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Thursday, June 29, 2006

Condo Demand To "Outstrip Supply"

With the talk of all the new condos that are allegedly on their way to downtown, we've been wondering where all the demand will come from to fill them. Here are three possible answers:

Suddenly, a proliferation of new high-rise residential tower projects is on the books, in for permits, or under construction. In downtown Seattle, there are 13 projects already under construction, with another 49 proposed. If all of these projects proceed to construction, over 8,000 new residential units will be built by 2010 in the most rapid expansion of high-density development in the history of our city. It is anticipated that this number could easily grow to 10,000 new units as additional projects are queued up to meet continued demand.

The question that many are asking is: Will there be enough people moving into downtown to fill all of these towers? According to local economist Matthew Gardener, the market could readily absorb up to 2,500 new units per year. Based on a current assessment of when projects are slated for occupancy, the market will have difficulty providing this supply for the next couple of years because the typical high-rise tower takes three to four years to design and build.

Three significant trends will bring people to live in the urban center, and help maintain strong demand for downtown living:

1) Restrictive land-use rules

Land is scarce — what little land is left is comprised largely of farmland, wetlands or critical areas that need to be preserved. Growth management and jurisdictional planning restrictions on suburban development -- in combination with a push for sustainable and responsible growth — is forcing high-density development in the urban center of Puget Sound where mature infrastructure is already built. Because fewer units will be built in the suburbs, demand for in-city living will escalate.

2) Road rage

With gas about $3 a gallon and traffic getting more congested every day, many people are questioning a lifestyle that keeps them on the road for up to 12 hours a week. Free time is precious. The ability to live, work and play in an urban setting that allows a walking commute has a special appeal to many individuals contemplating a move back into the urban center.

3) Seeking new life-styles

Many people are tired of the frenetic pace of modern life and are seeking a new lifestyle that is less stressful. People are seeking calm from the storm; a place of refuge that is connected to something greater but that also affords privacy and security. Living in the city affords a more carefree, pedestrian lifestyle that is less complex and more enjoyable. Downsizing is not a fad, it is a major trend as people look to simplify their lives, and as boomers empty the nest. People are also buying second or third homes to live part-time in the city.
Maybe it's just me, but I don't see how forking over half a million or more for a tiny box of a home downtown is the gateway to a "lifestyle that is less stressful." The whole article is very pie-in-the-sky, so take from it what you will.

(Blaine Weber, Daily Journal of Commerce, 06.29.2006)

30 comments:

Anonymous said...

High payments aside, many do feel that true city living and non-dependence on a car is a much less stressful lifestyle.

Seattle has yet to achieve that. So developing downtown into a more residential zone is a very good thing, for those who want that auto-free lifestyle.

It'll also be a plus for the rest of us who don't want to live downtown but do like to visit.

More people living there means more people on the streets, day and night.

Right now, Downtown Seattle is creepy after 5 PM when everyone leaves work.

The more people who want to make it their home, the better.

matt said...

Wait, wait!

I thought all the condo demand is from boomers seeking big-city living, empty-nesters and all that? That was like the #1 reason a few weeks back, now its the "carefree, pedestrian lifestyle"? Wow, when has downtown Seattle been a 'relaxing place'? Yeah, the parking's sublime and the lack of grocery stores? oh so relaxing. Not to mention the honking horns, pan-handlers and sports related grid-lock... this is probably why New Yorkers are so mellow, huh?

Then there's this one

Just like our neighbors up north in Vancouver and down south in San Diego, we will witness distinctive emerging neighborhoods as downtown evolves

Yeah, well if you go to the SoCal bubbleblogs, the downtown condo-towers are starting to look like something out of 'Omega Man', half-filled, dark at night, park-benches littered with Realtor key boxes.

ughh, again an fluff article with no statistics and only vague speculation on why Seattle's rip for a 'condo-boom'.

biliruben said...

I don't see a whole slew of richie-riches who can afford high-end condos. $3000/mo mortgage payment isn't particularly relaxing.

That said, if:

1)there were affordable condos with decent space (>1200 sq/ft and <300K), if
2) I didn't have/want kids
3) I worked downtown

I would seriously consider it. A pedestrian life-style is generally simpler, cheaper and more healthy.

Of course none of the above 3 applies, so I'll reluctantly leave downtown to the rich empty-nesters. I'm skeptical there are 10,000 of them, however.

I do miss downtown. Pan-handlers are generally of the kinder and gentler variety in comparison to other cities I've lived in, and some are even entertaining. All the traffic issues are no longer issues if you live downtown and you have two functional legs. The noise you get used to pretty quickly, and is generally only bad around rush hour.

Maybe in 20 years.

Anonymous said...

Blah, blah, blah.

I used to live in Denver in the late 90s. Back then, many previously-seedy downtown neighborhoods were gentrifying, and a huge number of crackerbox condos were taped together in places that used to have nice, older homes. These cardboard condominiums were followed by a rush of equally cardboard yuppies, of course.

Go to Denver now. You can hardly give away a condominium in the "nice" parts of downtown.

Things change. What looks like an inexorable trend on Tuesday, is a cliche by Friday. Things will be no different here, just a bit slower (which is usually the case for Seattle, but I digress).

Anonymous said...

I work in the relocation industry and one of my files just came back trying to sell a house in denver. The kicker: Average time on the market - 9 months!

seattle price drop said...

This is OT but big news.

98105 price reduced listings on SFH are now edging over 50%:

June 29 per Zip:
47 on market, 24 price reduced

For condos, multis and SFH combined:

60 on market, 29 price reduced.

I know, I know, they were all overpriced to begin with (Duh!) that's the only reason they're reduced now.

Get out there and pick up one of these super duper deals before rates go up again in August.

SourMash said...

We have a long way to go before downtown is actually a livable neighborhood. This article hints at the issues. Three things would have to change before I'd really look at it:

1. Tranportation. Serious, big-city, full-time, reliable, public transportation. Light rail to the airport ain't enough.

2. Public open space. The "pocket parks" and plazas the architect in the article refers to are not functional public spaces. They are places where people eat lunch, take their dogs to crap, or do drug deals at night.

3. Pedestrian-accessible household retail that is open past 6 pm.

I'd actually pay a decent premium for a true urban pedestrian lifestyle in Seattle. But these condo towers won't really offer that.

Anonymous said...

Microsoft laid off 5 percent of its US sales workforce.

http://biz.yahoo.com/ap/060629/microsoft_job_cuts.html?.v=3

Anonymous said...

Anyone have a link to the Benegebreth site mentioned in a recent post? Thanks!

Anonymous said...

http://www.benengebreth.org/housingtracker/

Anonymous said...

I read this blog daily, but shit you guys love to pick and choose what to report.

The guy who linked to the MS article. In the same article, you see the comment "In general, Microsoft has been bulking up its work force. It currently employs about 70,000 employees worldwide, up from more than 63,000 as of last September".

On one hand they laid off 148 (and all of those people are given 6 weeks plus severance to find another job within the company so the net result might be half that number) but on the other hand they are hiring 10k people over the coming years.

optioned unarmed said...

Right now, Downtown Seattle is creepy after 5 PM when everyone leaves work.

Is this still true? I haven't been to Seattle in a while, but remember noticing this in the past.

The place where I am currently bubblesitting seems to be encouraging new-construction condos in slummy areas as an a$$-backwards artificial way of trying to encourage gentrification and reduce crime.

optioned unarmed said...

Anon Thu Jun 29, 04:10:48 PM PDT:

I agree the microsoft layoff of 100 odd people is irrelevant in the larger context of things. I read that link really quickly and dismissed it as meaningless. It has no relevance to Seattle's economy or to its housing bubble.

Anonymous said...

The guy who posted the link to the article here...

I simply copy /pasted the title article and meant in no way of trick or deceive anyone.

Rumor has it there will be more lay offs after vista (just a rumor)....

realistic realtor said...

"Wow, when has downtown Seattle been a 'relaxing place'? Yeah, the parking's sublime and the lack of grocery stores? oh so relaxing. Not to mention the honking horns, pan-handlers and sports related grid-lock... this is probably why New Yorkers are so mellow, huh?"

Some people weren't meant for the city.

Anyway, I used to live on Cap Hill before buying in North Seattle. I hate it up here and can't wait to move back. Sure, there are some seedier sides of city life and Seattle still has a long ways to go in order to provide adequate services and infrastructure. But, I miss the pedestrian lifestyle and having most everything within walking distance.

However, the way things are going, I probably will only be able to afford some dinky little studio with a view of the alley. But, yeah, I'm willing to sacrifice space/value for urban lifestyle.

Anonymous said...

option unarmed-

Yeah it's creepy after 5PM. Because it's deserted.

That's why I'm looking forward to more people living downtown. It just needs more bodies walking around all hours.

And grocery stores and green space.

It's a shame that the Lake Union park got voted down several years back. Would have been awesome to have a huge park there.

matt said...

Some people weren't meant for the city.

I think you missed my point, the selling point was "relaxing", not the allure of the 'city life' and all its attractions/distractions etcetera.

Seattle's city-corp was not meant to be lived in, Cap-hill is a different story, I like it up there, but this is not the area of development they're hyping..

Anonymous said...

Feel totally betrayed by Bernanke. .25- what a whimp.

Looking to Japan to raise rates in July and force our hand in August.

Ah, the suspense....

Anonymous said...

Supposedly there are two grocery stores which have signed deals downtown but have not been announced... Retail Broker Maria Royer (sp?) said this at the recent downtown condo symposium... quite likely they may be finding a home in the base of one of the condos. The more people that arrive downtown, the better it will become. (I live in the Newmark, 2nd & Pike and have seen an occasional drug deal, but love walking to work, through the market whenever I want, and occasionally sampling the nightlife).

meshugy said...

Wow...the Leafers are picking up the slack in the housing boom:

Existing-home sales in Canada smash record

In a few years B.C. equity refugees could be replacing the ones from CA...

Eleua said...

meshugy,

You sure do like to yank on peoples' chains, don't you?

matt said...

In a few years B.C. equity refugees could be replacing the ones from CA...

Dream on Meshugy, dream on...

Eleua said...

anon 1229,

If you are looking to Helicopter Ben (as he is called on many blogs) to exercise any type of fiscal sanity, you need to seek professional help.

The FED is run by the applause meter. He is just aching to cut and print.

Rather than referring to him as "Helicopter Ben" (droppin money out of helicopters), I prefer B-52 Ben. We will be carpet-bombed with dollars.

meshugy said...

No chain yanking...just surprised to see all the housing activity in Canada this late in the game. Considering their economy is so tightly linked to ours, you'd expect they'd be experiencing a similar housing slow down.

Anonymous said...

And if we are carpet bombed with dollars (and I agree that the market is now expecting that after yesterday), doesn't that imply he is going to do what he can to re-inflate the housing market?

Buy gold?

Eleua said...

Anon,

It would APPEAR that B-52 Ben is trying to keep the housing market afloat.

In reality, inflation without wage inflation, will kill the housing market.

If your monthly income is fixed, and your food, medicine, energy, and retail expenses go up, then the amount of money you have available to chase housing goes down.

In the 70s we had wage inflation. In the 80s and 90s, we had sinking interest rates. Today, we are experiencing the inverse.

The FED can only control the short end of the yield curve. Mortgages are usually linked to the 10yr interest rate.

The FED is trapped, and they know it. Wall Street and middle-Amurhikuh thinks it is riding to save them.

Eleua said...

Yes, gold is a good insurance policy against a stupid FED.

emcityjill said...

anonymous 6:12,
I work right down there on South Lake Union and, in fact, the city (or Paul Allen...or are they the same thing?) IS doing a park there! A rather large one. Perhaps it's a different deal than what you know was up for a vote?

Nozferatu said...

Feel totally betrayed by Bernanke. .25- what a whimp.

Bernanke CANNOT raise the rates faster than this unless he wants to cause a complete collapse of the US economy.

People in this country are truly in utter denial about how poor the economy is right now.

We're up bald-spot deep in a war debt that's incredibly large and growing thanks to the christian freaks in power, the foreign investors (Asians mostly I'd say given that they are the only ones able to buy jack around here and in California these days...anyone wonder where they get their monies from???), and a ludicrously inflated housing market that by all logic is completely unsustainable, we're in big trouble.

The media and government are now playing mind-games with people in order to prevent panic...yes the same panic driven mentality was great on the way up...everyone made money. One the way down alot of people will lose and I'm not shedding one tear.

Anonymous said...

Most downtowns in America are "creepy" unless you are in Las Vegas.