How are Condos Performing These Days?

Speaker 1: [0:09] Hello, hello, and welcome to the Awesome in Seattle podcast. This is your host, Christian Nossum, from the Awesome Nossum Group at Wilson Realty, and I'm here with my awesome co-hosts, the one and only Jason Saldarriaga.

Speaker 2: [0:22] As

Speaker 3: [0:22] always.

Speaker 1: [0:25] And the dog whisperer, Les Cutting.

Speaker 2: [0:28] Les is always more.

Speaker 1: [0:31] Yes, it is. Um, we are, if you don't already know, we are a group of real estate agents in the Seattle area, and, uh, we love talking about real estate and getting people up to speed on what's going on. So today, we are talking all about Seattle's condo market. Um, the condo market There's been some rumblings of, you know, people thinking that there's some steals out there, that the condo market has just cratered. Um, uh, that's not totally true. There are potentially some deals out there, but it's definitely not cratered. Uh, so we're gonna go over that. We're gonna dispel any potential rumors or, you know, concerns of cratering, and just get you up to speed on what exactly is happening. So Jason, why don't you start us off?

Speaker 3: [1:18] Yeah. So let's first just discuss really quickly why condos are different from single-family homes. In terms of how the markets are performing, Seattle as a whole this year, especially since COVID, has performed incredibly well, and Christian's gonna go really, dive really deep into the data in a second. That said, if you separate out condos from single-family homes, they are performing differently. C- condos are not performing as well as single-family homes, and a lot of this, just anecdotally, if you just think of the dynamics at play, it kind of makes sense. It's what you'd expect. So first off, COVID has taken a lot of people by surprise and changed a lot of their priorities. You know, a lot of people are currently in apartments or in condos, and the walls are closing in, so to speak . You know, they need more space. They might now be working from home every day or 50% of the time, and in the future it might look like that's gonna continue for the long term. And so instead of needing just a two-bedroom, you know, your, your needs might have doubled now, especially if there's two of y'all and you need separate spaces because you're on Zoom calls all day. If you have kids who are in school and they're taking classes from home, uh, you know, the space needs have just dramatically altered with COVID. And you, on top of that, add the fact that condos are generally located in denser areas because of zoning, so you're paying a premium for being centrally located. But if you're working from home, don't need to commute as much, then that location might not be worth it to you. It also, y- you know, you live there for a reason, potentially, to enjoy the businesses and the, uh, the neighborhood, and if you're not going out, you know, to the restaurants and that sort of thing like we are during lockdown, again, you're paying a premium for what? So this is kind of what we're hearing from a lot of clients. Um, and it just- You, you think about it, it makes sense. So people are really wanting more space, needing more space. They're wanting a yard to just get some fresh air. Amenities that they're paying for currently might be off limits because of the restrictions, and it just all adds up to kind of making condos not be as aggressive in terms of the competitive nature as, um, single family homes. I do wanna add one more thing on top of this, just in general. If you take a step back outside of even just this year, condos versus single family homes, if you think of a single family home, you have the improvements, which are the parts of the property that a human basically has built, so it ma- basically the structure, the house itself. You also have the land upon which the house rests, and those two, uh, parts of the property have value, and they depreciate or appreciate at different rates. A condo only really has, uh, the improvement itself. You're not buying land. You're buying location, though. And so just in a general sense, even outside of this year, condos versus single family homes, they do perform differently for that fact alone, let alo- let alone other, other aspects. So, um, to speak more in depth about the data, let's shoot it back to Christian, uh, to, to really hone in on those details.

Speaker 1: [4:46] Yeah. I think you did a great job explaining that. Well done, Jason. All right. Let's go over some of the data, and let's start with pricing, 'cause that's what everyone pays attention to. So surprisingly, prices of condos compared to single family homes… Or I guess let's first look at both of them, and let's look at it year over year. So we are in, uh, November, but the c- the nearest stats that we have are October. So October 2020 compared to October 2019. Year over year, condos have actually increased 10.5% in price.

Speaker 3: [5:20] Wow. That's a lot.

Speaker 1: [5:20] Yeah, I know. Most people think that they've gone way down, so it's interesting that they actually haven't. Uh, single family homes in Seattle have actually gone up only 6.7%. So it's- Hmm … it's interesting, and, and we keep hearing that condo or that, that single family homes are so competitive, but it's not always in the heart of Seattle that these, uh, competitive houses are going up for sale. A lot of this action is happening in the suburbs or outside the city limits, which we just did a recent suburbs, uh, podcast episode. So if you wanna learn more about that and the dynamics at play there, just refer back to that episode. It was just a couple back. Um- Let's go over previous all-time high for both condos and single-family homes, and I think this will kind of help, uh, k- really it's just continuing the conversation we've been having at, on this podcast for a month, year, uh, whatever it's been. Um, in 2018, condos, their peak price was in May of 2018, same with houses, and the peak for condo was 533,000. That's actually decreased for condos down to 495. So it was peaked May 202-- or 2018, 533, it's now at 495. Single-family homes have actually gone about the same. So they peaked in May of 2018 at 800,000. They've kinda gone a little bit lower than that and then just kinda stayed pretty steady until recently when they've kind of creeped back up, and they're now actually right at about the same as May 2018, and that's $800,000. Let's dig, dig a little bit deeper into some of what these stats mean. Let's f- let's go over days on market. So this means how many days has the home or condo been on the market before they accepted an offer? For single-family homes, it's been about seven days almost all year long. COVID didn't really change that at all. Uh, condos, they're at 16 days. That means from the day it came on the market until the day it accepted an offer, and that's actually pretty much the same trend as usual. It's really nothing dramatically different. Um- The trend has pretty much stayed the same, meaning if you were to look at this on a chart, the graph going up and down is about the same as previous years. Now, where the graph or where the line is on the chart has decreased because there's actually about twenty percent less days on market than we were last year. Um, so it's actually places are selling faster this year than they were last year. Now, here's where a big increase has happened, and that's the number of condos for sale. And including all condos in Seattle, they have increased, the number of condos for sales increased fifty-one percent year over year. That is a lot, and that's actually a trend that started in March once COVID hit. Uh, and in March, we only had about two months of inventory, and now we're at four point nine months of inventory. And if you remember, if you've attended our Beers and Home Buying class, which if you wanna attend, it's totally free, just go to beersandhomebuying.com. That's beer like the drink, beersandhomebuying.com. In that class, we talk about a balanced market. A balanced market is one that doesn't really favor sellers or buyers. A balanced market is usually four to six months of inventory. We haven't had that for single-family homes in years and years and years. But condos, they're currently right smack in the middle of that. They're at four point nine months of inventory. And what that means is that if no new homes came on the market at the current sell-through rate, there would be four point nine months of inventory available Uh, in March, prices for all condos peaked at four eighty-three five hundred, and they kinda fluctuated throughout the year with a low of only four fifty in June. Uh, but now it's actually higher, and it's actually at four ninety-five now, which is interesting. One thing in terms of condos that did see a difference was one bedroom or smaller condos. In March, pri-- this is right when COVID hit, prices actually peaked for the year at four hundred and thirty-five thousand dollars, and they've actually dropped down to about four hundred thousand right now for the median sales price. So that's one market where you could potentially get some deals. They've actually… They've been selling for around ninety-eight percent to a hundred percent of the asking price all year long, and that's about the same trend as the last two years. We just have a lot more available. So overall, there's not too dramatic of a change if you're looking at the actual trend lines. The big difference has really been found in the one-bed or smaller units, which are less expensive now than before COVID hit, and there's a lot more month supply available. We actually haven't had this month's or this many months of inventory available for sale. You'd have to go all the way back to April 2012 to get at least four point nine months of inventory, and then you'd actually have to go back to November 2011 to get the actual number of, of condos for sale. So- Wow … it's, we actually have a lot more inventory now than we have in almost a decade. It's pretty crazy.

Speaker 3: [10:59] Yeah, in the last couple of years, we actually had quite a good amount of, uh, pipeline in terms of new large scale condo developments, especially downtown and-

Speaker 1: [11:09] Mm-hmm … Speaker 3: the Denney Triangle and South Lake Union areas and that sort of thing. So interesting. Yeah.

Speaker 3: [11:15] Very interesting. Um-

Speaker 1: [11:16] That's a good point. I mean, there are some big developments that are coming on the market. Uh, they don't have all their units for sale on the market, so there, there's a few hundred units that are coming on, but they're not all reflected in this data yet. Uh, those buildings, those new construction buildings are Nexus, First Light, which only has a few listings available, uh, currently on the market. Um, Spire is another one, and then The Emerald. Those are kind of the big four condo projects on the horizon that, that are kind of starting to trickle onto the market. The Nexus building is the, is the one that has the majority of that, uh, market data available. All right. So Les, let's talk about buyers. What does all this mean for buyers?

Speaker 2: [12:00] Oh, man. So it means that deals, there's deals out there to be had. For example, a two-bed, one-bath condo in Queen Anne in a small building, didn't have very many amenities, recently sold for 20K under asking price just after 34 days of being on the market, and it sold for $405,000. So that's around 4.8% under the ask price. That's not the standard for condo sales, but it's not uncommon right now either. So things buyers can do to get deals with- in the, within the condo market is really just study the market. When you're our client, we teach you the market with something we call a sold search, and they are very beneficial for a lot of our clients because it saves you guys so much time, so much effort. Um, once you… And you become an expert. You really know what's a fair deal, what is a good deal, what's a bad deal, and where those opportunities lie within the condo market, so.

Speaker 1: [12:55] Yeah. In fact, Les, you're helping a couple people right now in kind of that-

Speaker 2: [12:59] Condo world … you know. I think-

Speaker 1: [13:01] Yeah, condo world between, like, Queen Anne, South Lake Union, Capitol Hill You have a couple active, active lookers right now, and yeah, it's, uh, there's some choice-

Speaker 2: [13:10] And-

Speaker 1: [13:11] for the first

Speaker 2: [13:12] time in a while … for sure. I will shoot it back over to Jason in regards to sellers and what does it mean for them?

Speaker 3: [13:17] Yeah. So, I mean, Christian kind of already s- uh, spilled the beans here, but just to reiterate, you know, if you're a seller of a condo, y- at the current time, you have more competition. There's a lot more other condos listed compared to what we've seen in the, in recent memory. That said, prices have not necessarily de- decreased. Even as we say, you know, the condo market is more subdued compared to single family homes, that is not to say prices have decreased, especially for properties, for condos that are larger than one bedroom. So just keep that in mind. We get a lot of clients who are a- who ask us if they should sell now or wait and hope for, like, things to be better in the future, and, uh, you know, right now things are very good, you know? So-

Speaker 1: [14:08] Yep … Speaker 3: uh, you know, just keep that in mind. It's not necessarily that you wanna wait. I think it's more important as a seller for you just to understand the market, and have a good agent on your t- on your side that can really help market your property and make it stand out. Um, something else that a lot of people are cognizant of and thinking about right now is the eviction moratorium. Just keep in mind, this does not prevent you from selling. If you have a tenant and you need to sell your unit, your property, you can still evict them. You just have to give them proper notice, I believe it's 60 days, and you have to make sure you do it in the proper way. It has to be, you know, official and that sort of thing, so you have a record and… But it, the Seattle website and the Washington State websites, they, they lay it out on what you as a landlord need to do if you are going to sell your property or move into your unit. Um, so just keep that in mind. Yep. That, that should not prevent you from selling. That's a very good point. Yeah, and I, I feel like there might be an opportunity for buyers, I just thought of this, um- Where some of these landlords that own their condo but rent them out, I don't know if there's gonna be as many people renewing their leases in these condos. So there might be even more inventory coming on the market, uh, in the future once some of these leases start to expire. It'll be interesting to follow that trend.

Speaker 3: [15:37] Mm-hmm.

Speaker 1: [15:37] Um, yeah, it just, yeah, that just popped in my head, and I think that's a, a good point. So, so let's summarize everything. So in general, condo prices, uh, or condos are still selling very well. They've gone up on aver- or median sale price has increased 10.5%, 10 and a half percent year over year. That's not bad. The number of days on market is actually lower than it was a year ago, and it's only at 16 days on market before they get an offer. Uh, that said, there is a lot more inventory, so for buyers, there's more choice, and for sellers, you just gotta be aware that you gotta make your unit stand out. So whether that's staging, whether that's, uh, professional photography, a Matterport 3D walkthrough tour, or actually doing some updates to your unit, that might be what it takes to get it sold these days. And if you are one of those sellers that needs help with that, we can definitely assist. Uh, when it comes to selling, we can help. We have, uh, a tool available where you can actually update your home and not have to pay out of pocket. You can actually pay for those updates at closing out of your proceeds, which is pretty awesome. So if you are interested, you can always reach out to us. You can schedule a free, I guess, consultation. That sounds so formal, and we're so no pressure and laid back that we just call it a let's chat, uh, appointment. You can do that right on our website, awesomenossum.com/schedule. It is super easy to do. We are always around. Um, and yeah, if you ever have questions, just go to our website, let us know. You can also just reach out to us. All, all of our contact info is on our website. And that is it. If anyone has questions about condos, feel free to reach out to us. We'd love to help you out.

Speaker 4: [17:34] Yep. Agreed. Mm-hmm.

Speaker 1: [17:35] All righty. Thanks everyone. Thanks, guys. All right,

Speaker 4: [17:37] guys.

Speaker 1: [17:37] See ya.

Speaker 4: [17:38] Bye.