I sometimes use a rollercoaster as a metaphor for the housing market – it has its ups and downs. We have seen dips in the market (anyone remember the Great Recession?) and strong climbs such as the pandemic-induced shock of rising single-family home prices amid a dearth of new listings.
Today we are witnessing an enigma wrapped in a metaphor. Stick with me on this!
The enigma is the Seattle condo market – where prices remain steady or are even declining in some pockets as new listings outnumber sales. This is just the opposite for single-family home sales, where prices are soaring amid a shortage of listings.
As buyers look for their next home on the property ladder – whether it’s a first-time purchase or downsizing from a large home – they should strongly consider a condo purchase in their future. Why?
Condo homes as a housing option have not looked this attractive since post-recessionary times of a decade ago. There is plenty of choice – size, price range, amenity selection, location – that provide owners with reduced maintenance responsibilities and many conveniences that city life has to offer.
Not long ago markets like Seattle, Boston and San Francisco were the exploding tech hubs of young adults and office growth. Like a light switch being turned on, the pandemic prompted thousands of people to flee vertical high-rises in urban centers for peaceful surroundings and peace of mind.
As the constraints of the pandemic ease and businesses reopen, we are seeing a renewed energy in parts of every city. Museums are welcoming back visitors, tourism activities are resuming, plus restaurants and bars are opening their doors to more diners and drinkers. The city is coming out of its long hibernation and there is an air of promise.
Urban centers across our nation, including Seattle, offer excitement and variety. Just think what our city will be like a year from now when many of us will be back enjoying indoor dining, cheering on the Seahawks or Kraken to packed houses, or taking in live performances at the theater.
Beyond the bright lights and many conveniences that a city provides, living in an urban area can be the best option for buyers. Think price, for one. The median price of a single-family home in Seattle is $875,000 (April 2021), a 7.4% increase from the previous year. The median price for a city condo at the same time is $490,000, a rise of 4.5% from April 2020. But what’s most notable is that condo prices in Seattle have remained consistently at or below the half-million mark for more than a year, a sign of predictable affordability, as this chart shows:
It is also true that condo listings are far more prevalent than single-family and townhome listings. The chart below on left shows the number of Active condo listings in Seattle (dark green) and the number of solds (light green) per month. The chart on the right shows the same numbers for only single-family and townhomes, with Active listings in blue and solds in gold (through April 2020). They are opposites, with more listings on the condo market than sold homes and far fewer single-family listings available for sale than sold per month:
With this surplus of condo inventory, buyers have time to think through a potential purchase and perform their due diligence – unlike the quick-turn, listing-to-offer timelines of single-family homes, where people have more time looking for their TV remote in the living room than to decide whether to make an offer on a listed house. (I kid, but only slightly!)
With a decrease in demand, condo sellers also have a greater willingness to negotiate with buyers. This can allow a buyer’s voice to be heard and let their dollars stretch. Yes, there is room for negotiation on a condo home in most circumstances.
To be sure, living in a condo is different than in a single-family house or townhome. The most obvious is community living, with shared spaces and amenities. And that’s the beauty of condo living.
These value-adds are essentially at your doorstep ready to be enjoyed. Amenities can include 24-hour concierge service, perfect for those door deliveries and arrangements for dry cleaning service or making dinner reservations. They can also include access to a fitness center (typically without usage fees) or a guest suite for family and friends. Plus, there is almost always parking and storage that come with the price of the home (though some high-end condo buildings charge extra).
It’s important to note, the roller-coaster condo-housing ride will continue through this one-year dip and return to the top of the climb. In fact, there are signs in the chart above of a rise in condo sales for each of the last three months. The signals are there, that the condo market is starting to rebound and there is nothing to suggest it will stop.
Prices will likely only rise as people return to offices and activities reflect 2019 levels – or even greater. My advice: Buyers should ponder the possibilities, either as a long-term investment or their next dream home.