Downtown Seattle witnessed fewer condominium resales during the first quarter of 2018 compared with that of the first quarter of 2017, largely because there were fewer homes to choose from. And the lack of available supply is raising further concerns about an affordability crisis. Currently, there are only 44 resale homes available for sale in an urban center of more than 80,000 residents but there are more priced above $1 million than there are at lower price points. Meanwhile, median home prices in Seattle are rising at 19-percent per year, according to analysis of first quarter 2018 data compared to the prior year.
Above & Below: Median resale prices of downtown condominiums are now $700,000 just 11-percent less than the median home price of a single-family home in the City of Seattle.
“Rapidly rising prices are the hallmark of a sustained supply and demand imbalance,” notes Dean Jones, President and CEO of Realogics Sotheby’s International Realty (RSIR). “We have some new presale developments on the horizon but it will take years to deliver these high-rise homes. This new supply will do little to address the current crisis and meanwhile, prices will continue to rise.”
The first quarter of 2018 reveals a concerning trend as the number of condominiums priced below $500,000 dropped to 1/3 of Q1-2017 numbers while price points above $3 million doubled year-over-year
Jones points to several recently introduced condominium projects that drew long lines and almost instantaneous reservations for presales, especially at price points below $700,000. In order to pencil at these values with construction costs rising by double-digits per year, developers are designing more studios and urban one bedrooms with in-line kitchens while parking and storage are optional.
“We just need more housing within conforming loan limits ($667,000 in King County) so homebuyers can benefit from lower (i.e. 5-percent) down payment options, qualify with lower incomes and enjoy more attractive interest rates than with jumbo loans,” adds Jones. “This run on entry level prices is also the target of first time homebuyers as many renters eye ownership when purchasing amounts to monthly payments similar to prevailing leasing costs. Rising interest rates are only exasperating the situation.”
Alternative housing options can be found in new construction of townhomes in the surrounding neighborhoods, albeit these are relatively few in quantity and require commuting to job centers. Consider that the City of Seattle has been averaging fewer than 750 new townhome units per year sold across dozens of neighborhoods, within scores of developments and throughout the entire city. That same unit count could be found within just two high-rise condominium towers on the same block in downtown Seattle where many owners could simply walk to work.
Above & Below: The City of Seattle is averaging about 750 new townhome and single-family home sales per year but the reality is there’s a diminishing number of sales at price points below $750,000 with no such new home sales occurring in 2018 below $500,000 – not surprisingly, the median home prices are rising.
A search for affordable price points, including all property age groups, size and quality levels, is proving to become more and more daunting in recent years. The following heat map compares single-family homes sold in the City of Seattle, identified by size and price point. The data clearly illustrates the depletion of options at entry level prices while an intensifying glow of price points are increasingly fetching more than $1 million.
Similar trends can be found in the center city with condominium trends. The following graphics show the volume of home sales at different price points and the effects on the median price per square foot. The most significant impacts are indeed at values below $750,000 where the aggregate sales are in clear retreat and prices are rising the fastest.