Resale Condo Volumes Fall in Q1-2018 As Median Prices Increase to $700,000
Condo resale volumes decreased in the first quarter of 2018 compared to the same time last year, largely due to anemic supply that is providing fewer homes for buyers to choose from. A lack of available supply is contributing to mounting concerns regrading affordability, as there are only 44 resale condos available for sale in a city home to 80,000 residents, with more homes available above $1 million than at lower price points. Meanwhile, median home prices in Seattle are rising at nearly 20-percent annually, according to data from the first quarter of 2018 versus the prior year.
Above & Below: Median resale prices of downtown condominiums are now $700,000 just 11-percent less than the median home price of a single-family home in the City of Seattle.
“Rapidly rising prices are the hallmark of a sustained supply and demand imbalance,” notes Dean Jones, President and CEO of Realogics Sotheby’s International Realty (RSIR). “We have some new presale developments on the horizon but it will take years to deliver these high-rise homes. This new supply will do little to address the current crisis and meanwhile, prices will continue to rise.”
The first quarter of 2018 reveals a concerning trend as the number of condominiums priced below $500,000 dropped to 1/3 of Q1-2017 numbers while price points above $3 million doubled year-over-year.
Jones notes that many of the recently introduced condominium projects in the city have drawn longlines and strong numbers for reservation presales, particularly at price points below the $700,000 range. In order to continue to offer these values amidst rising construction costs, developers are offering studio and urban one bedroom designs with in-line kitchens and optional parking and storage.
“We just need more housing within conforming loan limits ($667,000 in King County) so homebuyers can benefit from lower (i.e. 5-percent) down payment options, qualify with lower incomes and enjoy more attractive interest rates than with jumbo loans,” adds Jones. “This run on entry level prices is also the target of first time homebuyers as many renters eye ownership when purchasing amounts to monthly payments similar to prevailing leasing costs. Rising interest rates are only exasperating the situation.”
Looking for affordable price points in all types of properties is becoming increasingly difficult in Seattle as identified in the following heat map, which compares single-family homes sold in the city of Seattle by size and price point. The data clearly shows a depletion of entry-level price point options, with intensifying sales at price points above $1 million.
Above & Below: Data compiled by William Hillis, Research Editor and Publisher for RSIR, illustrates the dramatically vanishing lower price points in the City of Seattle, especially below $500,000.
Similar trends are found in the center city for condominiums, as the following graphics illustrate the volume of homes sales at varying price points and the effect on median price per square foot. The strongest impact is found at values below $750,000 where aggregate sales are diminishing and prices are rising fastest.