Thurston County, said Dawn Weisdepp, a broker at Van Dorm Realty in Olympia.
“Buyers are lined up outside of houses,” Weisdepp said. “I showed a house yesterday that was for $319,000. I had to lock the door to prevent other buyers from coming in and viewing while my clients were viewing.”
Trends in single-family homes are more of what we’ve been seeing for the past months: Markets in outlying counties keep heating up as King County keeps slowing down.
Homes have been selling faster in Thurston County than almost anywhere else in the state since April last year. Modestly priced houses are driving the trend, according to last week’s S&P CoreLogic Case-Shiller report, as Seattle-area buyers look for less expensive markets. Tacoma and Pierce County, too, have sustained increases in home prices of 6.1% from July 2018, although this month’s median price of $375,000 is a minuscule decrease over last month.
Median home prices in King County continued a six-month decline, dipping by 2.7% in July to $680,000, according to monthly sales data from the Northwest Multiple Listing Service. King County is still far and away the priciest county in Washington for homebuyers.
Falling home prices in Seattle’s core
Within the county, there are pockets of stronger growth even as home prices in the city center have fallen in the past year by as much as 15.1%. Meanwhile, southeast Seattle has seen an uptick in both sales and median prices, from $640,000 to $710,000 last month — a 9.2% increase year-over-year. And up north, in Everett and Lake Forest Park, prices have rebounded from last month’s decline.
Year-over-year growth also picked up in Mercer Island, where median prices gained 13.7% to $1.91 million, continuing a three-month rise, and on the Eastside. But since Mercer Island and West Bellevue are the only neighborhoods in the county with more than 10 weeks of inventory — they both have over four months of inventory — those markets may be headed into neutral.
Elsewhere on the Eastside, last month’s falling prices have been replaced by modest gains almost everywhere except south Bellevue and Issaquah, where inventory rose by a third and prices fell by 10.3% to $942,500.
All in all, July was a month “balanced on a fulcrum between growth, stagnation, and decline,” said Northwest Multiple Listing Service director John Deely. Some regional hotspots aside, condo sales slowed. Home sales continued to surge in outlying counties, while they slackened in King County. And the Eastside showed stronger growth than previously. But no single trend dominated the market.