As unemployment continues to creep up and foreclosures soar, the housing market remains in a deep slump. Statewide, there were about 50,000 homes for sale at the end of June, a greater than 10-month supply of inventory. Glenn Crellen of the Washington Center for Real Estate figures the market will continue to weaken through the end of 2010 and perhaps as late as early 2011.
The market for condos is worse. Matthew Gardner, principal with Gardner Economics, thinks it could be two years before the condo market returns to normal and prices stabilize. A few properties may do OK, says Gardner, because they occupy unusual niches. A downtown Seattle luxury condo project called 1521, for example, is "well designed and in a great location," explains Gardner. Although the units are expensive-they start at $1 million-they have stunning views that can't be blocked and are priced at half the rate per square foot of the nearby Four Seasons hotel and condo complex. William Justen, the building's developer, and Blaine Weber, its architect, both live in the building.
And while the general market for downtown condos may face more price declines, some argue that the downside is limited by the scarcity of new supply that will come into the market once condos from the new Escala development, one of the last downtown condo towers to come on the market, are sold. Many condo projects planned for downtown have been canceled or delayed because of the lack of financing and weak market conditions.
Paradoxically, another good sign for the residential real estate market in downtown Seattle could be the poor commercial real estate market. The oversupply of office buildings could be a positive for Seattle by helping to lure more companies downtown. Russell Investments' recent decision to move downtown could help generate demand for condos in the region.
An Uncertain Future For Seattle's "Ghost Buildings"