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Tuesday, October 24, 2006

Kids + Condos = No Way

Here's a tidbit from a Seattle P-I story last week about the lack of families with children downtown. The article doesn't really have much to do with home prices or bubbles, but we have talked at length about downtown condos in the past, so it is at least worth mentioning.

Sure, there's a way to get families to live in Seattle's urban core, but someone needs to go first — and that seems to be the problem.

Parents say they need condos built with families in mind. Developers and families say they need a downtown school. And school district officials say they need to see some demand.

But many local parents leave condos — big ones, in neighborhoods with good parks and schools — because they feel the need for their own yard. So maybe the real problem is an intangible — a cultural bias against raising children in condos. And observers suggest changing that might require gas to become so expensive and affordable houses with yards to be so far away that commuting takes too much time and money.
Oh my, it sounds like such a delightful utopia, doesn't it? After reading this article I remembered how we're always hearing that demand for downtown condos comes from "retiring baby boomers" (old people whose kids have grown up and moved out) and "young professionals" (young people with no kids). If families with children won't move downtown unless they're basically forced to, I guess those two groups would have to be the ones driving condo demand, considering they're pretty much all that's left. That is of course, if you assume that the demand coming from "investors" is negligible.

(Aubrey Cohen, Seattle P-I, 10.16.2006)

37 comments:

trackbike said...

Is there something wrong with young professionals and retirees? You seem to be implying that.

Wanderer said...

I believe that the question on this site is whether those 2 demographic groups can be fully responsible for the run-up in condo prices... and even if they are responsible, are the values realistic anyway? There is no judgment against them.

trackbike said...

Why wouldn't they be? For one thing, the number of people living downtown is still quite small, relatively -- we're talking maybe 30,000 people? And it is a wealthy demographic. Make sense to me. I guess I don't get the question.

Grivetti said...

Young professionals and empty nesters are the red herring here, its the red herring developers are using to install a 'lifestyle' into their product... They have no numbers to back it up, there's never any mention of out-of-state investors, yet other local articles mention how condo-towers have sold out overnight on the internet... hmmm... sounds like the Phantom Menace to me.

I know if I were living in Redmond or Issaquah or wherever, and I was enternaining the notion of dropping 500K on a luxury condo, I'd be damned sure I get get my arse out of bed in the morning to check out what unit I was going to purchase and talk it over with the sales office, line or no line...

I just got some B.S. 'be a millionaire overnight' ad for a 3-day conference starring 'Ivanka Trump'... immediately trashed it, but despite the downturn in the condovestor mania, people are still buying in and something tells me if you were to sit in on one of these snake-oil pitches, you'd probably hear Seattle advertised as the 'last bastion of the equity ladder'.

This article reeks of a developer tainted stank. Unless you're overtly non-traditional, you're probably not going to experiment with raising a family downtown. For starters you can't even walk to a convenient 24 grocery store for a baby-formula/diaper raid... so what's the point?

trackbike said...

grivetti -- if you provide some numbers or data, with sources, to prove that the empty nesters and young professionals are a "red herring" I will be more than interested to see it. I have yet to see any proof of that. I think folks on this blog are the ones providing the "red herring" with the "out of state investor" argument. Maybe I'm wrong (and at least I am willing to admit the possibility, unlike people on this blog who think they have something like Papal infallability), but I won't say I'm wrong until I see some evidence. I do know that in my building in Belltown, there are people living in all, or very close to all, of the units. No phantoms. So give me some proof that Belltown is full of empty units bought by out-of-state investors.

TimbakTumba said...

Trackbike- you have valid concerns but do you have data on how many units in your building are infact rental units?

MisterBubble said...

"if you provide some numbers or data, with sources, to prove that the empty nesters and young professionals are a "red herring" I will be more than interested to see it."

Provide some numbers or data, with sources, to "prove" that they aren't. I will be more than interested to see it.

"So give me some proof that Belltown is full of empty units bought by out-of-state investors."

Speaking of red herrings...I don't recall this debate being specifically about belltown. There are condos popping up like magic mushrooms all over the core Seattle neighborhoods.

For my part, I'll note that if the condos were being snapped up like hotcakes by childless yuppies, the developers wouldn't be desperately hawking them with yard signs planted in every median within miles of their properties. Right now, you can find signs for NoMa, Hjarta and the other Ballard monstrosity as far away as downtown Seattle....

trackbike said...

The bylaws allow for no more than 20% rentals in my building, and I think it is less than that (although my neighbor just bought a SFH and told me he is going to rent out his unit rather than sell it as he thinks this is a better time to rent than to sell - we'll see).

SeattleMoose said...

Other than

1) Noise
2) Pollution
3) Crowds
4) Bums/panhandlers
5) Lack of nature (trees/green/etc.)
6) Expensive but small floor plans
7) Outrageous HOA fees (non-deductable)
8) Buildings that don't fill and revert back to rentals
9) Paying for services/facilities you don't need or use
10) Crime

I'm all for downtown condos!!!

trackbike said...

Provide some numbers or data, with sources, to "prove" that they aren't. I will be more than interested to see it.

Sorry but you folks are the ones making the argument about these out of state investors, so the burden of proof is on you. I'm not making any argument other than I'll only believe it if I see some proof. And if you don't have the proof, stop saying it.


Speaking of red herrings...I don't recall this debate being specifically about belltown. There are condos popping up like magic mushrooms all over the core Seattle neighborhoods.

Well the PI article that The Tim was posting about is specifically about downtown (more than Belltown, true, but not Ballard, QA, etc.). It is young professionals and empty nesters who are supposed to be moving downtown. As for my personal experience, my building is full of young and middle-aged professionals, no kids, and only one retired couple as far as I know.

Peckhammer said...

"The bylaws allow for no more than 20% rentals in my building"

That bylaw is meaningless. Try enforcing it. How much money does the Board have in its legal/adminstrative column on their budget? Whatever it is, it's not enough... I guarantee it.

trackbike said...

seattle moose
yeah, the suburbs are great, eh? I love driving everywhere I have to go...watching TV every night because that's all there is to do...mowing the lawn on the weekends...sitting around getting fat. Sounds awesome. Enjoy!

Anonymous said...

I have a kid and I live in a downtown Vancouver (BC) condo. I rent, of course, but we're downtown by choice.

Maybe we're freaks, but I can tell you that there are tons of kids around downtown Vancouver. The schools are oversubscribed; the community centre mom dropins are over-run with strollers.

Lots of bubblesitters like us, actually.

Here's what seattlemoose said, and my responses IN CAPS:

1) Noise
TRUE ENOUGH, BUT PART OF THE URBAN ENERGY PACKAGE, I GUESS.
2) Pollution
NOT DOWNTOWN VANCOUVER. WE GET FRESH AIR STRAIGHT OFF THE PACIFIC. IT'S THE SUBURBAN GUYS INLAND WHO GET STUCK WITH POLLUTION.

3) Crowds

I KINDA LIKE HAVING PEOPLE AROUND. I FIND SUBURBS TO BE BARREN.

4) Bums/panhandlers
TRUE ENOUGH - THIS SUCKS.

5) Lack of nature (trees/green/etc.)
AGAIN, FOR VANCOUVER THIS DOESN'T APPLY. I GET TO PLAY IN STANLEY PARK AND ALL ALONG THE SEAWALL. IF I LIVED IN THE BURBS I COULDN'T.

6) Expensive but small floor plans
SMALLER SPACE, TRUE. BUT THE CITY IS MY LIVING ROOM. I HAVE RESTAURANTS, CAFES, STORES WITHIN 5 MINUTE WALK OF MY PLACE. I ACTUALLY GET TO *INTERACT* WITH OTHER PEOPLE RATHER THAN HIDE OUT FROM HUMAMITY IN MY BASEMENT OR LIVING ROOM.

7) Outrageous HOA fees (non-deductable)
NOT FOR RENTERS!

8) Buildings that don't fill and revert back to rentals
--

9) Paying for services/facilities you don't need or use

GOOD POINT - THE POOL IN MY BUILDING SEEMS TO BE RARELY USED. SUCKS TO BE MY LANDLORD WHO PAYS FOR IT.

10) Crime
THIS DEFINITELY SUCKS IN VANCOUVER. BUT, PART OF THE PACKAGE.

The Tim said...

And if you don't have the proof, stop saying it.

I think that's what we all want. We keep seeing articles that make the unsubstantiated claim that retirees and "young professionals" are supplying a huge demand for condos. People here are just pointing out that no hard evidence has been provided to substantiate this claim.

I don't think anyone here is claiming that the majority of the demand is definitely being driven by investors, just that we don't know.

Personally I think it's just as likely that most of the demand is coming from the two aforementioned groups. Ever heard of the phrase "more money than sense"?

trackbike said...

Ever heard of the phrase "more money than sense"?
I have. Ever heard the expression "sour grapes"?

trackbike said...

Hi there Van Housing

Nice to hear someone else on this blog who enjoys urban living. And good for you for raising your kid downtown -- that's great. I was curious about all these families who live in downtown Vancouver. How do they afford it? Or are they all wealthy folks?

Wanderer said...

I have no doubt that young single professionals are driving condo prices. Perhaps empty nesters as well (I just don't happen to know any). I'm 33, no kids, no wife (some would say this speaks to the intelligence of women) and love the idea of living downtown. I am the perfect target for a condo sale. Unfortunately, I just think that the amazing run up of condo prices has precious little to do with fundamentals behind property value. Sale/Rental value outside normal. Sale value/income outside normal. Over reliance on questionable job projections for the area (how many of the new employees can put 70K down and pay $1700+/mo before dues?) Amazing rates of condo and townhome conversion. Possible depreciation of SFHs stealing some of the future sales away form condos. There are plenty of young professionals in San Diego with good jobs that can no longer change cities every 2.1 years because they are tied to a condo that is $80K underwater.
3 months ago the crap that was available for $350K was either scary or depressing. Take a look now and there are actually some nice places... overpriced but nice. Who in their right mind would want to get in right NOW? Perhaps we are all wrong about there being a bubble in the condo market, but I guarantee that I will not be the one to test it.
As I said before, my would-be mortgage broker would have given me any loan I asked for to get me in a place last year. It was very clear to her that I just had no balls to start climbing the equity ladder. Did I miss out on a few months of appreciation? Sure. Am I happy to be renting to see how this unfolds? You bet.

MisterBubble said...

"I don't think anyone here is claiming that the majority of the demand is definitely being driven by investors, just that we don't know."

Well said, Tim.

I have no evidence that condo demand is being driven by any particular group -- but neither do the writers, realtors and RE industry shills who continually assert that price increases are a result of a sudden ubran migration of childless yuppies.

To me, it's just as likely that condominiums are in greater "demand" because they are cheaper than single-family homes (on average). Since this is a far simpler explanation than The Great Yuppie Caravan of 2006, Occam's Razor dictates that it should be the default argument.

In other words: if you want me to believe that people are abandoning decades-old demographic trends, you have to prove it, trackbike. I don't have to prove the inverse.

MisterBubble said...

Addendum:

Actually, I have evidence that baby boomers, in particular, aren't moving to the city (at least on a national scale):

Baby boomers aren't as hot on vacation homes as believed.

FTA:

"The suburban-to-urban flow of homeowners represents just 5 percent of the stock of all retirement-age empty-nest homeowners located in central cities.When the urban-to-suburban flow of empty-nesters is taken into account,the net migration effect from the suburbs to urban area is –7.2 percent.Any return of empty-nesters to the urban core is not enough to stem the tide of urban-suburban flight."

Boo-yahr, trackbike. Data smackdowns hurt, don't they?

trackbike said...

Boo-yahr, trackbike. Data smackdowns hurt, don't they?

Um, I don't know, since that is national-level data, has nothing to do with Seattle, and doesn't have anything to do with young professionals at all. But I see how people prove points around here -- just grasping at any data that they can find, no matter how irrelevant, and calling it a "data smackdown" and patting themselves on the back. Kind of pathetic...but if that makes you feel better about yourself, enjoy.

MisterBubble said...

"Um, I don't know, since that is national-level data, has nothing to do with Seattle"

Except for the minor detail that Seattle is a US city (last I checked), and therefore, one of the cities included in the analysis.

"...and doesn't have anything to do with young professionals at all."

No, and that's why I said that the data was referring to BABY BOOMERS. Which, if we go back to your post at the very tippy-top of the comments...

"Is there something wrong with young professionals and retirees?" (emphasis mine)

...happens to be relevant to the discussion.

disgruntledengineer said...
This comment has been removed by a blog administrator.
disgruntledengineer said...
This comment has been removed by a blog administrator.
Kaleetan said...

CATFIGHT!!

The Tim said...

trackbike,

I responded to your antagonistic comments with a plainly-worded explanation of the basic point that I and other commenters are trying to make, and you replied with a personal insult.

If that's the way that you want to participate in this conversation, I'm not going to waste any more of my time on you.

Grivetti said...

trackbike's agenda:

Ever heard the expression "sour grapes"?

'nuff said

trackbike said...

I responded to your antagonistic comments with a plainly-worded explanation of the basic point that I and other commenters are trying to make, and you replied with a personal insult.

OK, so when you say "more money than sense" that is a plainly-worded explanation? That is not antagonistic? But if I say "sour grapes" it is a "personal insult"? Talk about a double standard. And personal to whom? How do you know I was refering to you? Were you refering to me when you said "more money than sense"?

trackbike said...


Except for the minor detail that Seattle is a US city (last I checked), and therefore, one of the cities included in the analysis.

Yeah, by that logic, you could say Seattle is part of the world so you should take a look at global-level data and then draw conclusions about what is going on in downtown Seattle with its population of about 30,000 -- and probably less than 10,000 empty nesters. Seriously, if you don't understand why national-level data is not applicable to this situation, then it is pointless to argue with you.

SeattleMoose said...

Wow, trackbike is quite the blog hog.

trackbike = downtown condo cheerleader.

Trys to pass off as a young "hip" professional (note name) but the vigorous defense of any negative comments about the "precious" would indicate involvement in the RE industry. Either that or a FB.

Regardless, don't you have a bike to go ride? And don't forget to wear your helmet....just in case we run into each other.

trackbike said...

Well as a matter of fact, Moose, yes, I do have a (track) bike to go ride, and I'm not sure what you mean by "in case I run into you" but it sounds like something someone in junior high school would say. And sorry but I'm not pretending to be anything, I'm not in RE, thankfully, and I don't know what an FB is so I doubt I'm one of those either. You folks really want this blog to just be an echo chamber, the same posts and comments over and over! And if someone presents a conflicting opinion, you freak out. Clearly you folks don't want, or can't handle, being challenged. All I wanted was some evidence of what was being said,that the young professionals and empty nesters were not really moving downtown. Because judging from my own building, which is full of young professionals, I don't see where all this skepticism is coming from. And I still don't.

Matthew said...

This thread reminds me of an atheist and a christian trying to argue the existence of God.

There is no proof that all the downtown condos are being bought by investors, urban pros, or empty nesters. All we have is speculation. I think trackbike does have some decent points that should not be immediately dismissed. Myself, I like would like some raw data about the Seattle area condo market and investors. I have long wondered who is buying all the new Seattle condos, and really no one has supplied anything concrete.

Veedra said...

I've been following this blog for months and I am as bearish on RE as one can be. But I do value contrary opinion, otherwise the forum would get rather boring (I miss Meshugy in a way. Where did he go?). This blog has done a lot better job of maintaining the standards of discussion than many other bubble blogs, so let's just all get along.

Lake Hills Renter said...

I welcome contrary opinions and I don't have a problem with trackbike's position, just his tone. He started out antagonistic and has remained that way. Sounds to me like he wants argument, not discussion. They are not the same thing.

I too am interested in who is buying these downtown condos, and trackbike's anecdotal evidence is useful to some degree. But at this point no one has done any studies to determine any data on this for Seattle, so the "prove it's not true" arguments (for either side) don't hold much water. All we have at this point is the national study, which gives a theory that we can't support or disprove with local data.

uptown said...

I'm a single professional who would be interested in buying a downtown condo, but they are overpriced currently, so it ain't going to happen. With the number of buildings going up at the same time - expect prices to drop fast.

Seattle can only absorb so many new units at a time and every builder seems to being going for the high end market.

Grivetti said...

grivetti -- if you provide some numbers or data, with sources, to prove that the empty nesters and young professionals are a "red herring" I will be more than interested to see it

dude, don't be a Donnie Rumsfeld "prove to me the weapons AREN'T there!", the burden of proof lies with the people that cite it as an reason for downtown condo demand...

Some developer's are already bagging out on the whole condo-boom.

Lease wins out...

The developers filed plans with the city in August to replace the 53-year-old building with two 28-story condo towers, but decided not to build because they had concerns about the current market...

*sniff* *sniff*... smells a little like panic's in the air.

So, that tells me the current projects already in the pipeline are increasingly anxious to fill those 10K-25K Reservations at the condo-sales office. If that's the case... the steady supply of "young professionals" and "empty nesters" is drying up, but my opinion is that the Phantom Menace is disappearing as well, no packed 'be a millionair overnight' seminars, no retirment portfolios being rolled into investment properites...

Mix that in with a little lending tightening, and watch-out...

So who else is there to milk? Families of course, "come on down! The family will love it! Let's all live like Eastern Europeans in Apartment towers! Yeehaw! It'll be 'kitch'!"

I'm not buying... thanks trackbike

trackbike said...


I'm not buying... thanks trackbike


That is wonderful news for downtown! Please stay where you are -- it's where you belong (I'll bet none of your current neighbors can spell "kitsch" either!)

Grivetti said...

That is wonderful news for downtown! Please stay where you are -- it's where you belong (I'll bet none of your current neighbors can spell "kitsch" either!)

Dude, have you ran into Tyler Durden on a Red-Eye yet? He might be able to help you...