Buy A Downtown Condo RIGHT NOW!
Many of you pointed out the latest in a series of paid advertisements masquerading as reporting in yesterday's Seattle Times. The apparent purpose of the "article" was to convince the reader that 2007 is a great year to buy a condo in downtown Seattle, at any cost.
[Condo developer David] Thyer insists that Seattle isn't like other cities, where developers are struggling with an oversupply of new condos. There's a demand for condos in downtown Seattle, he says, drawing a contrast with the speculative buying frenzy that has led to a boom-bust scenario elsewhere in the country.So, a bunch of condo developers, condo marketers, and real estate agents all say that "it's different here." What a shock. And what evidence, pray tell, do they have to support that assertion? Estimates, intentions, efforts, and (I'm just guessing on this one) a sprinkle of pixie dust.
On Friday, political and business leaders met over breakfast at the Westin Hotel for an annual review of downtown Seattle. Real-estate economist Matthew Gardner shared Thyer's optimism, telling an audience of about 700 that demand for new places to live downtown will remain "very positive."
...
Developers say the new condos will sell, but will they sell at the prices developers want?
...
In Miami and Las Vegas, developers have had to drop their prices after condos outnumbered buyers.
Part of the problem is that many buyers regarded their new condos as investments and had no intention of living in them.
...
[Dean] Jones [president of Realogics, a local condo-marketing firm] estimates that speculators accounted for 30 percent or more of all new condo purchases in Miami and Las Vegas, compared with "no more than 15 percent" in Seattle. Now, developers require buyers to disclose if they intend to live in their new condos in an effort to limit speculators, Jones said.
Ada Healey, a vice president at Vulcan Real Estate, said speculators represent a "very modest minority" of its buyers. Thyer, president of R.C. Hedreen, said he tries to limit speculators to no more than 5 percent.
...
[Seattle real-estate agent Brett] Frosaker counts at least four projects where a significant portion of the condos sell for $1 million or more. Never before, he says, has downtown seen so many ultra-expensive condos come online at the same time.
"A lot of research shows there's a market for them," he said. "But it hasn't been proven yet."
Matt Goyer, proprietor of the local condo enthusiast blog Urbnlivn also had some critical thoughts about this article that are well worth reading. Considering that he is already a condo believer, it is commendable that he takes these cheerleading articles with such a large grain of salt. Kudos, Matt.
(Amy Martinez, Seattle Times, 02.11.2007)
(Matt Goyer, Urbnlivn, 02.11.2007)
15 comments:
I have rented an apartment before. But I don't understand why anyone would want to buy one?
Ya know...I would buy a condo. Not now, obviously, but in general: I rather like the idea of a home that requires little maintenance, no landscaping, gutter cleaning or lawn mowing.
The thing is? The only way I would buy a condo is if it were cheaper on a monthly basis than renting the equivalent space -- and that includes co-op fees.
I can understand wanting a condominium; I can't understand paying a premium for one.
That's the whole point. Buying a condo is not a bad idea--it's essentially an apartment that is slightly nicer--gold countertops and wine flowing from the showerheads etc. However, it really doesn't make much sense to pay a 3500 monthly (with or without fees) instead of 1500 when you basically get the same thing. When you factor that mold may come in at any given time, maintainence is your responsbility and the fact that you may only live in one a couple of years, it really does not make much sense.
The people who bought in 03 and sold in 04 probably made their money back (unless they borrowed against their equity to pay off their car and credit cards), but that is not going to happen for those who buy today.
file under 'bad timing' --
The owners of an apartment building my neighborhood are trying to hawk it to a new buyer for a condo conversion... in spring 2007.
Can you say "a little late to the party?" The keg is tapped out and the band is packing up...
b:
Which neighborhood is it? In and around Capitol Hill, it seems like just about every apartment building has gone condo over the last two years.
It sounds as if just in the last couple of months the flippers are starting to get nervous and pull back fearing that the 20 something urbanites might not be able to afford a $350,000 condo working at Starbucks.
Should start a new term... the f&#*!d condo converters.
Some blurb on KiroTv about some jazzbo developers kicking old people out of some, frankly pretty shabby looking, apartments to convert them. Sure you can throw around the granite countertops and stainless steel nonsense but its going to take a particular kind of no-doc ARM nutjob to commit to that kind of condo insanity...
I wish the developers the worst, I hope they tank and eat it. Kicking out the old folks to cash in on the ka-boom.... morons.
I can't see buying a condo either. I'd prefer to own the land under my home, though I want the yard to be small.
Sounds like the same thing that's happening in Portland: every little old apartment complex has been converted over to condos, it seems. I'm not sure where the younger folks in their 20's who are just starting out are going to be living anymore now that there aren't so many apartments - in Portland we don't have near as many higher paying jobs for them as you have in Seattle. And they're building the south waterfront highrise condos here in Portland which is bringing hundreds of units on-line in that area alone... I hear they're not selling well.
why wouldn't you buy if you like the area, can afford the payment, enjoy the tax benefits? If you can't afford to buy a stand alone because they are way out of the league, but a condo payment makes sense all things considered, where is the harm?
The smart money will be renting condos from everyone willing to pay the ridiculous cost per square foots we're seeing now.
Thanks for the kind words Tim :).
Matt Goyer from Urbnlivn.
Matt -
I'm sure most of us reading this could afford to buy a lot of things (especially with the climate of financing that allows anyone with a pulse to go hundreds of thousands $ in debt on any property)
That doesn't mean there's any value there. The smart money started selling in 2005. The dumb money, not fully aware they were late to the party, is selling in spring 2007. The truly clueless are buying their first "build your equity by getting on the real estate elevator at any cost" books-on-tape just now.
Question: could you afford MSFT when it hit $120? Did you buy?
b...
I think that we should give Matt credit with regards to his follow-up post regarding the smart money renting from someone who was willing (foolish IMO) enough to buy.
So...Although in the condo vs house thing...I after living in apartments my whole adult life...and then owning a home...I actually want a condo next...but I won't be buying...and when I finally decide to move my lazy butt up there...the rental market will be even more swamped than it is today...lots of high end condo's for relatively reasonable prices in my estimation.
Just my $7.02*
*traditional just my 2c has been adjusted for potential future hyperinflation in other areas than housing.
Matt said:
why wouldn't you buy if you like the area, can afford the payment, enjoy the tax benefits? If you can't afford to buy a stand alone because they are way out of the league, but a condo payment makes sense all things considered, where is the harm?
I think that it is widely (if not universally) accepted by the community on this blog that the payment on a loan for just about any condo out there will not "make sense" in the the current market.
Another issue that I have with condos is that the relatively affordable units on the market today offer little room for changes in an owner's lifestyle. I'm single, and if I buy a 1BR condo downtown it would work pretty well for me at this point, excepting the payment. But what if I wanted to get married or cohabitate with someone? What if my spouse and I wanted to have a child? What would I do? Sell the condo and by something else? Okay, great...as long as I'm not upside down in my mortgage. And that's a real possibility today's first-time buyers.
I'm a bit old-fashioned in my views and tend to view a house or condo principally as a place to live for a reasonably long time, rather than fancier style of apartment in which an envelope stuffed with cash arrives in the mailbox each year, just like magic. This (combined with my modest income) would be enough to keep me from buying condo even if all that I expected was a modest correction in property values.
"The smart money will be renting condos from everyone willing to pay the ridiculous cost per square foots we're seeing now."
Absolutely.
Condo conversions are always the last gasp of a real estate boom.
Here is a little gem, built in 1978 near Greenwood "going for" $275,500, on market for 94 days.
Looks like the other ones aren't selling either.
Ok so here you guys are reading a blog written by a guy who lives in a garage, and owns no real estate. Think to yourself what the term marginally informed is.
Here is a life lesson for the wary home buyer..
A story about my father.
In
1968 my father was a teacher at Garfield high School at the time his house tally was up to 6 owned and sold, 1 in progress to sell and 1 rental.
Summer 1968 purchased house on Bainbridge Island, over the next 20 years purchased land around him totaling 16.5 acres
1988 Last year that he made an income. His cash value, the dollars he had in a bank 23,000$ (NOT NET WORTH)
If you aren't with me so far it's a good thing you don't own a house
So in 1988 he was worth 23,000 in cash
Minus the debt he had from bank loans such as construction loans and mortgages
His Debt to asset ratio was high meaning he owed allot of money to the bank's compared to what he owned in land
Over the next few decades he would take a 2nd then 3rd and 4th mortgage on the house and surrounding property since he had no steady income from building houses. He used the money from refinancing for living expenses such as the kids, food, gas and vacations. So for my entire childhood since the age of 6 my father was at home when I came home from school. At this pint you are probably thinking WOW this guy is in supper debt and the bank is gonging to foreclose on the house soon. Well here is the kicker. My dad's Debt to asset Ratio went down during those years... yes he is now worth more than he was.. Meaning he owns the bank less money % than what he did. Let’s say he owed the bank 75% of his asset value in 1988 and today he owes 45%. HOW is this possible you ask, well the housing market went up at a rate that was faster than his bank charged in interest. The bank would occasionally want a cash payment that could not be traced back to any loan they had given him for example the bank said that in 2006 he HAD to pay 11,000$ towards the interest that had accumulated on the loan. So my father borrowed money and lived a normal lifestyle living on the water in a big home while raising 3 kids and traveling to Europe every few years, no my parents did not live lavishly they still drive normal cars not 70,000$ cars but they do drive a 2002 Volvo paid in cash. Never finance an asset that looses value unless you are making good money. Now this example can be viewed as a 1 in a million success story but the point I am making is that land will always be valuable people have to live somewhere, people don’t have to buy stock…. People will always live where there are jobs… MIDWEST is not a place to make good money on real-estate there are exceptions but for the most part this is true. Flint Michigan is great example Detroit is another, jobs are been cut so how can people live there? Seattle and the Greater Seattle area are growing rapidly and yes the housing market will always fluctuate but we live in a boom town with trade to China set to exponentially increase and high paying jobs increasing faster than most areas. buying a house in Seattle is a relatively safe investment. Yes you can and may loose money if you buy a house or property where there will be a freeway built in 2-5 years, but that’s why people do research and become informed as to what the climate is and will be in the faceable future. Don’t listen to this horse shit from a guy living in a garage RENTING!!! Renting is throwing money away, if you pay a mortgage you can always sell, if you rent you can never get your money back. The housing market in Seattle will not grow as rapidly as it has this is because of the economy but it will undoubtedly be a positive growth rate a long time…. OH yea so when people stop buying houses they start renting, so if you are young and like roommates you can always rent out your house and make a little cash waiting till your home value increases enough to sell and buy a bigger one.
Be informed and don’t be ignorant buy a house today! If you don’t want a real-estate agent getting all your money just send some letters to addresses of houses you like asking if they would like to sell… you never know grandma might want a condo instead of a house is west Seattle. My brother and I laughed when my father suggested this, well my brother never did send those letters but his friend did and out of 30 letters he received 2 responses… he purchased one a my brother purchased the other.
Post a Comment